Buying a franchise: reviewing dispute resolution clauses

Joining a franchise network depends on cooperation, but the agreement must also work when disagreements arise. An unpaid charge, conflicting instructions or a different interpretation of an obligation can lead to costly litigation. Before buying a franchise in Greece, consider not only what the agreement promises, but also how accessible the process for enforcing your rights will be.

1. Identify the clauses that set out the process

The relevant provisions are usually found in the final pages, under headings such as ‘Governing law’, ‘Jurisdiction’, ‘Arbitration’ or ‘Dispute resolution’. Read them together: they do not all address the same question.

The governing law determines the rules against which the contractual relationship will be assessed. Jurisdiction and court competence concern which court may hear the dispute. Arbitration places the decision in the hands of arbitrators rather than state courts, while mediation seeks an agreement with the help of a neutral third party who does not impose a decision.

Ask your lawyer for a brief outline of the process:

• Who must be notified of the disagreement first, and how?
• Is negotiation or mediation a mandatory first step?
• What deadline applies to each stage?
• Where does the case go if no agreement is reached?

Check the schedules and annexes too. A different clause in a software agreement or another related contract could create parallel proceedings for the same practical problem.

2. Understand what Greek law provides

In Greece, there is no specific law providing a comprehensive framework for franchise agreements, nor is there a dedicated statutory system of mandatory pre-contractual disclosure for franchising. This does not mean that the relationship falls outside legal scrutiny.

Among other rules, the general provisions of the Greek Civil Code apply: Articles 197–198 on conduct and liability during negotiations, Article 288 on performing obligations in good faith, and Article 281 prohibiting the abuse of rights. Depending on the issue, commercial law, unfair competition rules and competition law may also apply.

The European Code of Ethics for Franchising is a self-regulatory framework, not legislation. Referring to it does not replace a clear contractual procedure or, on its own, guarantee a particular legal remedy.

Court proceedings are governed by the relevant procedural rules. Mediation is governed by Law 4640/2019, which requires an initial mediation session in certain civil and commercial disputes, subject to specified conditions. An obligation to attend an initial session does not mean an obligation to settle. Ask for a legal review of the clause tailored to your circumstances, particularly if the franchisor is based outside Greece.

3. Assess the real cost of access to dispute resolution

A clause may appear neutral yet create practical difficulties for the franchisee. Choosing courts far from the outlet can add travel costs and administrative burdens. Choosing foreign law or proceedings in another language may require additional advisers and translations.

If the agreement provides for arbitration, do not settle for assurances that it is ‘faster’. Ask for clarity on the arbitral institution and its rules, how arbitrators are selected and how many there will be, the seat of arbitration, the language and any advance payments towards costs. An arbitral award is generally not reviewed on its merits in the same way as a court judgment on appeal; the grounds for challenging it are limited.

Work through a hypothetical scenario: you dispute a charge and need a quick resolution. Ask for an estimate of the likely categories of expense, not a promise of a particular outcome. Consider whether the expected cost would make even a well-founded claim uneconomical to pursue.

Read particularly carefully any terms that place all costs on the franchisee regardless of the outcome. The wording needs legal review: its inclusion in the agreement does not, by itself, make every charge lawful or enforceable.

4. Negotiate a workable process before signing

A workable clause might provide for written notice, a meeting between designated representatives and a short, clearly defined negotiation period. It should, however, avoid successive stages with no final deadline, leaving the dispute unresolved indefinitely.

Ask for clarification that the process for seeking an agreement does not prevent either party from seeking urgent interim relief from a court, where permitted. Nor should you assume that simply exchanging letters or negotiating automatically suspends limitation periods or other critical deadlines.

Agree which email or postal address will be used for formal notices and when those notices will be deemed received. Keep an organised record of the agreement, schedules and annexes, invoices and significant correspondence. Preparing your evidence starts before a disagreement arises, not after it has escalated.

Practical takeaway: before signing, you should be able to answer clearly: where do I turn, what steps must come first and what costs might I face? If the answers remain unclear, ask for written clarification and a legal review.