Buying a Franchise in Ireland: Checking Performance Targets

A franchise can suit your skills and budget yet still impose performance targets that are difficult to meet. Before joining Ireland’s franchising community, separate the sales figures used to promote the opportunity from the results you will be contractually required to achieve. Your priority is to understand the measurement rules, test whether the targets are workable and establish what happens when circumstances change.

Find every binding performance requirement

Start by asking the franchisor for a complete list of minimum performance obligations. These may appear in the franchise agreement, schedules, a development agreement or an operating manual referred to in the contract. Do not assume that a heading such as ‘business objectives’ makes a requirement optional.

Distinguish between an illustrative forecast, an agreed business plan and a binding minimum. A forecast describes an expected outcome; a contractual target can create an obligation even when your business remains profitable below that level.

Ask your solicitor to identify:

• Minimum turnover or sales requirements.
• Any required customer numbers, service standards or opening hours.
• Deadlines for launching the business or opening additional locations.
• Reporting duties used to demonstrate compliance.
• Provisions allowing targets to be introduced or changed later.

The Irish Legal Guide explains that franchise agreements may link failures to meet turnover targets to contractual consequences, including restrictions on franchise or development rights. The important question is therefore not simply whether the target looks achievable, but what legal significance the agreement gives it.

Make the measurement rules unambiguous

A turnover target is only meaningful when both parties calculate turnover in the same way. Ask whether the figure includes VAT, refunds, cancelled orders, discounts or sales made through delivery platforms. Establish whether sales are counted when an order is placed, an invoice is issued or payment arrives.

These distinctions matter particularly where customers pay later. You could meet a sales target while lacking the cash needed to pay wages and suppliers. Conversely, a timing difference could make a sound business appear to miss its contractual minimum.

Confirm the assessment period: monthly, quarterly, annually or over a rolling period. A seasonal business may comfortably achieve an annual target while falling short during quieter months.

Request a worked example showing how compliance would be calculated. Use a scenario involving a refund, an unpaid invoice and a sale near the period end. Then ask:

• Which system supplies the authoritative figures?
• Who can correct errors, and within what time?
• Will you receive the same performance reports as the franchisor?
• How are central online sales attributed to your business?

Your accountant should check that your bookkeeping can produce the required information without extensive manual adjustments.

Test the target against your operating capacity

Rather than revisiting the brand’s headline profit forecast, translate each binding target into practical activity. How many transactions, appointments or completed jobs would you need? What staffing, premises capacity and opening hours would that require?

Allow for the period before the business reaches normal trading levels. Ask when measurement begins: signature, opening day or a later agreed date. A launch delay should not quietly consume the time available to meet your first target.

Test the requirement against a slower start, staff absence and temporary closure. These are planning scenarios, not predictions. Their purpose is to show where a contractual commitment might exceed your resources.

If the target rises over time, establish whether increases follow a fixed schedule, a stated formula or the franchisor’s discretion. Ask for proposed protections, such as advance notice, consultation and adjustments for documented disruption. Any concession that matters to your decision should be recorded in the signed documents, not left as a verbal reassurance.

Check the legal position and review process

In the Republic of Ireland, there is no specific franchise legislation or statutory franchise disclosure regime, and franchise agreements do not require registration with a local authority. General contract law governs performance obligations, alongside applicable Irish and EU laws, including competition law. Association codes are not a substitute for legislation or your signed agreement.

Do not assume that Irish law automatically gives you a grace period or requires a franchisor to reduce an ambitious target. Ask an Irish solicitor experienced in franchising to explain the actual wording and its enforceability.

Focus on the review process: written notice of a shortfall, access to the underlying calculations, an opportunity to correct errors and any agreed improvement period. Check whether one missed period is treated differently from repeated underperformance, and what support or review commitments the franchisor makes.

Practical takeaway: Before signing, create a one-page target schedule recording each obligation, calculation method, deadline and review procedure. Have your accountant test its practicality and your solicitor confirm its contractual effect.