Franchising: check the premises before signing a lease

Premises may appeal to a franchise brand yet be unsuitable for the intended business. Or they may only become usable after expensive building work, approvals and months of waiting. Setting up a franchise in Italy therefore calls for careful checks: before leasing premises, establish whether the project is feasible and coordinate your commitments to the landlord and franchisor. Their approval serves different purposes and is no substitute for technical and regulatory checks.

1. Distinguish the brand’s approval from the suitability of the premises

The franchisor will usually assess visibility, floor area, location and the scope for implementing its business model. This assessment does not certify that the property complies with applicable requirements or that a particular activity can legally be carried out there.

Before submitting an offer to lease, ask the brand for a written specification of its premises requirements. This should cover at least:

• minimum floor areas and layout;
• electrical capacity and building services specifications;
• ventilation, extraction or flue requirements;
• storage, toilet and staff facilities;
• requirements for shopfronts, signage, access and deliveries.

Ask which requirements are non-negotiable and who can approve any adaptations. Informal approval from a sales representative is not enough if the final design must be authorised by another department within the franchise network.

Then give the specification to an appropriately qualified technical professional of your choice. Their brief should include comparing the brand’s requirements with the property’s actual condition and the available documentation, rather than simply preparing a fit-out drawing.

2. Check feasibility and regulatory requirements before committing

Through your technical adviser, ask the landlord for the documents needed to check planning and building compliance, permitted use, cadastral records, fitness for occupancy and building services. A cadastral floor plan alone does not establish building compliance, nor does it guarantee that your intended business activity is permitted.

The checks should also cover accessibility, hygiene and public health requirements, any fire prevention obligations and restrictions affecting the property. If work is needed on façades, roofs or shared areas, establish in advance which consents are required and whether the building’s co-ownership rules contain any relevant restrictions.

Also contact the relevant municipality’s Sportello unico per le attività produttive, or SUAP, the one-stop office for business activities. Describe what the business will actually do, not just the brand name: retail, food preparation, serving food and drink, or personal services may involve different procedures.

There is no nationwide rule allowing every shop below a certain floor area to open without further checks. Requirements depend on the activity, the size of the premises and the applicable regional and local rules. Where a SCIA — a certified notification of commencement of activity — is required, it does not remedy property compliance issues and assumes that all necessary requirements have been met. Some works or activities instead require specific permits or authorisations.

Ask your technical adviser for a written assessment covering feasibility, issues identified, necessary works and any matters still to be verified.

3. Coordinate the lease and franchise agreement

In Italy, franchising is governed by Law No. 129 of 6 May 2004. The agreement must be in writing to be valid. Article 4 requires the franchisor to give the prospective franchisee a complete copy of the agreement, together with the annexes required by law, at least thirty days before signing, subject to the specific confidentiality exceptions set out in the legislation.

This period does not, however, provide a general cooling-off right for the lease. An accepted offer to lease may already create binding obligations, even if the franchise agreement has not yet been signed.

Have a lawyer coordinate the two agreements. Consider clauses making the commitments conditional on clearly defined events, such as the brand’s written approval of the premises or satisfactory technical checks. The deadlines, evidence required, duties to cooperate and treatment of any money paid if the conditions are not met must all be clear.

Avoid vague wording such as ‘subject to obtaining permits’ without specifying which permits are needed. The protection should reflect the procedure that actually applies.

Also bear in mind Article 5 of Law No. 129/2004: if the business location is specified in the agreement, the franchisee cannot relocate without the franchisor’s prior consent, except in cases of force majeure. Choosing unsuitable premises can therefore cause difficulties even after opening.

4. Allocate responsibility for works, costs and delays

Before signing, draw up a schedule agreed with the landlord, technical adviser and franchisor. For each item of work, specify who authorises it, who carries it out, who pays for it and when it must be completed.

In particular, clarify:

• which works are the landlord’s responsibility and which are the franchisee’s;
• when rent and other payments become payable;
• who pays for any alterations required following inspections;
• what happens if handover or opening is delayed;
• what reinstatement work is required at the end of the lease.

Where useful, negotiate an initial rent-free or reduced-rent period for the fit-out: this is not an automatic entitlement. Also align the opening deadlines in the franchise agreement with verified timescales for the necessary work and procedures, rather than promising a date based solely on commercial estimates.

In practice: do not commit to premises simply because the brand likes them. Proceed once you have a written technical assessment, a clear picture of the regulatory requirements and coordinated agreements covering conditions, works and delays.