Buying a franchise: what value does a code of ethics offer?

When considering buying a franchise in Greece, a franchisor’s reference to a code of ethics may boost your confidence. On its own, however, it does not prove that the investment is safe or that every promise is enforceable in court. In franchising, self-regulation has real value when you know who is making which commitments, how compliance is monitored and what happens if the rules are breached.

1. Distinguish between the law and self-regulation

Greece has no dedicated law providing a comprehensive framework for franchise agreements. The main provisions that apply are the general rules on contracts and obligations in the Greek Civil Code, alongside competition, unfair competition and intellectual property rules, depending on the relationship.

There is no specific mandatory pre-contractual disclosure document for franchising, nor a statutory minimum period between disclosure and signing or payment. There is also no dedicated government register of franchisors or franchise agreements. A company’s registration with the General Commercial Registry (GEMI) does not constitute approval of its franchise system.

This does not mean there is no protection. Articles 197–198 of the Civil Code govern conduct during negotiations: they require good faith and observance of fair dealing, while a culpable breach of the relevant duties may give rise to a claim for damages. The withholding of material information or misleading presentations are assessed on the facts of each case.

The European Code of Ethics for Franchising, by contrast, is a self-regulatory tool, not Greek law. Similarly, the code adopted by the Greek Franchise Association concerns the commitments its members make as part of their membership. It does not automatically become binding on every franchise network.

2. Check who is bound and by which text

Do not rely solely on a membership logo or a statement that ‘we follow European standards’. Ask for the association’s exact name, the specific code and its current version. Confirm directly with the association that the membership is still active.

The identity of the member is particularly important. It may be the parent company, an overseas franchisor or a different company from the one that will sign the agreement with you. One company’s membership should not be assumed to cover all its associated businesses automatically.

Before assessing the practical value of membership, ask for written confirmation of:

• Exactly which legal entity is a member, and in what capacity.
• Which provisions of the code cover pre-contractual disclosure and dealings with franchisees.
• Whether there is a complaints procedure and who can use it.
• What action the association can take when it finds a breach.

Membership should not be treated as certification of profitability, financial resilience or suitability for a particular investor. Ask exactly what has been checked, by whom and when, rather than assuming that admission involves financial or legal due diligence.

3. Turn principles into specific questions

The European Code calls for full and accurate written disclosure of material information about the relationship within a reasonable time before signing. A ‘reasonable time’ is not a fixed statutory number of days in Greece. In practice, ask for enough time for your lawyer and financial adviser to review the documents and obtain answers to their questions.

The ethical principles also include testing the business concept before developing a network, lawful use of trade marks and other brand identifiers, and initial training with ongoing support. Use these principles as a starting point for questions, not as proof of compliance.

Create a short table with three columns: ‘code principle’, ‘supporting evidence’ and ‘outstanding answer’. For timely disclosure, for example, record when you received the full draft agreement and its annexes. This helps you distinguish a general assurance from a verifiable practice.

Also ask your lawyer to check whether the agreement incorporates a specific code or merely refers to it descriptively. The potential contractual significance of such a reference depends on the wording; it is not the same as membership alone.

4. Find out what a complaint can achieve

An ethics review procedure is not a court. Where recommendations, disciplinary measures or expulsion from membership are available, these do not automatically result in compensation, a refund or termination of your agreement.

Read the procedural rules before you need to use them. Check whether complaints from prospective franchisees are accepted, what evidence is required, whether there is a fee and how potential conflicts of interest are handled. Do not assume that submitting a complaint suspends court deadlines or contractual obligations; that requires a separate legal assessment.

Practical takeaway: assess the code as an additional accountability tool, not an investment guarantee. Before choosing a network, verify which entity holds membership, read the applicable text and ask for evidence that supports the principles it claims to follow.