Franchise agreements: accepting standard terms and conditions

When you build a franchise network from an existing business, it makes sense to use the same template agreement for every partner. But accepting pre-drafted terms is not simply a matter of signing. Some clauses require specific notice and express acceptance. Before bringing your first franchisee on board, you therefore need to plan how the provisions in your template will actually become part of the agreement.

1. Recognise what counts as a standard contract term

Under Hungary’s Act V of 2013 on the Civil Code, a provision may qualify as a standard contract term if the party using it has drafted it unilaterally in advance for use in multiple contracts, without the other party’s involvement, and the parties have not individually negotiated it. The document’s title is not decisive: standard terms can also appear in the main text of a franchise agreement.

For example, if you ask a lawyer to prepare a template in which only the franchisee’s name, the premises’ address and the fee change, the remaining provisions may still be standard contract terms. Nor does every clause become individually negotiated simply because the prospective franchisee was able to ask questions about the agreement or secured a reduction in one fee.

Hungary has no separate, comprehensive franchise act, but franchising is not unregulated: Sections 6:376–6:381 of the Civil Code expressly provide for franchise agreements. The general rules on contracts, including those governing standard contract terms, also apply. Competition law and intellectual property requirements must be met too.

Your first task is to mark which clauses in your template you use unchanged and which are genuinely negotiated individually. Document those negotiations by retaining revisions and correspondence. The burden of proving that a term was individually negotiated rests with the party using it.

2. Provide a genuine opportunity to review the terms

Under Section 6:78 of the Hungarian Civil Code, a standard contract term becomes part of the contract if the party using it has enabled the other party to familiarise themselves with its content before entering into the contract, and the other party has accepted it. Simply referring to an annex that the franchisee can access only after signing is therefore not enough.

Put together a clearly identifiable set of contract documents. It should contain the main agreement and every annex that imposes obligations, such as the fee schedule, the list of mandatory services and the operating requirements referred to in the contract. Give each document a date or version number.

The confidential nature of your know-how is no justification for asking a franchisee to accept obligations they have not seen. Access can be provided subject to appropriate confidentiality arrangements. If you do not supply the full manual in advance, it is particularly important to clarify with a lawyer which requirements constitute contractual obligations and how the prospective franchisee can review them.

Use a document delivery process that leaves an audit trail:

• send a document list identifying the exact versions;
• provide copies that can be downloaded or retained long-term;
• record when the documents were sent and received;
• resend the relevant document after any substantive amendment;
• keep acknowledgement of receipt separate from acceptance of the terms.

The Hungarian Franchise Association’s guidelines recommend allowing at least 14 days to review the agreement in advance. This is a recommendation, not a general statutory deadline for franchising in Hungary. Allowing that time does not, in itself, replace proper disclosure and acceptance.

3. Highlight clauses requiring separate acceptance

Specific notice must be given of any standard contract term that differs substantially from statutory provisions or usual contractual practice. The Hungarian Civil Code provides exceptions, for example where the term is consistent with an established practice between the parties. A new clause that differs substantially from a previously used term also requires specific attention.

Such a term becomes part of the contract only through express acceptance following that specific notice. A blanket statement that the franchisee has ‘read everything’ is not a reliable substitute for this process.

Ask a lawyer to examine, in particular, clauses covering matters such as:

• the right to change fees unilaterally;
• limitations of liability;
• unusually extensive inspection rights;
• substantial contractual penalties or exceptional payment obligations;
• restrictions affecting the franchisee’s ability to enforce their rights.

These clauses do not all automatically require separate acceptance, nor are they necessarily invalid. They must be assessed in light of their precise wording, the applicable law and the relationship between the parties.

Prepare a short notice drawing attention to the relevant clauses, with exact clause numbers and plain-language explanations. For example, rather than simply writing ‘fee changes’, explain what event may trigger a change in the payment obligation and what procedure applies. A separate declaration can also help provide evidence of express acceptance. Remember, however, that acceptance does not make an unlawful provision valid.

4. Test the signing process from start to finish

Run an internal trial before bringing your first franchisee on board. Give a colleague the same documents, in the same order, that a prospective franchisee will receive. Ask them to locate the payment obligations, the terms that depart from the usual rules or practice, and the declarations of acceptance. If they struggle, simplify the process.

After signing, retain the document pack supplied, the answers to questions, the amendments, the specific notices and the evidence of acceptance. Do not keep only the final contract: you should also be able to reconstruct what information was available to the franchisee before they made their decision.

Practical takeaway: alongside your template agreement, prepare a document list, a delivery log and a separate notice highlighting terms requiring particular attention. In a well-run franchise network, cooperation rests not on the small print, but on commitments that are clearly understood and accepted.