Franchising in Greece: insurance cover for franchisees

When you turn an existing business into a franchise network, the insurance policy for your own outlet is not automatically a suitable template for every franchisee. Different premises, equipment and services create different risks. To build a resilient franchise network, you need clear insurance requirements before signing the first agreement: who insures what, on which terms, and what happens when a loss occurs.

1. Map out the risks before requesting quotes

Start with how your business actually operates, rather than a generic list of insurance products. Consider what could cause injury to a customer or employee, or damage to a neighbouring property, which assets are critical, and which events could bring sales to a halt.

A practical risk assessment might cover:

• Damage to premises, equipment and stock.
• Third-party claims arising from the outlet’s operations or products.
• Incidents involving employees, deliveries or work away from the premises.
• Business interruption following insured physical damage.
• Cyber incidents, where operations depend on digital systems.

For each scenario, note who controls the risk and who would bear the financial consequences. The property owner, franchisee and franchisor do not necessarily have the same insurable interest.

Use your existing outlet as a starting point. Review previous losses, near misses and reinstatement costs. Then consider what changes when the same activity is carried out by an independent business with different staff, lease arrangements and premises.

2. Distinguish legal obligations from contractual requirements

Greece has no specific law comprehensively governing franchising, nor a dedicated register for franchise agreements. Relationships between franchisors and franchisees are governed primarily by the general provisions of the Greek Civil Code on contracts and obligations, including good faith. Insurance contracts are governed by Law 2496/1997, alongside any applicable specific provisions.

This does not mean that all insurance cover is optional. Specific obligations may arise from the business activity, its vehicles, its characteristics or other requirements in force. Each business needs an individual review: do not assume that every member of the network has the same obligations.

Set out three categories in writing: cover required by law, cover required under the franchise agreement, and cover recommended as additional protection. Do not present your own commercial requirement as a statutory obligation.

There is also no specific statutory pre-contractual disclosure regime for franchising. In practice, however, insurance requirements and their expected costs should be explained to prospective franchisees early enough for them to assess the full commitment they are taking on.

3. Specify the cover required, not just an amount

A clause requiring only ‘adequate insurance’ leaves considerable room for disagreement. With help from an insurance intermediary and a legal adviser, define the types of cover, required limits, acceptable excesses and supporting documents the franchisee must provide.

Limits should not be copied arbitrarily from another network. They need to be justified by the business activity, the replacement value of equipment and the potential consequences of an incident. The excess also matters: apparently broad cover may still leave the franchisee facing a substantial immediate expense.

Pay particular attention to:

• Whether the declared business activity reflects what actually takes place.
• Whether all relevant premises and off-site work are covered.
• Which exclusions materially restrict the protection provided.
• Which conditions apply to business interruption claims.
• Whether naming the franchisor as a co-insured provides the intended protection.

Do not assume that the franchisee’s insurance automatically covers your own liability. Assess the franchisor’s risks separately. If equivalent cover from different insurers is permitted, set objective criteria for accepting it.

4. Organise renewals and claims handling

Protection does not end with receiving an insurance policy when an outlet opens. Assign responsibility for monitoring cover, maintain a renewal calendar and establish a process for confirming that policies remain in force. A simple certificate does not always reveal important exclusions or amendments.

Require notification when premises, equipment or services change. A new activity may require cover to be adjusted before it begins, rather than after the first incident.

Create a brief procedure for dealing with losses: protect people, limit further damage where it is safe to do so, record the relevant evidence and notify the insurer promptly in accordance with the law and the policy. Informing the franchisor is not a substitute for notifying the insurer.

Practical takeaway: before taking on your first franchisee, prepare a risk matrix, a clear insurance schedule to the franchise agreement and a renewal calendar. Review them with legal and insurance advisers so that contractual requirements translate into genuine protection.