Franchising: changes to terms before signing

When you turn an existing business into a franchise network, the initial proposal to a prospective franchisee may change before signing. A different fee, a new requirement to purchase equipment or a smaller operating territory can affect their decision. The aim is not to prohibit changes, but to make them clear and understandable. In a responsible franchise sector, the final agreement should reflect an informed choice, not come as a surprise.

What the Greek framework requires

Greece has no dedicated law that comprehensively regulates franchise agreements. There is no specific mandatory pre-contractual disclosure document, nor a statutory minimum period between disclosure and signing or payment of the initial franchise fee. There is also no dedicated register in which every franchisor or franchise agreement must be recorded.

This does not mean that negotiations are unregulated. Articles 197–198 of the Greek Civil Code govern pre-contractual conduct: they require good faith and observance of accepted commercial practice, and provide for liability, subject to the statutory conditions, for harm caused through fault during negotiations. Concealing a material change may therefore give rise to a legal issue, even without a specific disclosure deadline.

The European Code of Ethics for Franchising provides for full and accurate written disclosure within a reasonable time before the relationship is entered into. This is a self-regulatory framework, not a generally applicable Greek law. Whether it is binding needs to be assessed in light of membership of a relevant association or its incorporation into the contract.

Distinguish a material change from a correction

Do not treat every new version of the proposal as a simple editing exercise. Correcting an address is different from adding a financial obligation. A useful internal test is: could the change affect the prospective franchisee’s decision to join or their preparations? If so, it needs a separate explanation.

Material changes may, for example, concern:

• The initial cost, recurring fees or the basis on which they are calculated.
• Mandatory equipment and purchasing commitments.
• The term of the agreement or personal guarantees.
• The operating territory and sales rights.
• The support included in the proposed franchise relationship.

Consider the cumulative effect too. Three seemingly minor additions may together significantly alter the investment. Your record should also cover changes to schedules or binding specifications, not just the main agreement.

Establish a process for providing updates

Appoint someone to bring together changes from management, legal advisers and the franchise development team. Before a revised proposal is sent, that person should confirm that it is an approved version and that its practical implications have been assessed. This helps avoid giving conflicting assurances to the same prospective franchisee.

For each material change, send a short note covering four points:

1. What the previous proposal provided for.
2. What the new version now provides for.
3. Why the change was made.
4. Which financial or operational implications need to be reassessed.

Provide both the complete revised text and a clear comparison showing the changes. Do not rely solely on a telephone call or an assurance that “it is just a standard addition”. Ask for acknowledgement of receipt, without presenting it as acceptance of the content or a waiver of rights.

Allow time proportionate to the significance of the change and the opportunity for review by independent advisers. There is no single statutory number of days that applies to all Greek franchise agreements. If signing has already been scheduled, a significant change may justify postponing it rather than pressing ahead with the original appointment.

Resolve outstanding issues before entering into the agreement

Before signing, compile a list of material changes, the dates they were sent and the answers to the prospective franchisee’s questions. Confirm which issues remain open. Uncertainty about a cost or the scope of an obligation is not resolved simply because the prospective franchisee has received the file.

If, for example, mandatory equipment is added after the initial costing, explain why it is needed, disclose the cost information available and highlight any uncertainties. Allow the prospective franchisee to reassess their financing before committing.

Disclosure does not automatically make a term lawful. Changes to sales restrictions or exclusivity arrangements require a separate review under Greek and EU competition law, including Regulation (EU) 2022/720 where applicable.

Practical takeaway: before asking for a signature, make sure every material change has been explained in writing, questions have been answered and the prospective franchisee has had a genuine opportunity to reconsider their decision.