Franchising in Greece: agreeing shop refurbishment terms

When you turn an existing business into a franchise network, the appearance of your first shop will not stay the same forever. Equipment wears out, needs change and a new brand identity may require investment. The key question is not just who decides on a refurbishment, but who pays, how much notice they receive and how long they have to adapt. These points need to be agreed before the first franchise agreement is signed.

1. Distinguish maintenance from new investment

A general obligation to ‘maintain a modern appearance’ leaves far too much room for interpretation. Replacing a damaged sign is one thing; replacing all the furniture because the franchisor has redesigned its brand identity is quite another.

Before drafting contractual terms, set out three distinct categories:

• Routine maintenance: repairs and work that keep the shop up to the standards already agreed.
• Necessary compliance work: changes required by applicable safety requirements or other legal obligations.
• Commercial upgrades: a new design, a different layout or equipment required as the business model evolves.

For each category, specify who identifies the need, who approves the work and who bears the cost. Allocating costs between the parties does not remove either party’s legal responsibilities.

Use your own shop to draw up an initial inventory of equipment and work required. Note what can be repaired, what needs replacing and which changes affect operations. This grounds the discussion in specific items rather than aesthetic preferences.

2. Put financial limits in the agreement

The agreement should describe the mechanism for requiring and funding changes. The operations manual can set out technical specifications, but using it as an unchecked means of creating substantial new financial obligations is not sound practice.

Discuss with your legal adviser whether you need:

• a minimum period of written notice for planned work,
• an agreed spending limit or a specific approval procedure if that limit is exceeded,
• rules on how often a full refurbishment can be required,
• different arrangements for recently opened shops,
• specific provisions where little time remains before the franchise relationship ends.

These limits are negotiable, not statutory amounts or deadlines. They should reflect the business model and the shops’ actual capacity to meet the requirements.

The budget should not cover materials alone. Include design and planning costs, transport, installation, removal of existing fittings, any necessary approvals and the impact of temporary closure. Also clarify whether the costs shown include VAT.

If the franchisor contributes financially, record how: through a direct contribution, the supply of equipment or temporary relief from contractual obligations. Do not leave such commitments as verbal assurances.

3. Align changes with the Greek legal framework

Greece has no dedicated law comprehensively governing franchising, nor a specific statutory regime requiring pre-contractual disclosure for franchises. This does not mean that a franchisor can conceal planned investments or impose any change it chooses.

The general rules of the Greek Civil Code apply. Articles 197 and 198 concern good faith in negotiations and pre-contractual liability. Article 288 concerns the performance of obligations in good faith, while Article 281 prohibits the abusive exercise of rights. How these provisions apply to a particular clause requires a case-specific legal assessment.

If you are already planning a rebrand, therefore, inform the prospective franchisee before they commit. Distinguish between decisions already made and options still under consideration, and explain which costs remain uncertain.

The European Code of Ethics for Franchising provides for full and accurate written disclosure of material information within a reasonable time before signing. It is a self-regulatory framework, not a generally applicable Greek law. If the changes involve compulsory purchases from specified suppliers, they also need to be reviewed under competition rules, particularly Greek Law 3959/2011 and, where applicable, Article 101 of the Treaty on the Functioning of the European Union (TFEU).

4. Establish a process before requiring work

For each planned upgrade, send a written proposal setting out the reasons, technical specifications, estimated cost and timetable. Give the franchisee an opportunity to identify constraints relating to the premises, the lease or day-to-day operations.

Where possible, trial the change in a company-owned outlet before requiring it across the network. Assess not just its appearance, but also installation time, usability and maintenance needs. Do not present a cosmetic change as a guaranteed way to increase sales.

Document the final agreement, any approved departures from the specifications and acceptance of the completed work. Urgent safety issues require a separate procedure; urgency should not be used to justify routine commercial changes.

Practical takeaway: before signing the first franchise agreement, agree who can require a refurbishment, at what cost and with how much notice. A consistent brand appearance strengthens the franchise network when it comes with predictable obligations.