Franchising an Existing Business: A Guide to Opening Hours and Temporary Closure Rules

When franchising an existing business, opening hours are more than just information displayed on a shopfront. They are contractual terms that affect franchisees’ staffing costs, owners’ working patterns and commitments to customers. Avoid passing on an operating model that depended on the founder working excessive hours. To build a sustainable franchise community, establish not only standard opening hours but also procedures for changing them or closing temporarily before you start recruiting franchisees.

1. Review company-owned outlets’ opening hours by time slot

The first question is not ‘How late should we stay open to increase sales?’ but ‘How much additional profit and workload does this time slot generate?’ Daily profit and loss figures can conceal losses incurred early in the morning or just before closing.

Collect the following information by time slot at company-owned outlets:

• Sales, transaction numbers and the cost of goods sold
• Staffing requirements and actual hours worked, including preparation and cleaning up
• Labour costs, including late-night pay premiums, additional utility costs and waste disposal costs
• Reasons for customer visits, booking levels and enquiries about opening hours
• Unscheduled hours worked by the manager or founder to cover staffing gaps

In particular, do not treat the founder’s help as free labour. Replace it in your calculations with the cost a franchisee would incur to employ someone to do the same work, and check whether those opening hours remain viable. Staff working hours, breaks and related arrangements must be designed with Japan’s Labour Standards Act in mind.

Do not assess a reduction in hours solely by comparing sales before and afterwards. Record the effects of weather, days of the week, peak trading periods and promotions, and check whether customers have shifted their visits to other times or stopped coming altogether. Use the findings to set standards for different locations and outlet formats, rather than as grounds for imposing identical hours across the network.

2. Separate standard opening hours from the scope for changes

When setting opening hours, distinguish between the customer experience you want to deliver consistently and local circumstances. Residential areas and office districts, for example, have different peak trading days and times. Think carefully before requiring every franchisee to follow the same schedule simply because it worked at one company-owned outlet.

In practice, it helps to divide the rules into three categories.

Standard terms: Set basic opening hours, regular closing days and arrangements for periods such as the New Year holidays for each outlet format.

Terms that can be changed following prior discussion: Establish procedures for reviewing normal operating arrangements in response to persistent staff shortages, changes in local demand or changes to a host facility’s opening hours.

Situations in which the outlet can act immediately: Define circumstances where waiting for approval would be inappropriate, such as disasters, power cuts, equipment failures or risks to staff or customers.

For outlets in shopping centres or other commercial premises, check the opening hours required by the facility operator. The franchisor’s agreement to shorter hours does not automatically change the terms of a lease or other agreement. When recruiting franchisees, make clear which matters also require coordination with the facility operator.

3. Make the process for discussing changes work in practice

Simply stating in the agreement that the franchisee must ‘consult the franchisor’ is not enough if the person responsible keeps postponing a decision. Design a complete process covering where to submit requests, supporting information, target response times, interim measures and how decisions can be reviewed.

The basic supporting information should include income and expenditure by time slot, staffing arrangements, recruitment efforts, proposed opening hours and the impact on customers. However, avoid refusing to consider urgent requests until every document is available.

The franchisor should consider more than a simple yes or no to shorter hours. Options may include changes on selected days, a trial reduction or revised booking arrangements. If relief staff are to be sent, agree the duration and who will bear the cost in advance. Also make clear whether shorter hours will affect any fixed monthly payments.

Japan has no single law comprehensively governing franchising. However, franchisors and franchisees are independent businesses, and their dealings are subject to the Antimonopoly Act. The Japan Fair Trade Commission’s guidelines on franchise systems under the Antimonopoly Act identify conduct that may raise concerns during recruitment and after an agreement has been signed.

Using a superior bargaining position to impose unfair disadvantages—for example, by refusing to discuss a franchisee’s request for shorter hours—may raise concerns about abuse of a superior bargaining position. Specifying opening hours in the agreement does not make every method of enforcing them permissible. Equally, this does not mean every request for shorter hours must be granted. What matters is considering the individual circumstances and keeping a record.

4. Plan safety measures and customer communication for temporary closures

For temporary closures, clarify who can stop trading immediately before deciding who must approve a closure. Where there is a safety risk, procedures should allow the person in charge of the outlet to suspend trading and report to the franchisor once safety has been secured. This is a recommended operational approach, not a suggestion that a single statutory procedure applies in every situation.

Closure procedures should cover:

• Events that warrant suspending trading and the outlet’s authority to make that decision
• The franchisor’s normal and out-of-hours contacts, and what to do if neither can be reached
• Customer evacuation, contacting customers with bookings and handling orders already accepted
• Updating opening hours on premises, booking websites and outlet listings
• Checks before reopening and any necessary confirmation from relevant authorities or organisations

For example, if a booking system remains active, customers may continue making bookings while the outlet is closed. Plan for a situation in which outlet staff have no authority to change the system and the franchisor’s contact cannot be reached. Designate an alternative person who can suspend bookings.

Handle refunds and rebookings according to the customer’s terms of purchase and the identity of the selling business. Even if the franchisor manages these centrally, establish separate arrangements for settling amounts with franchisees. To avoid delaying a decision to stop trading, keep emergency action separate from subsequent discussions about sharing costs.

5. Align the agreement, pre-contract information and operating procedures

In Japan, Article 11 of the Act on the Promotion of Small and Medium-sized Retail Business requires franchisors whose operations qualify as a specified chain business to provide prospective franchisees with a document containing prescribed information, and explain it, before a contract is signed. Whether the requirement applies is not determined simply by describing a business as retail or food service. It depends on statutory criteria, including ongoing supplies of goods and standardised contracts.

Where the requirement applies, opening hours, trading days and closing days form part of the required disclosures. Explain not only the standard terms but also the obligations and restrictions relating to changes. Businesses outside its scope are still subject to the Antimonopoly Act, the Civil Code and other relevant laws; this does not give them licence to leave significant operating burdens unclear when prospective franchisees are deciding whether to join.

Give each document a clear role: the agreement sets out basic terms and decision-making authority; pre-contract materials explain burdens and restrictions; and operating procedures show how to contact the relevant people and suspend bookings or orders. Avoid arrangements that allow opening hours to be extended merely by changing the manual. Check with professional advisers the basis for making changes, when franchisee agreement is required and how additional burdens will be handled.

Before recruitment begins, run tabletop exercises for two scenarios: ‘We cannot recruit enough staff and want to reduce our opening hours’ and ‘A power cut means we need to close immediately’. Assign separate outlet and franchisor roles, then check who makes decisions, who contacts customers and where actions are recorded. This will help reveal gaps between the documents.

Practical takeaway: Start with a one-page summary of standard opening hours, the contact for discussing changes, authority to suspend trading in an emergency and responsibility for notifying customers. Trust within a franchise community depends not just on enforcing opening hours, but also on providing a workable way to seek help when those hours can no longer be maintained.