Buying a franchise: who are you contracting with?

When choosing an international franchise brand, it is easy to assume that you will be working directly with the company that created the network. In practice, you may be signing a contract with a Greek subsidiary or an independent master franchisee authorised to develop the network in Greece. In franchising, this distinction determines who owes you what — and needs checking before you make any commitment.

1. Distinguish the brand from the contracting company

The name above the door is not enough to identify your business partner. Ask for the company's full legal name, legal form, registered office, registration details in the relevant register, and the capacity in which the proposed signatory will be signing. If it is a Greek company, cross-check who is authorised to represent it using the available corporate documents and Greece's General Commercial Registry (GEMI).

Next, map out the structure of the arrangement on a single page:

• Which company developed the business system?
• Which company grants the rights to operate it in Greece?
• Which company will sign your contract?
• Which company collects the fees, and which is responsible for delivering the contractual support and services?

The involvement of several companies is not a problem in itself. Problems arise when their roles remain unclear or presentations give a different impression from the draft contract. A company negotiating with you may simply be a commercial representative, rather than your future franchisor.

In Greece, a foreign franchisor is generally not required to establish a Greek subsidiary or branch solely to grant franchises. A direct contract with an overseas company is therefore possible and is not, in itself, a sign of anything improper.

2. Check the local partner's authority

If you are signing with a master franchisee, its ability to grant rights depends on its agreement with the original franchisor. The description ‘exclusive partner for Greece’ is not enough. It may cover different responsibilities, such as developing company-owned outlets, without including the right to grant sub-franchises.

Ask for evidence that the proposed arrangement is authorised: in the intended geographical area, for the specific business activity and for the term being offered. The full master franchise agreement may contain confidential information. One practical option to negotiate is for your lawyer to review the relevant extracts under a confidentiality obligation, or to obtain written confirmation from the original franchisor.

Pay particular attention to dates. If the local partner's authority expires before the end of your agreed term, ask for a written explanation of how continuity will be secured. An expectation that ‘the master agreement will be renewed’ is not the same as an enforceable right.

This check concerns the chain of authority and responsibility. It does not replace a separate check of trade mark rights.

3. Understand what Greek law actually requires

Greece has no dedicated law providing a comprehensive framework for franchise agreements, nor a specific register in which franchisors or their agreements must be registered. A company's registration with GEMI does not constitute state approval of its franchise system or certification of its authority.

The contractual relationship is governed primarily by the general provisions of the Greek Civil Code on contracts and obligations. Depending on its content, intellectual property, unfair competition and competition law rules, along with other relevant provisions, also apply. Regulation (EU) 2022/720 is also relevant to vertical restraints, subject to its conditions of application.

There is no mandatory franchise-specific pre-contractual disclosure document or statutory minimum disclosure period before signing. However, Articles 197 and 198 of the Civil Code, concerning pre-contractual conduct and liability, are significant: negotiations are no place for misleading statements about a partner's identity or authority.

The European Code of Ethics for Franchising is a self-regulatory framework, not legislation. If a company claims to comply with it, ask how that commitment will be reflected in your relationship.

4. Establish who is responsible if the structure changes

Ask your lawyer to examine what happens if the master agreement between the international franchisor and the local partner expires or is terminated. Do not assume that the parent company will automatically take over your contract or another company's obligations.

Ask three specific questions: will you receive timely notice of any change in the local partner's authority? Can your business lawfully continue operating? Is there an agreed mechanism for another party to take over the relationship, with clear terms and the necessary consents?

If the security of your investment depends on a promise from the international franchisor, seek an appropriate binding agreement to which it is a party. An assurance from the local partner does not, by itself, create an obligation for a third-party company.

Practical takeaway: before choosing a brand, identify the company that will be legally bound to you, verify its authority and record what happens if that authority changes. You are buying specific contractual rights, not simply a place under a familiar sign.