Franchising in Greece: checking premises before signing a lease

When turning your existing business into a franchise network, you cannot choose premises solely on the basis of footfall or the appearance of the shopfront. A commercially attractive property may require disproportionately expensive work or may not be permitted to accommodate your particular activity. You therefore need a clear approval process before the franchisee signs a lease, makes non-refundable payments or orders equipment.

1. Turn your business needs into premises specifications

Start with what your day-to-day operations actually require. Do not simply copy the floor area of your existing outlet: it may work because of particular circumstances that cannot be replicated elsewhere, such as an additional storage area or the owner's constant presence.

Set out the minimum requirements for customer service areas, storage, deliveries, staff access, electrical capacity, water supply and ventilation, where needed. Separate non-negotiable requirements from desirable features. Permission to use the property for the intended purpose is essential; a larger shopfront may simply be an advantage.

The assessment form for each prospective property should include:

• its address, floor plan and the space actually available,
• the asking rent and other charges,
• the building and installation work required, with an initial cost estimate,
• restrictions on access, loading and unloading, and signage,
• outstanding documents and the person responsible for each check.

This allows the development team to compare properties against the same criteria, rather than approving premises because they ‘look suitable’. Also specify who can approve exceptions and what supporting evidence is required.

2. Distinguish commercial approval from permission to operate legally

Greece has no dedicated law providing a comprehensive framework for franchising, nor a specific statutory regime requiring pre-contractual franchise disclosure. The general rules of the Greek Civil Code on contracts and good faith apply, among other provisions. Articles 197–198 of the Civil Code concern conduct and liability during negotiations. You should therefore not present unchecked premises as definitely suitable.

The franchisor's approval does not replace technical checks or administrative procedures. Incorporating a company and registering it with the General Commercial Registry (GEMI) do not, in themselves, establish that a particular outlet may operate from a particular property.

Law 4442/2016, as amended, provides for notification or approval procedures for economic activities within its scope. The applicable procedure depends on the activity. Where notification is required, it does not remove the obligation to meet the substantive conditions for operating the business.

Appoint an appropriately qualified engineer to examine the property's lawful use, planning and building compliance, and the requirements associated with the proposed works. Depending on the circumstances, check fire safety, accessibility, public health requirements and any co-ownership regulations governing the building. A lawyer should examine the landlord's right to let the property and any contractual restrictions. Ask for written findings, not verbal assurances from estate agents or owners.

3. Link the lease to the true cost of setting up

Low rent does not mean a low initial investment. Premises may need an electrical upgrade, new service installations or extensive alterations. Obtain comparable quotations based on a common specification of works, and record what each quotation excludes.

Include the tenancy deposit, professional fees, administrative costs and rent payable before opening in the budget. Assess the cash-flow impact of VAT separately, where applicable, and retain a contingency for unforeseen works without presenting it as a confirmed cost.

Before signing, your lawyer should ensure that the lease and franchise agreement are aligned. In particular, check:

• whether the agreed business activity and necessary works are permitted,
• who is responsible for each alteration and who retains the equipment,
• when rent payments begin,
• what happens if the premises prove unsuitable,
• whether the duration and timing commitments under the two agreements are compatible.

Where possible, negotiate appropriate contractual conditions before commitments become binding. These need to be tailored to the circumstances and accepted by the landlord; they do not arise automatically from the franchise relationship.

4. Require a written decision before any expenditure

Use a staged process: initial commercial assessment, technical and legal checks, budget confirmation and final approval. At each stage, specify who makes the decision and which costs may be incurred. A favourable preliminary assessment must not be treated as permission to sign a lease.

The final decision should be dated, relate to a specific floor plan, record any conditions and identify the documents reviewed. If the intended use, layout or cost changes materially, repeat the relevant checks.

Also explain that commercial approval is not a guarantee of turnover or profitability. The franchisee must assess the investment independently, although this does not relieve the franchisor of responsibility for its own statements.

Practical takeaway: before committing to a property, bring together the specifications, written assessments and a complete budget. A franchise network grows more securely when premises approval is an evidence-based decision, not an enthusiastic promise.