Buying a franchise: checking the premises lease

Choosing premises is not simply a matter of location. For anyone entering the franchise market in Greece, a lease creates separate obligations that do not automatically end when the relationship with the franchisor changes. Before committing to premises, you need to review the lease, the franchise agreement and whether the business can legally operate there together.

1. Clarify who is letting the premises and exactly what is included

First, ask for the contractual structure to be clarified. Will you rent directly from the owner or sublet from the franchisor? These are different arrangements with different risks. Approval of the location by the brand does not establish that the premises are legally and technically suitable.

For a direct lease, check who has the right to let the property and whether the person signing has the necessary authority. For a sublease, ask your lawyer to examine the head lease: does it allow subletting, how long does it run, and what happens if it ends? A promise from the franchisor does not, by itself, bind the owner.

Also record precisely what the lease covers:

• The main premises, storage areas and any ancillary spaces.
• The legal right to use outdoor space, where a separate permit or concession is required.
• Rights to put up signage and install equipment and fittings.
• Restrictions under the building regulations governing its use, and any consents required.

Anything essential to the particular business model must be documented, rather than taken for granted because another business previously operated there.

2. Check the Greek legal framework and lawful use

Greece has no specific law comprehensively governing franchise agreements, nor a dedicated statutory regime requiring pre-contractual disclosure for franchising. The general provisions of the Greek Civil Code apply, among other rules. Articles 197 and 198 concern good faith in negotiations and pre-contractual liability, while Articles 281 and 288 concern the prohibition of abuse of rights and performance of obligations in good faith.

The European Code of Ethics for Franchising is a self-regulatory framework, not a specific Greek law. Its provisions on material written information do not replace an independent assessment of the property.

Commercial leases are governed by the relevant provisions of the Civil Code and the framework established by Presidential Decree 34/1995, as amended. Article 13 of Law 4242/2014 provides for a minimum three-year term for new leases falling within its scope, even where a shorter or indefinite term is agreed. This does not mean that every tenant can leave after three years without financial consequences if they have agreed to a longer term.

You should also commission an engineer to check the permitted use, compliance with planning and building legislation, and the requirements of the proposed business activity. Depending on the activity, specific fire safety, accessibility, ventilation or public health requirements may apply. Previous operation of a business on the premises does not guarantee that they meet the requirements for your intended use.

3. Align the terms, approvals and payment start dates

The lease and franchise agreement must be read alongside each other. If the lease expires first, you may lose the premises while still having contractual obligations to the franchise network. If it runs for longer, you may continue to owe rent without the right to use the brand identity.

Draw up a single schedule showing the handover date, rent commencement date, planned opening date, expiry dates and notice deadlines for each renewal. Check whether renewal is an actual contractual right or requires a new agreement. Wording such as ‘option to renew’, without clear terms, does not guarantee that you can remain in the premises.

With legal support, negotiate what will happen if the franchisor does not approve the premises or if the technical inspection identifies an obstacle to operating there. Consider appropriate conditions or rights to withdraw, with clear deadlines and consequences. The relevant counterparty must agree: a clause in the franchise agreement does not automatically amend the lease.

For example, if handover is delayed, who adjusts the opening deadline, and when does rent become payable? The answers must be included in the appropriate documents before signing.

4. Set out the true cost and responsibilities of occupation

Do not compare premises solely on the basis of the initial monthly rent. Ask for a clear statement of rent adjustments, the rent deposit, shared building charges and any other agreed costs. Your accountant should confirm the tax treatment and charges applicable to your particular case.

Clarify who is responsible for building defects, essential building systems, insurance and making good damage. At handover, prepare a record with photographs, a list of defects and utility meter readings. Also agree on the condition in which the premises must be returned and what will happen to your fixtures and fittings.

Before signing, bring together a single file containing the draft lease, franchise agreement, technical inspection report and written approvals. Ask your advisers to identify inconsistencies between them, rather than simply reviewing each document separately.

Practical takeaway: suitable premises are those you can use legally, for the time you need and at a clearly defined cost. Do not finalise the lease until you have confirmed that it aligns with the franchise agreement.