Buying a Franchise in Ireland: Checking Set-Off Terms

Before buying a franchise in Ireland, check whether you must pay the franchisor in full even when you believe it owes you money. A clause requiring payment ‘without deduction or set-off’ can affect your position if an invoice is wrong or promised support is not delivered. Understanding that wording helps you assess the practical balance of rights within your chosen franchise community.

Understand what ‘without set-off’ means

Set-off broadly involves using a claim against another party to reduce an amount you owe that party. For example, a franchisee might believe that an agreed reimbursement should reduce the next payment due to the franchisor. Whether that is legally available depends on the circumstances and the contract.

A franchise agreement may require continuing fees to be paid ‘without deduction or set-off’. Irish Legal Guide’s illustrative franchise agreement contains this wording. It is an example of a contractual provision, not a rule that every Irish franchise must follow.

The practical effect may be that you must pay the amount due and pursue your own claim separately. Do not assume that dissatisfaction with support gives you permission to reduce a payment.

Ask your solicitor to distinguish between:

• A disputed invoice: you say the amount charged is not contractually due.
• A separate claim: you accept a fee is due but believe the franchisor owes you compensation or reimbursement.
• An agreed credit: the franchisor has accepted an adjustment, but it has not yet appeared on your account.

These situations should not automatically be treated alike. The wording of the agreement and the facts matter.

Establish the Irish legal position

Ireland has no specific franchise legislation, no statutory franchise-specific disclosure regime and no requirement to register franchise agreements. There is consequently no franchise-specific statutory payment-withholding procedure on which a buyer can simply rely.

General contract law governs the parties’ payment obligations and contractual remedies. Applicable Irish and EU competition law, intellectual property law and other general laws also govern the arrangement. Section 4 of the Competition Act 2002, as amended, prohibits anti-competitive agreements, subject to applicable exemptions; it does not provide a general right to stop paying franchise fees when service is disappointing.

The Irish Franchise Association’s Code of Ethical Conduct applies to its members. It is not legislation and does not replace advice on your payment clauses.

Buying a franchise is a business transaction. Do not assume that consumer cancellation or refund protections apply. Ask an independent Irish solicitor to explain the scope and enforceability of any no-set-off wording, including how it interacts with your rights where the franchisor breaches the agreement.

Trace the clause across every payment document

Do not review the continuing-fee clause in isolation. Restrictions on deductions may also appear in supply terms, software arrangements, repayment schedules or the general payment provisions of the franchise agreement.

Prepare a simple schedule showing each payment, its recipient, its due date and the applicable dispute procedure. Identify whether the recipient is the franchisor or a different company. A claim against one company should not be assumed to reduce a debt owed to another, even where they share branding.

Request written answers to these questions:

• How do you challenge an incorrect invoice, and is there a deadline?
• Must you pay the disputed amount while it is investigated?
• Can the undisputed portion be paid separately?
• Who authorises credits, and when must they be applied?
• Does interest accrue on a disputed amount?
• Can an unresolved invoice trigger suspension of services or other contractual consequences?

Check that the answers match the proposed agreement. A recruitment representative’s assurance that accounts staff are ‘always flexible’ is not the same as an enforceable payment procedure.

Agree a workable process before committing

Ask your solicitor whether the agreement should expressly address genuine invoice errors, acknowledged credits and disputed sums. Possible requests include a clear review timetable, payment of undisputed amounts and written confirmation of how an accepted adjustment will be refunded or credited. The franchisor may not accept changes, but its response helps you evaluate the arrangement.

Then ask your accountant to model a practical scenario: you pay a disputed charge in full while funding replacement support and pursuing reimbursement. This is not an assumption that a dispute will happen; it tests whether the payment terms create exposure you can manage.

Keep invoices, credit approvals and relevant correspondence together. If a problem later arises, seek advice before cancelling a direct debit or making a unilateral deduction. A claim against the franchisor and your obligation to pay may need to be addressed separately.

Practical takeaway: Before signing, know what you must pay during a disagreement, how errors are corrected and whether agreed protections appear in the contract.