Franchise inspections: what to agree before you buy

Quality checks help protect customers’ trust in the entire franchise network. For a prospective franchisee, however, they can also mean additional costs, access to documents by outside parties and an obligation to remedy shortcomings quickly. Before signing the agreement, check not only the brand standards but also who will assess compliance, what criteria they will use and what the consequences may be.

1. Establish the basis and limits of inspections

Poland has no separate law comprehensively regulating franchising, nor a dedicated state register of franchise networks. A franchise agreement is an ‘unnamed contract’ — one not specifically defined in legislation — based primarily on the Polish Civil Code and the principle of freedom of contract under Article 353¹. That freedom has limits: the terms and purpose of the agreement must not conflict with the nature of the legal relationship, the law or the principles of social conduct.

The franchisor’s right to inspect your outlet should be set out in the agreement. It is not the same as the statutory powers of public authorities, such as the sanitary inspectorate. Using a shared brand does not, in itself, give the franchisor an unrestricted right to examine every aspect of your business.

Ask whether inspections cover service quality, product preparation, the appearance of the premises, stock management or sales records. Keep these areas separate from information unrelated to performance of the agreement. If you also run another business, access to your entire accounting records may go well beyond what is needed to check the accounts for a particular outlet.

Poland’s Code of Good Practice for the Franchise Market provides for prospective franchisees to be given access to the agreement and any rules, manuals or guidelines forming part of it. This is a self-regulatory instrument, not legislation binding on everyone. Check whether the network says it follows the code. Regardless, ask for the inspection procedure before entering into the agreement.

2. Understand the audit process and assessment method

A clause stating that ‘the franchisor may carry out inspections at any time’ leaves many questions unanswered. You need a procedure that allows standards to be checked without unnecessarily disrupting the outlet’s operations. Agree which visits will be announced and which may take place without notice, for example to assess the actual customer experience.

Before buying a franchise, ask for answers to specific questions:

• Who may carry out an inspection, and how will they prove their authority?
• Is the auditor entitled to enter back-of-house areas, photograph the premises and copy documents?
• How long may a visit last, and who will take part on your behalf?
• Are mystery shopping visits permitted, and how are their findings recorded?
• When will you receive the inspection report and the evidence supporting the assessment?

Also ask for the current audit checklist and an anonymised sample report. Check whether assessments are based on measurable criteria. ‘Inadequate display’ tells you less than a reference to a specific requirement and documented evidence of non-compliance.

It is important to distinguish between levels of severity. A minor issue with appearance should not automatically have the same consequences as a food safety risk. Also agree how situations beyond your control will be treated, such as a failure of the network’s central IT system.

3. Calculate the costs of inspections and remedial action

A free initial audit does not mean the whole process will be free of charge. The agreement may provide for fees for a repeat visit, compulsory training or an expert assessment. Staff time and any interruption to customer service add to the cost.

Prepare a table covering routine inspections, additional inspections and checks on whether required actions have been completed. For each item, record who pays, how the fee is calculated and what document will substantiate the cost. If the network cannot quote a rate, negotiate a method for setting it and a cap on your liability for the auditor’s expenses.

Be particularly wary of an obligation to cover ‘all inspection costs’ without further explanation. Ask whether this includes travel, accommodation, external specialists and follow-up visits. Establish whether a repeat inspection fee becomes payable only once a shortcoming for which you are responsible has been confirmed.

Requirements for remedial action should specify the result expected, the deadline and how completion is to be verified. Where the nature of the issue allows, it is worth agreeing that photographs or documents can be submitted instead of arranging a paid visit. Safety obligations may require an immediate response; other deadlines should reflect what is realistically achievable in operational terms.

4. Protect your right to challenge the findings

Do not assume that an auditor’s report cannot be challenged. Before signing the agreement, agree a procedure for raising objections: the deadline, who to contact, the evidence you may submit and the response time. A reassessment by someone who did not conduct the original inspection is good practice.

Establish whether signing the inspection report merely acknowledges receipt or also signifies acceptance of its findings. You should be able to record your own objections and receive a copy of the document. Also clarify whether disputed fees or other contractual consequences will be put on hold while your objections are considered. This need not mean delaying urgent action to protect customers’ health.

Auditors’ access to information requires appropriate safeguards. Relevant considerations include personal data protection legislation, including the GDPR, and the protection of trade secrets. The agreement should set out confidentiality obligations, the purposes for which materials may be used and the rules for sharing them with external contractors.

Practical takeaway: before buying a franchise, ask for the audit checklist, a sample report and the rules governing inspection charges. If these do not make clear what you are responsible for and how you can raise objections, clarify the agreement before signing.