Franchising in Greece: Business Activity Codes for New Franchisors

Your business is already operating, and you are planning to expand through franchising. Before you invoice your first franchisee, there is a specific check to make: do your registered activities cover what you will provide as a franchisor? Running an outlet is not the same as granting rights, supporting independent businesses or selling goods to them. Checking your Greek Business Activity Codes, known as KAD, starts with the substance of the proposed relationship.

1. Identify what will change in your existing business

Do not start by simply asking for ‘the franchising activity code’. First, describe exactly what your business will do for franchisees. The commercial label given to the relationship is not enough to identify every activity that may need to be registered.

Prepare a short table with four columns: what is provided, the recipient, how payment is calculated and who is responsible for delivery. For example, consider whether you will provide:

• The right to use a trade mark and an established business system.
• Initial training or ongoing operational support.
• Goods, raw materials or equipment to franchisees.
• Separately charged promotional services or other services.

This list does not mean that every item necessarily requires a different KAD or a separate invoice. It gives your accountant the information needed to assess the actual activity, rather than relying solely on how a charge is described in the agreement.

Also distinguish between what you provide and what third parties provide. If a supplier invoices the franchisee directly, that does not automatically count as a sale by your business. If you buy and resell the goods yourself, the position is different.

2. Check whether you need to amend your registered activities, not register a new business

For a business that is already operating, the question is usually whether its registered details need to be amended. The digital service for registering a sole trader business is not a procedure for adding an activity to an existing sole trader business: one of its conditions is that no such business already exists.

Greece’s Independent Authority for Public Revenue (AADE) provides for declarations of commencement, changes and cessation of business through Form D211. The appropriate submission procedure must be confirmed according to the business’s legal form, the type of change and the digital services available at the time. Do not assume that guidance on setting up a new business applies unchanged to your circumstances.

Give your accountant your current tax registration details, the table of proposed supplies and services, and the draft agreement. Ask for a written explanation of:

• Which supplies and services are already covered by your registered activities.
• What additions or other changes may be needed.
• Whether the distinction between your primary and secondary activities remains appropriate.
• When the necessary steps must be completed before the new transactions begin.

For a company, also check whether its corporate objects cover the planned activities and whether a formal corporate action or filing with Greece’s General Commercial Registry (GEMI) is required. Registering an activity for tax purposes and defining a company’s objects are separate matters.

3. Do not treat a KAD as a licence to franchise

Greece has no dedicated law comprehensively governing franchise agreements, nor a mandatory pre-contractual disclosure law specifically for franchising. This does not mean that the relationship falls outside the legal framework.

The general rules of the Greek Civil Code on contracts and good faith apply. During negotiations, Articles 197 and 198 of the Civil Code are particularly important for the parties’ conduct and pre-contractual liability. Competition rules also apply, notably Law 3959/2011 and, where its conditions for application are met, Article 101 of the Treaty on the Functioning of the European Union (TFEU).

The European Code of Ethics for Franchising is a self-regulatory framework, not Greek law. It provides for full and accurate written disclosure of material information about the relationship within a reasonable period before signing.

Registering a KAD therefore does not amount to state approval of the business system, a review of the agreement or proof of rights to the trade mark. Nor does registration with GEMI certify the suitability of a franchise proposition. Tax, corporate and contractual obligations each require a separate review.

4. Link the review to your first transactions

Before you start collecting fees, work through a hypothetical example of your first franchise relationship with an accountant and a legal adviser. What does the agreement provide for? What is actually being supplied? Who issues the invoice, and how is the supply described? Are goods being sold alongside the granting of rights?

Do not assume that all receipts receive the same tax treatment simply because they arise from the same agreement. Ask for a specific assessment rather than copying another network’s invoicing arrangements.

Keep a small completion file containing your confirmed tax registration details, any corporate changes and agreed invoicing instructions. Review it whenever you add a new supply or service, not just when you take on a different franchisee.

Practical takeaway: first describe what you will provide as a franchisor, then confirm how it needs to be registered. The correct KAD reflects the actual business activity; it does not replace the legal and tax planning that activity requires.