Franchising in Greece: credible profitability forecasts

When turning an existing business into a franchise opportunity, the question ‘How much will I earn?’ is inevitable. The right answer is not an impressive figure, but a well-supported financial model. In franchising, trust is built when prospective franchisees can distinguish actual results from estimates and understand the circumstances in which their investment returns could change.

1. Start with comparable actual figures

Before preparing any presentation, gather the existing business’s results for complete trading periods. Reconcile the figures with your accountant and define consistently what each category includes. Turnover, gross profit, operating profit and available cash are not the same thing.

Do not present the best month as representative of a full year. Record seasonality, one-off events, temporary rent reductions and any other circumstances that affected results. If you use figures from several outlets, explain which are included and how they were selected, rather than highlighting only the strongest performers.

Next, adjust the figures to reflect how an independent franchisee would operate:

• Allow a reasonable cost for work that the founder currently performs without separate remuneration.
• If the premises are owned by the business, consider the rent an equivalent unit would incur.
• Add the contractual franchise fees and mandatory services.
• Distinguish genuine economies of scale from benefits that the new outlet will not have.

Keep a brief explanation and source for each adjustment. This ensures the model remains verifiable when prices or operating conditions change.

2. Turn assumptions into a verifiable model

A sales forecast needs a clear calculation method. Rather than setting an unexplained annual target, link turnover to variables such as daily transactions, average transaction value and trading days. Check whether staffing and equipment can actually meet the projected demand.

Divide the inputs into three groups: historical data, third-party quotations and estimates. Equipment costs may come from a supplier’s quotation, whereas footfall in a new area remains an estimate. This distinction should be visible to prospective franchisees, not just recorded in your internal files.

Present base-case, downside and upside scenarios without assigning arbitrary probabilities of success. Vary material factors: lower sales, higher staffing costs, increased purchasing costs or a delayed opening. Do not assume that every additional sale becomes profit without extra work or expense.

Calculate cash requirements separately. An outlet may show an accounting profit yet need additional cash for stock, tax liabilities or loan repayments. State whether the figures include VAT, taxes, depreciation, owner remuneration and financing costs. If you quote an investment payback period, explain exactly which cash outflows and inflows you use.

3. Respect Greece’s pre-contractual framework

Greece has no specific, comprehensive franchise law or mandatory, standardised pre-contractual disclosure document equivalent to those used in some other countries. Nor is registration on a dedicated state register of franchisors a prerequisite for offering a franchise opportunity. General corporate disclosure obligations under Greece’s General Commercial Registry (GEMI) are a separate matter.

This does not mean that financial claims are unregulated. Articles 197 and 198 of the Greek Civil Code establish duties of good faith during negotiations and liability for harm caused through fault. Depending on the circumstances, inaccurate assurances or the concealment of material information may also raise issues of mistake, fraud or claims for damages. The agreement is governed by general civil and commercial law, while Greek and EU competition rules also apply.

The European Code of Ethics for Franchising is a self-regulatory framework, not a Greek law of general application. It provides for full and accurate written disclosure within a reasonable time before a prospective franchisee commits. It should not be presented as imposing a specific statutory waiting period.

Have the financial presentation legally reviewed alongside the relevant contractual wording. The statement ‘results are not guaranteed’ does not remedy misleading calculations or unsupported promises.

4. Control what is said and what is provided

Establish a single approved version of the financial model, with a date, a named person responsible for its preparation and a change log. Everyone speaking to prospective franchisees should use the same assumptions. Do not allow verbal assurances of ‘guaranteed income’ that contradict the qualifications in the documents.

Provide prospective franchisees with the model’s definitions, key sources and limitations. Allow meaningful time for independent accounting and legal review. Record questions and respond in writing whenever an answer changes the financial picture. If a material change arises before signing, update the presentation.

Practical takeaway: before presenting any forecast, make sure every critical figure has a source, every assumption is visible and every promise can be substantiated. The aim is not to predict profit with certainty, but to help prospective franchisees assess the risk responsibly.