Franchising: defining franchisees’ autonomy

When you turn an existing business into a franchise network, you cannot manage franchisees as though they were managers of your company-owned outlets. They are independent business owners, but they must follow a shared business format. Before offering your first franchise, you therefore need a decision-making framework: what the franchisor determines, what the franchisee decides and which changes require discussion. This is a practical tool for avoiding disputes and delays.

1. Start with the independence required by law

In Italy, franchising is governed by Law No. 129 of 6 May 2004. Article 1 defines the relationship as a contract between economically and legally independent parties. The franchisee joins a shared system but does not become a branch of the franchisor.

This distinction must be reflected in day-to-day operations. The franchisee takes on obligations, bears costs and runs their own business; the franchisor grants the rights and provides the services specified in the contract. Independence does not mean freedom from contractual restrictions, just as brand consistency does not justify unrestricted interference.

Article 3 requires the contract to be in writing, failing which it is void, and specifies mandatory content, including details of the support offered. The allocation of decision-making powers must be consistent with these commitments: simply writing ‘independent management’ is not enough if every operational choice then depends on the franchisor.

Your first practical check: review the instructions you currently give employees in the original business. Which genuinely protect the business format? Which simply reflect your habit of deciding everything yourself?

2. Build a decision matrix

Prepare a working document with four columns: decision, responsible party, applicable constraints and whether approval is required. This should not be an abstract list of responsibilities, but a picture of the decisions that recur every week.

You can organise it into three groups:

• Shared standards: brand identity elements, essential features of the offering and procedures needed to deliver the business format.
• Franchisee decisions: the organisation of their own business, staff management and other local decisions, subject to the law and contractual obligations.
• Decisions requiring agreement: initiatives that change shared elements, such as a local proposal that uses the brand in a new way.

For each constraint, also record the reason behind it. ‘This is needed to guarantee this aspect of the service’ is a reason that can be tested; ‘we have always done it this way’ is not.

For example, you could set a service standard for agreed opening hours while leaving the franchisee to organise the shifts needed to meet it. This defines the expected outcome without automatically taking over the local employer’s role.

Arrange a specific legal review of resale pricing. Commercial autonomy is also subject to Italian and EU competition rules: imposing fixed or minimum resale prices raises significant legal concerns. Even prices described as ‘recommended’ can be problematic if accompanied by pressure or incentives that effectively make them compulsory. Do not treat the price list as though it were an ordinary visual branding standard.

3. Set approval rules without holding up the business

A provision such as ‘every initiative must be approved’ may seem prudent, but it can create a bottleneck. If the franchisor has to review every decision, the franchisee loses the ability to respond quickly and the central team accumulates unplanned work.

For each type of approval, define:

• what information must accompany the request;
• who is responsible for responding;
• the internal deadline for communicating the outcome;
• the criteria for approval, amendment or rejection;
• how a delayed response will be handled.

Do not leave the meaning of silence unstated: make clear in the contract when express approval is required. Also distinguish routine requests from emergencies, in which the franchisee must be able to take the measures necessary to comply with the law and protect people.

Keep a register of exceptions, recording their reasons, duration and scope. An exception granted for a local situation must not inadvertently become a general change to the business format.

4. Align the contract, operations manual and day-to-day conduct

The matrix helps you design the relationship; it does not replace the contract. Ask a lawyer to check which rules belong in the agreement and which should be detailed in the operations manual, avoiding contradictions and overly broad powers to make changes.

Article 4 of Law No. 129/2004 requires the complete contract, together with the required annexes, to be supplied at least thirty days before signing. The allocation of responsibilities should therefore not become apparent only during the opening process or through unexpected instructions issued later.

Finally, train the franchisor’s staff too. Anyone supporting franchisees must distinguish between a contractual obligation, a recommendation and an optional proposal. An informal message should not turn a suggestion into an instruction.

In practice: before taking on franchisees, choose ten recurring decisions in your business and assign each a responsible party, a justified constraint and a process for discussion. If the answers are unclear, the franchise network’s operational boundaries are not yet sufficiently defined.