Buying a franchise: who pays for refurbishments?

Before buying a franchise, look beyond the cost of opening the premises. Check how much you may have to spend to keep them in line with the brand’s image. Across a franchise network, a consistent appearance supports brand recognition and the customer experience. But a future change to furniture, lighting or equipment could mean significant additional expense. The crucial question is whether clear limits are placed on this obligation before you commit.

1. Distinguish maintenance from compulsory refurbishment

Repairing a worn counter is not the same as replacing it because the brand’s design has changed. Nor is preventive maintenance on a machine the same as buying a newer model required by the franchisor. If the agreement groups everything under an obligation to ‘maintain standards’, your actual financial exposure remains unclear.

Ask for the following to be distinguished in writing:

• Routine maintenance and repairs for normal wear and tear.
• Replacement of equipment due to breakdown or technical obsolescence.
• Refurbishment prompted by a change to the network’s brand image.
• Work required by law or safety requirements.

For each category, clarify who makes the decision, who approves the work and who pays. Also request the current technical specifications as a dated appendix to the agreement. This gives you a clear reference point for what you are buying today and what might change later.

2. Check the track record and the full cost

Before signing, ask for examples of recent refurbishments at comparable outlets in the network. Useful information includes the scope of work, how long it took, how long the outlet was closed and the final bill. Figures can be provided in aggregate or anonymised form, without disclosing other franchisees’ personal data.

Where possible, speak to franchisees who have already been through the process. Ask whether the initial estimate covered all the work, whether there were delays and whether they could choose their contractors. Premises of a different size or in a different condition are not a reliable benchmark for your own.

Do not limit your budget to the building contractor’s quotation. Add design fees, strip-out, transport, storage, waste removal and any approvals required. With your accountant, also consider how the timing of VAT payments affects cash flow.

Calculate the impact of closure separately: lost gross profit, rent and other continuing commitments. Prepare one scenario for limited work and another for an extensive refurbishment, using actual quotations where available. The past cost of refurbishing another outlet is an indication, not a guarantee of future prices.

3. Understand the Greek legal framework

Greece has no dedicated law comprehensively governing franchise agreements, nor a specific statutory system of mandatory pre-contractual disclosure using a standardised document. Do not therefore assume that an information pack is a government-vetted account of all future investment requirements.

The general rules of the Greek Civil Code apply. In particular, Articles 197 and 198 concern good faith and liability during negotiations, Article 288 concerns performance in accordance with good faith, and Article 281 prohibits the abusive exercise of rights. Their application depends on the specific circumstances; they do not automatically mean that you can refuse an expensive refurbishment.

Law 3959/2011 is also relevant, as is Article 101 of the Treaty on the Functioning of the European Union where the conditions for its application are met. Regulation (EU) 2022/720 concerns the exemption of certain vertical agreements from the prohibition in Article 101. It does not determine who pays for a refurbishment or automatically make every related demand lawful. Maintaining a consistent brand image may justify specifications, but the allocation of costs requires careful review of the contract.

4. Agree limits before taking on the obligation

Ask your lawyer for specific wording rather than a general promise of ‘reasonable requirements’. The key negotiating points are:

• Frequency: when a full refurbishment can be required and what exceptions are permitted.
• Notice: how far in advance specifications, a timetable and a cost estimate must be provided.
• Financial limit: a cap on your costs or an agreed procedure for approving overruns.
• Choice of contractor: the ability to obtain comparable quotations based on the same technical specifications.
• Cost sharing: a contribution from the franchisor or phased implementation, if agreed.

Pay particular attention to what happens when there is little time left before the franchise relationship ends. A major investment at that stage needs to be assessed against the time available to benefit from it, not an uncertain future extension. Also record who bears responsibility for delays caused by changes to plans or approvals.

Practical takeaway: before signing, ask for a clear list of works, a substantiated budget and agreed limits on when the obligation can be triggered. If the cost cannot be determined, there should at least be clarity about how it is approved and shared.