Franchising: what membership of a trade association means

When turning an existing business into a franchise network, joining a trade association can strengthen your links with the franchise community and your commitment to ethical standards. It does not, however, constitute government authorisation to develop a network or guarantee a prospective franchisee’s investment. Presenting membership properly requires documentary evidence, precise wording and a clear distinction between legal obligations and voluntary commitments.

1. Distinguish membership from government approval

Greece has no specific law regulating franchising comprehensively as a distinct type of contract. There is no dedicated government register of franchisors or requirement to register franchise agreements in a franchise register. A company’s registration with the General Commercial Registry relates to its general corporate obligations, not to an assessment of its business model.

Similarly, membership of a private trade association is governed by that association’s own admission rules. It does not replace the tax, corporate or licensing requirements applicable to the activity concerned. Registering a trade mark does not constitute approval of a franchise system either.

The contractual relationship is subject to the general provisions of the Greek Civil Code, while competition and trade mark protection rules also apply. During negotiations in particular, Articles 197–198 of the Civil Code require conduct consistent with good faith and accepted commercial practice, and provide for liability where the relevant legal conditions are met. The absence of a specific franchise law therefore does not give businesses free rein to create misleading impressions.

2. Check exactly what membership status you have obtained

Before announcing your membership, read the acceptance decision and the association’s current rules. Submitting an application is not the same as being accepted. Different membership categories may also reflect different stages of development or eligibility requirements.

For example, the published admission procedure of the Franchise Association of Greece distinguishes between associate and full members. It includes criteria relating to an information pack, financial information, the operation of outlets, acceptance of a code of ethics and trade mark details. These are criteria set by that particular association, not general government requirements for every Greek franchise network. Before relying on them, confirm the current procedure directly with the association.

Put together a small file containing:

• the name of the company accepted and its membership category,
• the acceptance date and any conditions for retaining membership,
• the articles of association or rules you have accepted,
• permission to use the association’s logo and any restrictions on its use,
• details of the person within your business responsible for overseeing membership.

Also check whether membership applies to a particular company or trading name. Do not automatically extend it to other companies or different business models belonging to the same owner.

3. Describe ethical standards without presenting them as law

Greece has no specific statutory pre-contractual disclosure regime for franchising, no mandatory standard disclosure document and no prescribed statutory minimum period for providing it. General obligations to act in good faith before entering into a contract nevertheless remain in place.

The European Code of Ethics for Franchising provides for full and accurate written disclosure of material information about the relationship within a reasonable time before signing. This is a self-regulatory framework, not Greek law. Its application to a particular business must be assessed by reference to, among other things, commitments the business has made through association membership or by contract.

If you state that you follow a code, explain which one and how. For example, specify who checks the accuracy of the information provided, who answers prospective franchisees’ questions and how you document that they have had meaningful time to assess the opportunity. A general statement about ethical conduct is no substitute for these practices.

4. Review every public reference to membership

Use precise wording, such as ‘the company is a member of [association name]’, provided you can substantiate it. Avoid descriptions such as ‘government-approved network’, ‘guaranteed investment’ or ‘certified profitability’ when association membership is your only supporting evidence.

Before publishing an announcement, review your website, presentations, advertisements and email signatures. Give everyone involved in recruiting prospective franchisees a consistent, substantiated description to use. If your membership status changes or ends, update the relevant references promptly and remove any logos you are no longer entitled to use.

Practical takeaway: present membership as a specific relationship with an organisation within the franchise community. Document your status, fulfil the commitments it entails and do not attribute approvals or guarantees to it that it does not provide.