Franchising in Greece: check grant eligibility before signing

When you turn your existing business into a franchise network, a potential grant can help a new franchisee fund their investment. It is not, however, a guaranteed source of finance. Some schemes explicitly exclude franchise businesses, while others require a different eligibility assessment. For a responsible franchise sector, the rule is simple: first examine the specific call for applications, then discuss how the opening will be funded.

1. Check the call for applications, not the scheme’s title

References to ‘new businesses’ or ‘business start-ups’ do not mean that every new franchisee qualifies. One example is the specific call under the Region of Western Greece’s ‘Business Start-up’ scheme: its published frequently asked questions state that beneficiaries must not belong to a franchise network.

This example does not establish a blanket exclusion of franchises from grant funding. It shows why each scheme needs to be checked separately, using the current call for applications, its annexes, amendments and official clarifications.

Before presenting a funding opportunity to a prospective franchisee, ask the adviser handling the matter to record:

• Whether franchise businesses are allowed to participate.
• Who will submit the application and in what business capacity.
• Which conditions apply to the business start date, registered office and business activity.
• Whether there are restrictions on taking over another business’s activities.
• When expenditure may begin and which obligations continue after completion.

Keep the exact wording of every critical condition and the date of the check. A verbal assessment is no substitute for the terms of the call.

2. Separate eligibility from commercial promises

Greece has neither a single, dedicated franchising law nor a specific mandatory pre-contractual disclosure procedure with a standardised disclosure document and a fixed deadline. This does not mean that pre-contractual assurances have no consequences. Among other provisions, the general rules of the Greek Civil Code on good faith in negotiations and pre-contractual liability apply, particularly Articles 197–198, alongside the rules governing contracts and the performance of obligations.

Greek and EU competition law also apply to franchise relationships, as appropriate. Grant eligibility, however, is determined by the specific regulatory framework and terms of each scheme, not simply by whether the franchise agreement is lawful.

In presentations to prospective franchisees, avoid statements such as ‘the outlet is grant-funded’ when there is merely an opportunity to apply. Clearly distinguish between the initial assessment, application, approval and payment of the grant. These are separate stages, with different requirements.

The same care is needed if your own business has received funding. Before changing how a grant-funded outlet is operated or making equipment available to a franchisee, check the continuing obligations attached to the funding award. Do not assume that expanding the network automatically permits every change.

3. Assess each cost separately in a table

Even if a prospective franchisee is eligible, it does not follow that their entire investment qualifies for funding. The initial franchise fee, ongoing fees, equipment, software and fit-out works must each be assessed separately.

Create a table listing the description of each cost, the supplier, the party contractually responsible for payment, the expected order date, the supporting documents required and the status of the eligibility check. Where there is no clear answer, mark the item ‘awaiting clarification’ rather than simply including it in the expected grant amount.

Also consider who will own the equipment. If the call requires grant-funded fixed assets to belong to the beneficiary, any different contractual arrangement needs specific scrutiny. The commercial agreement and the funding application must describe the same underlying transaction.

Do not simply rename a fee to make it appear to be an eligible service. The description must reflect the actual work and deliverables.

4. Agree what happens if the funding does not materialise

Before taking a deposit or requesting a binding order, agree in writing whether the franchise arrangement is conditional on funding approval. With legal advice, clarify who will handle the application, which costs each party will bear and what happens if the application is rejected, payment is delayed or the grant is smaller than expected.

Also specify whether there will be a deposit refund, an extension of deadlines or a right to withdraw. Do not leave these issues unresolved until work has begun or materials have been ordered.

Practical takeaway: before linking a new franchise arrangement to a grant, complete three checks: business eligibility, expenditure eligibility and a written allocation of the risk that funding will not be secured.