Franchising in Greece: keeping supplies flowing

A business can run efficiently while its owner personally resolves every supply problem. But when independently operated outlets open under the same brand, that reliance becomes a weakness. A resilient franchise network needs clear arrangements: who supplies what, who checks quality and what happens when a delivery fails to arrive. This planning should come before commitments are made to the first franchisees.

1. Map the supplies that keep each outlet running

Start with the existing business’s actual purchases, rather than a generic supplier list. Record products, raw materials, consumables and equipment spare parts. For each item, note the lead time, minimum order quantity, shelf life and storage requirements.

Then divide them into three practical categories:

• Operationally critical: without these, the outlet must stop operating or substantially reduce its services.
• Brand-critical: replacing these could change the experience the brand promises.
• Readily replaceable: these can be purchased from different sources, provided they meet defined specifications.

A common mistake is to treat everything as exclusive and irreplaceable. This increases dependence without necessarily protecting quality. Wherever possible, describe the required outcome in measurable terms, rather than simply naming a supplier.

For each critical item, also specify who monitors availability. Responsibility should not be left vaguely with “head office” or “the outlet”.

2. Check whether the supplier can support growth

Serving one outlet well does not demonstrate the ability to serve a network. Ask for specific answers on geographical coverage, capacity, peak periods and handling urgent orders. Pay particular attention to deliveries to islands or remote areas if these feature in your expansion plans.

Agree operational terms in writing: order deadlines, expected lead times, procedures for reporting shortages, arrangements for accepting returns of defective items and a designated contact. Clarify whether the franchisor buys and resells supplies or each franchisee contracts directly with the supplier. This choice affects invoicing, credit, stockholding and liability towards the buyer.

Run a stress test on paper: what changes when several outlets open at once, or when the main supplier is delayed? Calculate the impact on working capital, not just the purchase price. Large minimum orders can create excess stock, tie up cash and lead to losses when products expire.

Do not present an unconfirmed trade discount or delivery capability as guaranteed. Record current terms separately from those that depend on future purchasing volumes.

3. Align supply obligations with Greek law

Greece has no specific law providing a comprehensive framework for franchising, nor a dedicated statutory regime requiring pre-contractual disclosure for franchises. This does not mean there are no obligations. The general rules of the Greek Civil Code apply, particularly Articles 197–198 on pre-contractual liability and Article 288 on performance in accordance with good faith.

Material dependencies on suppliers, mandatory purchases and known availability constraints should therefore be addressed transparently during negotiations. The European Code of Ethics for Franchising is a self-regulatory framework, not a Greek law of general application. Membership rules for an association are not equivalent to a state licence to operate a franchise network.

Exclusive purchasing clauses also require a competition law assessment under Greek Law 3959/2011 and, where applicable, Article 101 of the Treaty on the Functioning of the European Union (TFEU). Regulation (EU) 2022/720 provides an exemption framework for certain vertical agreements, subject to conditions; it does not automatically make every purchasing restriction lawful.

Before requiring purchases from a specified source, seek a legal review of the restriction’s necessity, duration and scope. The agreement should also explain who approves alternatives and which obligations each party assumes if supply arrangements fail.

4. Establish an alternative sourcing procedure

An alternative should be assessed before a shortage arises. For every critical item, identify a second source or an approved substitute wherever technically and legally feasible. Check samples, compatibility, safety specifications and any traceability requirements.

Set out a short procedure for activating the alternative:

1. The outlet reports the shortage and its remaining stock.
2. The person responsible for procurement confirms when supply is expected to resume.
3. A temporary alternative is approved in writing, for a clearly defined period.
4. Costs, quality deviations and affected outlets are recorded.
5. Once supply is restored, assess whether a permanent change is needed.

Avoid both uncontrolled local substitutions and an approval process that leaves the outlet unable to operate. Appoint a deputy and establish an emergency contact method. Every change must remain consistent with the agreement and applicable safety requirements.

Practical takeaway: before committing to a new outlet, make sure every critical supply has a named person responsible, confirmed terms and a realistic replacement plan. This protects day-to-day operations and trust across the franchise network.