Franchising in Greece: the limits of business independence

When you turn an existing business into a franchise system, you are not simply creating more outlets under your management. You are working with independent business owners who use your business model. For this franchise network to work, you need a clear distinction from the outset: which standards are shared, which decisions belong to the franchisee and when consultation is required.

1. Distinguish collaboration from joint ownership

A franchise agreement connects two legally and financially independent businesses. The franchisor grants the right to use its business system, trade mark and know-how on agreed financial terms. The franchisee runs its own business and takes on the associated obligations and commercial risk.

This collaboration does not automatically create an equity interest, an employment relationship or general authority to act on the other party’s behalf. If the franchisor also holds a stake in the franchisee’s business, this needs to be documented separately in legal terms. Likewise, a shared brand identity does not mean that every franchisee can enter into commitments on behalf of the whole network.

Before seeking franchisees, set out what changes compared with a company-owned branch. In a branch, you can issue internal management instructions. In a franchise relationship, your requirements must be grounded in the agreed relationship and respect its legal limits.

Practical test: for every instruction you currently give your outlet manager, ask yourself whether it protects the shared business model or relates solely to the management of another business.

2. Create a decision-making responsibilities table

Before the agreement is drafted, create a simple table with four columns: decision, responsible party, approval required and response time. This is not a substitute for the agreement, but it helps identify where your plans remain unclear.

Divide decisions into three groups:

• Mandatory shared standards: brand identity, core product or service specifications, hygiene rules and how the trade mark is displayed.
• Franchisee decisions: organising their own business, recruitment, payroll and managing payment obligations, in compliance with the law and lawful contractual commitments.
• Decisions requiring consultation: local commercial partnerships, new uses of the trade mark or departures from established operating standards.

Avoid a blanket requirement for ‘approval for everything’. It creates delays and blurs responsibility. Specify who submits a request, what information is needed and what happens if there is no response. Silence should not be arbitrarily treated as approval.

For example, the franchisor may set competence and training requirements for customer service. This does not automatically make it the employer of the franchisee’s staff. Actual day-to-day operations, not just the wording of documents, need careful planning.

3. Set these boundaries within the Greek legal framework

Greece has no specific law comprehensively regulating franchising as a distinct type of contract. There is no dedicated register of franchisors or mandatory pre-contractual disclosure document prescribed by law. This does not, however, mean there are no rules.

The general provisions of the Greek Civil Code apply. In particular, Articles 197–198 concern good faith in negotiations and pre-contractual liability, while Article 288 concerns the performance of obligations in good faith. Material restrictions on a franchisee’s autonomy should therefore be clearly explained before the agreement is concluded, rather than introduced unexpectedly after they join the network.

Competition rules also apply, notably Greek Law 3959/2011 and, where applicable, Article 101 of the Treaty on the Functioning of the European Union. Regulation (EU) 2022/720 provides an exemption for certain vertical agreements subject to conditions; it does not make every restriction lawful simply because it appears in a franchise agreement.

Codes of ethics provide a framework for self-regulation, rather than specific legislation enacted by the state. Ask a lawyer to review both your proposed powers and how you intend to exercise them.

4. Make independence visible in day-to-day operations

This clear separation must also be reflected in business dealings. Customers, employees and suppliers need to know which business they are dealing with wherever this is required. Using a shared trade mark does not replace the legally required details of the operating entity on transaction documents, contracts and mandatory notices.

Also specify who may sign orders, agree local expenditure or handle customer claims. If the central team communicates directly with the franchisee’s staff, distinguish instructions on implementing standards from decisions made in the capacity of an employer. Designate a specific contact on each side and document exceptions rather than relying on informal arrangements.

Practical takeaway: before offering your first franchise, check that responsibility for every significant decision is clearly assigned. A healthy franchise network needs shared standards without undermining its members’ business independence.