Buying a franchise: licensing checks before opening

Choosing a well-known franchise network does not guarantee that your outlet can operate legally from the premises you have found. In franchising, common operating standards must be adapted to the requirements of each business activity and property. Before committing, you need specific answers: which administrative procedures are required, who will handle them, and what happens if opening is delayed or proves impossible.

1. Map out the activities, not just the brand

Start with what will actually happen at the outlet. A general description such as ‘food outlet’ or ‘service premises’ is not enough for a reliable assessment. Preparing food, selling alcohol, playing music, providing outdoor seating or offering certain services may each create different obligations.

Ask the franchisor for a detailed description of the proposed operating model and give it to an engineer and a legal adviser. Where necessary, involve a professional familiar with the specific requirements of the activity as well.

Create a table with four columns:

• Activity: exactly what will be offered to customers.
• Requirement: notification, approval, licence or another prerequisite.
• Responsible party: who prepares, signs and submits the application or supporting documentation.
• Evidence: which document confirms that the check has been completed.

Do not assume that another outlet in the network operating in the same city proves that your premises are suitable. A different layout, building use or equipment can substantially change the requirements.

2. Distinguish the franchise agreement from licensing

Greece has no specific law providing a comprehensive framework for franchise agreements, nor a dedicated statutory pre-contractual disclosure regime for franchising. Applicable rules include the general provisions of the Greek Civil Code, commercial law, and the laws governing unfair competition and competition more broadly.

Articles 197 and 198 of the Civil Code concern good faith in negotiations and pre-contractual liability. Information about known obstacles to operating the business is therefore not a trivial detail. The precise scope of any duty to disclose information, and any resulting liability, is assessed according to the circumstances.

The European Code of Ethics for Franchising provides for full and accurate written disclosure of material information in good time before a commitment is made. It is a self-regulatory framework, not a Greek law imposing a universally applicable disclosure deadline.

For the establishment and operation of many business activities, Law 4442/2016, as amended, provides the main framework, alongside activity-specific provisions and implementing decisions. Not all businesses follow the same procedure. Where notification is required, this does not mean that the authorities have checked the suitability of the premises in advance, nor does it remove the obligation to retain the required supporting documents.

3. Check the premises before authorising work

The franchisor’s commercial approval of a property does not establish its technical suitability or regulatory compliance. Ask an engineer for a written assessment of the lawful use of the premises, permitted land uses, planning and building compliance, and the requirements associated with the proposed operation.

Depending on the circumstances, the assessment should cover fire protection, accessibility, ventilation, odour extraction, hygiene requirements and any approvals needed for building or fit-out work. For outdoor public spaces, check separately whether a municipal permit is required. A verbal assurance that ‘approval always comes through’ is not a sound basis for an investment.

At the same time, compare the technical requirements with the network’s mandatory standards. If the proposed kitchen or service layout cannot be implemented legally, you need an approved alternative before ordering equipment.

The resulting report should be brief and clear: which matters have been confirmed, which remain unresolved, what alterations are needed, and which approvals must be obtained before opening.

4. Turn outstanding issues into contractual commitments

The phrase ‘licensing is the franchisee’s responsibility’ is not enough to allocate responsibilities properly. The agreement or a relevant schedule should specify what each party will provide or handle: plans, technical specifications, equipment documentation, submissions and corrections.

Discuss clauses with your lawyer that link specific payments or the opening deadline to objective milestones. Also set out what happens when delays arise from incomplete information supplied by the network, unsuitable premises or an outstanding administrative matter. Do not assume that you are automatically entitled to a refund or an extension.

In your budget, list professional assessment and design fees, administrative fees, necessary alterations and delay-related costs separately. Ask for substantiated estimates, rather than a blanket promise that ‘licences are included’. Also establish who will monitor subsequent changes to activities or equipment that may require a new procedure.

Practical takeaway: before committing to opening, obtain a written suitability assessment, a list of the required procedures and a clear allocation of responsibilities. Approval from the franchise network and lawful operation of the outlet are two different things.