Overseas franchises: what to check before opening in Italy

Joining a franchise network established abroad can offer a distinctive business proposition, but it requires careful checks: what works in another country must also be workable in Italy. Before investing, distinguish between the brand’s international reputation and the franchisor’s ability to make clear commitments that can actually be delivered in the Italian market.

1. Identify who is offering the franchise

Your first check should concern the contracting party, not the brand’s country of origin. You might sign directly with the overseas company, with its Italian subsidiary, or with an operator that has acquired the right to develop the franchise network in Italy and enter into agreements with other franchisees.

Ask for a written explanation of the relationships between these parties. It should make clear who signs the agreement, who receives payments and who is responsible for fulfilling the promised obligations. A sales presentation bearing the parent company’s name does not mean that it guarantees the performance of the company signing the agreement.

Above all, check that responsibility for commitments does not fall between different parties. If the Italian representative promises to adapt the franchise model but says approval depends on the overseas head office, ask who has the authority to approve the changes and within what timeframe.

The key question: if an agreed service is not provided, which party can you require to fulfil that obligation under the contract? The answer must be clear from the documents, not just from conversations with the sales manager.

2. Understand when the specific rules apply

In Italy, franchising is governed by Law No. 129 of 6 May 2004. Its safeguards include a requirement for the agreement to be in writing, failing which it is void, and for a complete copy of the agreement, together with the required annexes, to be supplied at least thirty days before signing. Matters not covered by this specific legislation are governed by the relevant provisions of the Italian Civil Code.

There is also Ministerial Decree No. 204 of 2 September 2005, which concerns franchisors that have operated exclusively outside Italy before the agreement is signed. The decree sets out specific disclosure obligations and applies where, under private international law rules, the agreement is governed by Italian law.

The fact that a brand is foreign does not therefore automatically mean that the decree applies. You need to check the franchisor’s previous activities and the law governing the relationship. An overseas company already operating in Italy is in a different position from a franchisor operating only outside the country.

Have a lawyer review these points before agreeing to a signing timetable. If the draft agreement refers to foreign law, assume neither that all Italian protections fall away nor that they apply in full: the rules relevant to your particular circumstances need to be assessed.

3. Obtain clear and consistent information

Article 3 of Decree No. 204/2005 provides that, at the prospective franchisee’s request, the franchisor must supply information concerning the agreement and its annexes in Italian. This is an important option where the decree applies, but it does not amount to a general obligation to translate every document relating to every international franchise into Italian.

Submit your request in writing and keep the response. Avoid relying solely on an informal translation by the sales representative or on a summary that leaves out less favourable terms.

If documents are circulated in two languages, ask for clarification on:

• which version of the agreement takes precedence if there is a discrepancy;
• whether the annexes and definitions match across both versions;
• who is responsible for correcting any discrepancies before signing;
• which language will be used for formal communications during the relationship.

An imprecisely translated term can change your understanding of an obligation. Have the financially and legally significant passages compared, particularly where the Italian version is described as a courtesy translation only.

4. Check how the franchise model has been adapted for Italy

International success alone does not show that the proposition is ready for Italy. Ask for a list of the changes needed to operate there, distinguishing those already completed from those still to be developed.

Your checks may cover customer-facing materials, instructions for use, labelling, terms of sale and product or service specifications. Compliance requirements vary by activity: there is no single approval that automatically makes the entire overseas franchise model compliant.

Turn the list into a table with four columns: required adaptation, responsible party, cost and availability date. Also ask who will approve the changes and how any conflicts between international standards and Italian requirements will be handled. Do not assume that every adaptation cost is included in the initial fee.

In practice: before signing, clarify the contracting party, the applicable rules, the language of the information supplied and responsibility for adapting the model to Italy. An international brand only becomes an option you can properly assess when these points are documented and clear.