Franchise reservation fees: how to protect your right to a refund

Before joining a franchise network in Poland, you may be asked to pay a fee to reserve a location, begin preparatory work or temporarily suspend talks with other candidates. Such a payment is not necessarily a bad thing, but it needs clear terms. The key question is not just “how much am I paying?”, but also “what am I paying for, for how long, and when can I get my money back?”. Settle these points before making a bank transfer.

1. Establish the legal nature of the payment

Poland has no separate statute comprehensively regulating franchising. A franchise agreement is an “unnamed contract”, meaning it is not a specifically defined contract type under Polish law. It is entered into under the principle of freedom of contract set out in Article 353¹ of the Polish Civil Code. That freedom is limited by legislation, the nature of the legal relationship and principles of social conduct. Payments made before an agreement is concluded are governed primarily by the general provisions of the Civil Code.

There is also no generally applicable, franchise-specific legal requirement to provide a disclosure document 14 days before signing an agreement. Legislative proposals and voluntary codes of conduct should not be confused with law currently in force. It is therefore worth agreeing in writing how much time you will have to review the terms before paying.

The label “reservation fee” does not, by itself, determine the legal consequences. The document may provide for:

• An advance payment (zaliczka) — a payment towards a future contractual obligation. If the agreement does not go ahead, this is generally subject to settlement and repayment, although the basis for the payment and any claims between the parties will matter.
• An earnest-money deposit (zadatek) — a form of security to which Article 394 of the Polish Civil Code may apply. If one party fails to perform the agreement, the other may, subject to the statutory conditions, withdraw from it and retain the deposit or demand twice the amount paid. The parties may agree different consequences.
• Payment for a reservation or a specific service — a fee that may remain payable regardless of whether you subsequently buy the franchise, provided that this genuinely reflects the agreed scope of the service.

Ask for the nature of the payment to be stated clearly. The bank transfer reference should match the document, but it cannot replace its terms.

2. Define what the reservation gives you

A statement such as “we are reserving an opportunity for you to work with us” is too vague to assess whether the fee offers value. Before paying, establish exactly what obligation the franchisor is taking on and how you will check that it has been fulfilled.

The agreement should identify what is being reserved, when the reservation starts and ends, and what activities are permitted during that period. If it concerns specific premises, include the address. If it reserves a place in the schedule of new openings, explain what that status means. Also record whether the franchisor may negotiate with other candidates at the same time.

Keep the reservation separate from preparatory services. A location assessment, training and design work are distinct services. Each should have a description, a completion deadline and a procedure for confirming acceptance. Without these, it is difficult to establish how much of the payment has actually been used.

Check how the payment will be treated later: will it be credited against the initial franchise fee, or will it remain an additional cost? Does the quoted amount include VAT, where applicable? What invoice or other accounting document will you receive? Confirm these points with an accountant, as the tax consequences depend on the true nature of the payment.

3. Agree refund terms in case the launch falls through

Being refused finance does not automatically entitle you to recover every payment. The same applies if you cannot obtain permission to use the premises or if they fail a technical assessment. If these events are to allow you to pull out without losing money, they must be covered in the agreement.

Draw up a list of conditions on which your decision depends. For each one, specify a deadline, the evidence required and the consequences if it is not met. For financing, for example, agree whether a bank’s refusal is sufficient evidence, when you must submit a complete application and when you must notify the franchisor.

Distinguish between at least four situations:

1. You pull out even though all the agreed conditions have been met.
2. An objective condition cannot be met, such as securing finance.
3. The franchisor pulls out or fails to deliver what was agreed.
4. Both parties agree to end the talks.

For each situation, state whether a full refund, a partial refund or no refund will apply. If you accept deductions for preparatory costs, agree an exhaustive list of those costs, a maximum amount and a requirement to provide supporting evidence. A general phrase such as “after deducting the network’s costs” makes it difficult to predict the final amount you will receive.

Add a specific refund deadline and a method for submitting your request. The process should not depend solely on the franchisor’s discretionary approval.

4. Check the agreement before transferring money

A document called a “reservation form” may contain a commitment to enter into a future agreement or other obligations that go beyond the payment itself. A lawyer should review its contents, particularly if it makes the payment non-refundable or imposes liability for breaking off talks.

Do not assume you have a consumer right to withdraw simply because you sign the document remotely or have not yet registered a business. The purpose of the agreement and the parties’ legal status are what matter.

Verify the payment recipient and the authority of the person signing the agreement. Keep the signed document, any terms agreed by email and the bank transfer confirmation. If the document differs from the representative’s promises, have it amended before paying.

Practical takeaway: pay only when you can identify exactly what you will receive, how long the reservation lasts and how the payment will be handled under each possible outcome of the talks. An assurance that “we’ll definitely work something out” is no substitute for a written refund procedure.