Buying a franchise: assess the pilot unit

Before buying a franchise, you need to distinguish an attractive idea from a business model that has genuinely been tested. The pilot unit is the outlet or business where the franchisor puts its model into practice and refines it before offering it to others. Assessing it helps prospective franchisees understand exactly what they are buying: a repeatable way of operating or a success that depends on particular circumstances.

What the pilot unit proves — and what it does not

A busy outlet does not, on its own, prove that an independent business owner can put the same model into practice. It may operate from premises owned by the business, receive daily support from the founder or use head office staff without that assistance being reflected in its operational records.

Your aim is not simply to see whether it is ‘doing well’. It is to check whether the core tasks can be carried out with available resources, clear procedures and the staffing levels your own business will have.

Ask:

• Which specific unit was used to test the model, and how long has it been operating?
• Who operates it, and what is their relationship with the franchisor?
• What significant changes were made after the initial trial?
• Has the format now being offered to you operated in practice?

The last point is crucial. A successful large outlet does not automatically provide sufficient testing for a small service point, a mobile unit or a delivery-only business. A different format brings different operational requirements.

What is the legal framework in Greece?

Greece has no dedicated legislation comprehensively regulating franchising as a distinct type of contract. There is no specific franchise register, mandatory standardised pre-contractual disclosure document or statutory minimum disclosure period before signing.

Franchise agreements are governed primarily by the general provisions of the Greek Civil Code on contracts and obligations. During negotiations, Article 197 of the Civil Code requires parties to act in accordance with good faith and accepted business practice. Depending on the issue, competition rules, trade mark protection and the requirements for operating a business lawfully also apply.

The European Code of Ethics for Franchising, adopted by the Franchise Association of Greece, establishes the principle that the business model should have been successfully tested in at least one pilot unit before a network is developed. This is a self-regulatory standard, not a standalone statutory licensing requirement.

Invoking the Code therefore does not amount to state certification of the unit. Ask a lawyer to examine whether and how the relevant commitments are incorporated into your agreement. Nor should you assume that you automatically have a right to access all internal records: agree a specific assessment process.

How to organise a meaningful site visit

Ask to visit on a normal trading day, rather than attending only a scheduled presentation. If agreed, observe both a busy period and a quieter one. The picture changes when the team has to deal with customers, incoming deliveries and unexpected problems at the same time.

Note who does what. How many people are actually needed? Which tasks does the manager handle? When is head office intervention required? How does the team deal with a staff absence, a late delivery or an equipment breakdown?

Where available, ask for anonymised staff rotas, workflow descriptions and records of operational problems. You do not need employees’ or customers’ personal data to assess the approach. You need evidence that day-to-day difficulties have been identified and addressed.

With the franchisor’s agreement, speak to the unit manager. Ask which procedure has changed recently and why. A specific answer with a practical example is more useful than a general assurance that ‘the system works perfectly’.

Turn your findings into a buying decision

Draw up a short table with three columns: ‘what was tested’, ‘what will apply at my unit’ and ‘which differences remain unexplained’. Compare the outlet format, equipment, staffing, opening hours and reliance on head office.

If, for example, the founder resolves problems at the pilot unit every day, ask who will perform that role in your business. If different equipment is proposed, look for evidence that it has been tested for the same use. Do not dismiss differences as insignificant simply because the brand remains the same.

Ask for the key answers in writing and review them with your advisers before making a financial commitment. Refusal to allow any reasonable verification does not prove unlawful conduct, but it does increase uncertainty around the investment.

Practical takeaway: before paying for a business model, see it operating without special treatment and make sure its essential operating conditions can be replicated in your own unit.