Buying a franchise: checking eligibility for grant funding

Grant funding can help you buy and set up a franchise business in Greece, but it should not be treated as guaranteed finance. For a prospective franchisee, the key question is not whether franchise networks generally qualify for grants. It is whether your particular business, with its specific agreement and planned expenditure, meets the conditions of a particular funding call.

1. Distinguish potential eligibility from approval

Circular ref. 13151/ΕΥΚΕ-ΧΕ 192/10.02.2023, issued by Greece’s General Secretariat for Public Investment and the National Strategic Reference Framework (ESPA), examines the scope for supporting businesses operating under franchise agreements. It clarifies that EU State aid regulations do not expressly exclude these businesses from their scope. Support is therefore possible in principle.

This does not mean that every programme accepts every franchise business. The circular provides a framework of indicative guidance for eligibility checks, not approval of funding for an individual applicant. The terms of the relevant funding call and the applicable aid scheme remain decisive.

Before comparing franchise brands on the strength of a promise of grant funding, ask for written confirmation of:

• The specific funding call and its current amendments.
• The eligible business activities and geographical coverage.
• Whether businesses yet to be incorporated, newly established businesses or existing businesses can apply.
• The requirements concerning business size, ownership structure and private funding contributions.
• Any specific conditions for franchise businesses.

The statement ‘other franchisees in our network have received grants’ is a useful starting point for discussion, not proof that you qualify for the same treatment.

2. Check which business is actually being assessed

A key point in the circular is the need to examine whether the applicant forms a single economic unit with other businesses. The assessment does not necessarily stop at the fact that you have a different Greek tax identification number (AFM) from the franchisor.

Equally, using the same brand is not, on its own, enough to treat all franchisees in a network as one undertaking. The actual corporate and contractual relationships must be examined under the rules governing the particular aid scheme.

Give your funding adviser and solicitor the full draft agreement, details of your company’s ownership and management, and any other agreements with the franchisor. Ask them to examine rights of control or influence, rather than formal ownership alone.

Bear in mind that the concepts of a single economic unit, a ‘single undertaking’ under de minimis aid rules, and linked enterprises for determining small and medium-sized enterprise (SME) status are not automatically equivalent. A proper assessment uses the definition required by each rule, rather than relying on a general statement that ‘we are independent’.

Record any previous aid that may need to be counted towards the relevant limits. Omitting relevant relationships or amounts can affect both approval and your ability to retain the funding.

3. Divide the investment into eligible and ineligible costs

A business being eligible does not mean that its entire initial purchase package qualifies for funding. The initial franchise fee, equipment, software, fit-out works and other charges must be assessed separately. Do not assume that a cost is eligible simply because it appears in the franchisor’s quotation.

Create a table with four columns: cost description, supplier, corresponding category in the funding call, and required supporting documents. If you are offered a single package, ask for an itemised quotation without artificially changing the true nature of the charges.

Pay particular attention to:

• The date from which expenditure and binding orders are permitted.
• Whether comparative quotations or specific evidence supporting prices are required.
• How transactions with related parties are treated.
• Which payment methods and supporting documents are accepted.
• Whether VAT and second-hand equipment are covered under the specific terms.

Under some schemes, starting work before submitting an application can affect the eligibility of the project as a whole. Check the timetable before making any irreversible commitment, not when you are gathering invoices.

4. Align the funding arrangements with your agreement

Greece has no dedicated law providing a comprehensive framework for franchise agreements, nor a specific statutory system of mandatory pre-contractual disclosure for franchising. The general provisions of the Greek Civil Code, commercial law, and rules on unfair competition and competition law apply. During negotiations, Article 197 of the Civil Code requires parties to act in accordance with good faith and accepted commercial practice.

This does not turn a commercial assurance about grant funding into a government guarantee. Ask for a written record of who will prepare the application, who will supply information and who will pay the associated fees. If the investment depends on approval, discuss an appropriate contractual clause with your solicitor to cover rejection or delay.

Also work out when the grant will be paid and which amounts you will need to cover beforehand. Examine any obligations to maintain the investment, so that they do not conflict with the duration or other terms of the franchise relationship.

Practical takeaway: before committing, obtain a documented eligibility assessment, an itemised schedule of costs and a financing plan that does not assume grant funding is guaranteed. Potential support should strengthen your investment decision, not replace due diligence.