Buying a franchise: check local demand

A recognisable brand does not guarantee sufficient demand in the neighbourhood where you are considering investing. Before joining a franchise network, you need to assess the local market independently. The aim is not to confirm your initial preference, but to establish who will buy, why and how often — without treating brand recognition as proof of commercial suitability.

1. Define your customer and the actual catchment area

Start with the need the business meets, not the premises available. An appointment-based service needs a different customer base from a shop that relies on spontaneous, everyday purchases. Describe your core customer, the occasion that prompts a purchase and the alternative they currently use.

Next, map the area from which customers could realistically travel. Do not simply draw a circle on a map. Major roads, steep hills, parking difficulties, public transport and physical barriers all affect access. A customer catchment area is a commercial reality, not the same thing as the exclusive territory defined in your contract.

Record the following groups and factors separately:

• Permanent residents and their everyday needs.
• People who work in the area at particular times.
• Visitors, students or tourists, where relevant.
• Reasons to visit the area created by nearby services or businesses.

Look for available data from the Hellenic Statistical Authority (ELSTAT) and the local municipality, paying attention to its date and geographical detail. The population of an entire municipality does not prove demand on a particular street.

2. Carry out on-site research, not just a brief visit

Visit the proposed location on different days and at different times, reflecting the opening hours envisaged by the business model. Use a consistent method to record passing traffic, the visibility of the entrance and ease of access. Note the conditions during each observation: weather, public holidays, school term dates or an unusual event can distort the picture.

Passing traffic does not equal an intention to buy. A busy street may serve people who are in a hurry, on the wrong side of the road or outside your target market. Observe whether passers-by stop and which businesses or services attract actual visits.

Map both direct and indirect competitors. For each alternative, record publicly available information: products or services, prices, opening hours, access and how customers are served. Do not look only for businesses in the same sector; look for those meeting the same need.

Supplement your observations with brief, anonymous conversations with potential customers. Ask what they already buy, where they buy it and what difficulties they face. Asking ‘Would you like this to open here?’ often produces polite answers rather than reliable evidence of demand.

3. Check whether the network’s evidence is comparable

Ask the franchisor to explain why they consider this particular market suitable. A general brand presentation is no substitute for local evidence. Useful information includes customer profiles, peak demand times, seasonality and the characteristics of locations where the model already operates.

If you are shown examples of existing outlets, assess whether they are genuinely comparable to your plans. Compare residential density, the presence of offices, dependence on tourism, accessibility and how long each outlet has been trading. An established outlet in a tourist location is not necessarily a suitable benchmark for a new business in a residential neighbourhood.

Create a simple table with four columns: claim, source, date and independent verification. Distinguish what you have observed from what is an estimate. Where permitted, speak to existing franchisees about local habits and the challenges of attracting customers, without asking for confidential information.

Pay particular attention to seasonality. An area may look very different in summer or at the start of the academic year from how it does during the rest of the year. Record what remains unknown rather than filling the gaps with optimistic assumptions.

4. Use your findings to inform your decision before signing

Greece has no specific law comprehensively governing franchise agreements, nor a dedicated statutory system of mandatory pre-contractual disclosure for franchising. The general principles of the Greek Civil Code apply, including good faith in negotiations under Article 197 and the associated liability under Article 198. Depending on the issue, rules on commercial law, unfair competition and competition law also apply.

The European Code of Ethics for Franchising provides for full and accurate written disclosure of material information within a reasonable period before an agreement is signed. It is a self-regulatory framework, not a Greek law that automatically binds every franchisor. Ask a lawyer to assess its relevance to your particular relationship.

Your independent research does not relieve the franchisor of their legal obligations. Keep their presentations and written responses. Before deciding, define which findings would justify proceeding, changing location or rejecting the proposal.

Practical takeaway: choose a brand only after confirming the local need it will serve. If your decision still rests mainly on its reputation, your market assessment is not yet complete.