Opening a franchise: who is responsible for delays?

When buying a franchise, it is easy to plan all your spending around the intended opening date. Yet wages, stock orders and subscriptions still cost money even if the business cannot welcome customers. Before joining a franchise network, it is therefore worth negotiating a separate opening schedule: who will deliver what, what conditions must be met before trading can begin, and who will bear the consequences of any delay?

1. Turn the promise of an opening into a verifiable commitment

“Comprehensive support until opening” sounds reassuring, but it does not tell you what outcome you can expect from the franchisor. Providing advice is one obligation; handing over a system needed for opening in working order is another. The agreement should make that distinction clear.

Ask for a separate schedule to the agreement setting out, for each task:

• the precise deliverable and who is responsible for it;
• the document to be supplied or the verifiable outcome;
• the deadline and any steps that must be completed beforehand;
• the acceptance procedure and the time allowed for checks;
• the process for reporting and rectifying defects.

For example, instead of simply promising “opening support”, the agreement could specify when the franchisor will appoint an on-site support person, which days they will attend and what tasks they will carry out. These are commitments to negotiate, not services automatically available to every franchisee.

The schedule should also include your own tasks. If the franchisor can only set up user access once it has received your staff list, the deadline for that list matters just as much. This will make it possible to identify not only that the opening was delayed, but also the stage at which preparations stalled.

2. Distinguish brand approval from legal permission to operate

The franchisor’s approval to open generally confirms that the outlet meets the network’s standards. It does not replace the regulatory licences, notifications or other requirements needed to carry on the activity. The reverse is also true: being legally entitled to operate does not prove that every contractual brand requirement has been met.

Hungary has no standalone, comprehensive franchise act, but that does not mean franchise agreements are unregulated. Act V of 2013, the Hungarian Civil Code, expressly recognises franchise agreements as a named contract type. The Civil Code’s general rules on contracts, co-operation, information duties and breach of contract are also important. Further requirements may apply depending on the business activity.

There is no general requirement under specific franchise legislation for a mandatory pre-contractual disclosure document or a statutory fourteen-day waiting period. The Hungarian Franchise Association’s recommendation to allow fourteen days to review the agreement is an industry guideline, not a statutory deadline of this kind. It is worth using that time to review the opening schedule as well.

Ask for brand approval to be tied to an objective checklist. Make clear which departures from the standards will prevent opening and which can be rectified later. Agree a deadline for the franchisor’s response too; however, do not automatically treat silence as approval, particularly on safety matters.

3. Allocate the financial consequences of delays in advance

Prepare a separate list of potential delay costs. These might include wages for staff employed before opening, losses on perishable stock, a rescheduled marketing campaign and charges for services that have already started. These costs will not necessarily be recoverable automatically, even if the delay originates on the franchisor’s side.

Under the Civil Code’s rules on damages for breach of contract, matters to be examined include the breach, the loss and the causal link between them. Rules on exemption from liability and foreseeability may also be relevant. It is therefore particularly useful to notify the franchisor in writing, in advance, of the expenditure you are committing to in reliance on the agreed schedule.

The agreement should distinguish at least three situations: delay by the franchisor, delay by you and external obstacles. A supplier’s mistake or a prolonged regulatory process does not, by itself, automatically determine which party bears the consequences.

Check the start date for recurring fees particularly carefully. Signing the agreement, receiving access to systems, obtaining approval to open and actually opening may all happen on different dates. You can negotiate for certain fees to start only once operational readiness has been verified, or to be suspended during a delay attributable to the franchisor.

It is also worth setting a final deadline for completion. This should be linked to a notification procedure, an additional period for performance and clear arrangements for settling payments and assets if preparations fail to lead to an opening. Do not leave unresolved what happens to sums already paid and assets that can still be used.

4. Complete the preparations with a documented handover

Keep a written record of the pre-opening inspection. Distinguish between completed tasks, outstanding issues that prevent opening and departures from the standards that can be rectified later. Assign a responsible person and a deadline to every outstanding item.

Do not sign an unqualified statement confirming full performance if significant issues remain unresolved. Equally, documenting the handover does not mean you waive every claim or defect that may come to light later; have a lawyer review any clauses to that effect.

Keep approvals, defect reports and revised schedules. After a verbal agreement, send a brief written summary and ask for confirmation.

Practical takeaway: always pair the opening date with a named responsible party, measurable completion criteria and arrangements for settling delay costs. That way, you will know not only when your business can open, but also what to expect if the plan goes off course.