Bilingual franchise agreements: which version takes precedence?

When joining an international brand’s franchise network in Hungary, you may receive the agreement in two languages. However, the Hungarian version is not necessarily the one you can rely on in a dispute. Before investing, you should therefore check not only the terms but also how the different language versions relate to each other. An inaccurate translation can create uncertainty over payment obligations, deadlines or important franchisee rights.

1. Distinguish between legal requirements and ethical expectations

Hungary has no standalone, comprehensive franchise act, but that does not mean franchise agreements are unregulated. Act V of 2013 on the Civil Code contains specific provisions on franchise agreements. General contract rules also apply, including provisions on co-operation and the provision of information.

Operating in Hungary does not, in itself, mean that a business-to-business franchise agreement must be drawn up exclusively in Hungarian. Nor should you assume that a Hungarian translation automatically takes precedence. The agreement’s language, its governing law and the forum responsible for resolving disputes are three separate issues: a document written in Hungarian may still specify that foreign law applies.

Under the European Code of Ethics adopted by the Hungarian Franchise Association, franchisors should endeavour to provide agreements relating to the franchise relationship in a language the franchisee declares they understand, or in the official language of the country of operation. The code also sets an ethical requirement to provide signed agreements immediately.

The code of ethics is not legislation. Its significance must be assessed separately, taking account of factors such as association membership and contractual commitments. Do not treat it as an automatic statutory guarantee of a translation; seek an express agreement on the language of the documents.

2. Specify which version takes precedence

For a bilingual agreement, look for a clause stating which version takes precedence if there is a discrepancy. If there is no such clause, ask for a clear rule. Describing both versions as “equally authentic” does not necessarily solve the problem if the document does not explain how inconsistencies will be resolved.

Before signing, clarify at least the following:

• Will both language versions be signed, or only one?
• Is the Hungarian text a contractual document or merely a translation for information purposes?
• Which version takes precedence if there is a discrepancy?
• Who will correct translation errors, and who will pay for this?
• Will you also receive subsequent amendments in both languages?

Pay particular attention to any declaration stating that you have fully understood the foreign-language agreement. Only sign a declaration that accurately reflects your circumstances. If you need an interpreter, a translation or further explanation, raise this in writing before the agreement is finalised.

For example, if the Hungarian version refers to calendar days while the foreign-language version refers to working days, the same performance deadline could fall on different dates. In that situation, verbal reassurance from your contact is not enough: the two texts must be brought into line before signing.

3. Have the translation checked obligation by obligation

Fluent Hungarian wording does not prove that the two versions have the same legal meaning. It is worth having the documents reviewed by a lawyer who understands the prevailing language and is familiar with the particular features of franchise relationships in Hungary. The translator and the lawyer conducting the legal review perform different roles: as well as linguistic accuracy, the legal effect of the provisions needs to be examined.

Ask for a comparative review, particularly of the following:

• mandatory obligations versus obligations merely to make efforts;
• prior consent versus simple notification;
• when time limits begin, how long they run and how they are calculated;
• fees, taxes, currencies and currency conversion rules;
• liability and its limitations;
• delivery of notices and when they take effect.

A discrepancy log is a useful working document. It should record the clause number, both texts, the practical consequence and the agreed correction. This allows specific decisions to be made, rather than a general debate about whether “the translation is good”.

Set aside a separate budget for translation, bilingual legal review and further checks of revised versions. There is no general requirement for every franchise agreement to have a certified translation; whether one is needed depends on its intended use. Certification alone is no substitute for reviewing the legal content.

4. Consider the schedules and day-to-day communications too

Your agreement on language should extend beyond the main contract. Draw up a document register covering schedules, fee tables, mandatory forms and subsequent amendments. For each document, make clear its language, version and which text takes precedence.

The language of formal notices is particularly important in the franchise network’s day-to-day dealings. Clarify which language may be used for a formal demand, a request for approval or a proposed contract amendment. If a foreign-language notice can trigger a deadline, arrange translation and legal support in advance.

When signing, obtain both final language versions and their accompanying schedules, with matching dates and clearly identifiable versions. Keep earlier drafts separate from the signed copies so that you do not later make a decision based on a superseded translation.

Practical takeaway: only sign once you know which language version determines your obligations, understand its contents and have resolved any discrepancies in writing.