Franchising: bringing an existing shop into your network

Growing a business through franchising does not always mean opening new shops. An independent operator can convert their existing outlet into a shop within your network. But alongside the premises, equipment and customer base come contracts, stock and outstanding obligations. Responsible franchising calls for a structured transition, not just a change of sign.

1. Establish exactly what is joining the network

Before setting out a conversion timetable, clarify the structure of the arrangement: will the same operator continue running the same business, or will the business activity be transferred to another entity? Joining a network is not the same as a business acquisition. This distinction affects the review of contracts, employees, assets and liabilities.

Ask for an inventory covering:

• equipment, specifying whether it is owned, leased or supplied on loan by a supplier,
• goods, raw materials and packaging still available for use,
• current supply, software and service contracts,
• prepaid orders, gift cards and outstanding customer claims,
• digital accounts, websites and telephone numbers used by the shop.

For each item, decide whether it will be retained, replaced or require further checks. Also record who is entitled to use it. A machine on the premises does not necessarily belong to the operator, while an ordering account may be subject to terms that prohibit a change of user without consent.

2. Check existing commitments before requiring new ones

Your operating model may require specific products, systems and suppliers. However, the prospective franchisee may already be bound by exclusive supply agreements, minimum purchase commitments or fixed-term contracts. Signing a franchise agreement does not automatically bring those commitments to an end.

Create a table with four fields: existing obligation, expiry date, conditions for release and person responsible. A legal review should take place before any promise that the shop will be operating under the new system by a particular date.

If a third party's consent is required, treat it as a genuine outstanding issue. Do not assume it will be granted simply because the prospective franchisee has a good personal relationship with their supplier or landlord.

Also distinguish the costs of joining the network from the costs of exiting existing arrangements. Replacing a sign is a different expense from terminating a service contract early. The prospective franchisee needs to know which costs they will bear and which remain uncertain until the review is complete. Where there is material uncertainty, specify what will happen if the transition is delayed or proves impossible.

3. Set out the transition in the agreement

Greece has no dedicated law comprehensively governing franchising as a distinct type of contract. There is no special register of franchisors or requirement to register the agreement in a franchise register. Registration with the General Commercial Registry (GEMI) relates to the business and does not constitute approval of the franchise system.

Nor is there a specific statutory pre-contractual disclosure regime requiring a standardised document or a minimum waiting period. However, the general rules of the Greek Civil Code apply, particularly good faith in negotiations and pre-contractual liability under Articles 197–198. Competition rules, including Law 3959/2011 and, where applicable, Article 101 of the Treaty on the Functioning of the European Union (TFEU), also apply to franchise agreements.

Draw up a transition schedule to the agreement for this particular conversion. Set out the conditions for starting operations, the work required, any acceptable temporary departures from network standards and who will bear each cost. These departures need clear end dates: otherwise, temporary use of old equipment can turn into an ongoing dispute.

The employment, tax and licensing implications depend on the actual structure of the conversion. Review these separately with the appropriate advisers, without assuming that a new brand identity wipes out previous obligations.

4. Set the changeover date around outstanding issues

The date for joining the network should be tied to verifiable milestones. Record when orders under the old arrangements will stop, how remaining stock will be handled and when the new operating system will apply in full. Avoid using the old and new branding simultaneously without clear rules.

Customers who have already paid require particular attention. Agree who will fulfil their orders, who will handle returns and how they will be informed of any changes. The internal allocation of responsibilities must not be presented as automatically extinguishing customers' rights.

Before the transition, jointly review outstanding issues and draw up a written record of what has been completed and what remains open. Once operations have begun, specifically revisit the temporary exceptions so that they are not overlooked in day-to-day business.

Practical takeaway: Bring the shop into the network only when you know what is staying, what is changing and who is responsible for each outstanding issue. A successful conversion starts with an inventory and an agreement, not a new sign.