Leasing premises for a franchise: how to align both agreements

When choosing a brand, look beyond the terms for joining its franchise network: check that you can use the premises throughout the relationship. The franchise agreement and the lease create two separate sets of obligations. Ending one does not usually end the other automatically. Unless they are aligned, you could be left paying rent for an outlet you can no longer operate under your chosen brand, or owing duties to the network despite losing your premises.

1. Establish who grants you the right to use the premises

First, establish whether you will lease directly from the owner, sublet from the franchisor or occupy the premises under another arrangement. This is more than an administrative distinction. The structure determines whose termination notice or breach of contract could put your business at risk.

For a direct lease, verify the landlord’s right to let the property and the authority of the person signing the documents. For a sublease, also ask to see the provisions of the head lease covering its duration, termination and consent to subletting. Under the Polish Civil Code, subletting premises requires the landlord’s consent. A sublease ends no later than the head lease.

An assurance from head office that ‘the premises are secured’ is not enough. Check the documents and ask:

• Does the consent cover your business and your intended use of the premises?
• Will the head lease remain in force throughout the planned sublease term?
• Will you be told about any termination notice or arrears that threaten the head lease?
• Could you enter into a direct agreement with the owner if their relationship with head office ends?

The last option requires agreement with the owner. A promise from the franchisor alone does not bind someone who is not a party to that arrangement.

2. Align the contract terms and exit arrangements

Poland has no separate statute comprehensively regulating franchising, nor any specific, generally applicable requirement to register franchise agreements or provide a statutory pre-contract disclosure document. A franchise agreement remains an ‘unnamed contract’ — one not specifically defined by statute — based on the principle of freedom of contract under Article 353¹ of the Polish Civil Code. General rules on contractual obligations also apply, alongside other legislation depending on the business, including competition law. Leases, meanwhile, are governed by the relevant provisions of the Civil Code on letting property.

The link between the lease and the franchise agreement therefore needs to be deliberately built into the documents. Compare the start and end dates of both agreements, their notice periods and renewal conditions. Also check when rent becomes payable and when you gain access to carry out fit-out works.

Fixed-term leases require particular attention. Under Article 673 § 3 of the Civil Code, the parties may terminate them on notice in the circumstances specified in the agreement. Do not assume that leaving the brand means you can simply hand back the keys.

Negotiate clearly defined grounds for ending the lease early, such as the definitive loss of the right to carry on the agreed franchise business. Specify the time limits, how the triggering event must be evidenced and any compensation payable. Similarly, set out the consequences of losing the premises in the franchise agreement: whether the outlet can relocate, how long you have to find a new site and how fees will be charged during the interruption.

3. Check fit-out consents and payment for improvements

The network’s approval of a location does not replace the landlord’s consent to alterations, installation work or signage on the building’s exterior. Nor does it replace any approvals or notifications required by law. Before commissioning work, compare the brand’s standards with the permitted use of the premises and any restrictions affecting the building.

Prepare a shared schedule of works for head office and the landlord. It should identify who approves the design, who obtains consents, who pays and what happens if the required changes prove impossible. Obtain confirmation before committing to expenditure you cannot recover.

Deal separately with what happens to improvements. Under Article 676 of the Civil Code, unless otherwise agreed, the landlord may retain improvements in return for a payment reflecting their value when the premises are returned, or require the premises to be restored to their previous condition. This does not mean that your fit-out invoices will automatically be reimbursed.

The agreement should therefore specify:

• which items you may remove and which must remain in the premises;
• whether you will be paid for improvements and how that payment will be calculated;
• who pays to remove signage and restore the premises to their previous condition;
• whether the rules differ depending on why the lease ends.

4. Test three scenarios before signing

Read both draft agreements side by side, ideally with a lawyer. For each scenario, record which obligations remain, for how long and who bears the cost.

The franchise agreement ends before the lease. Check whether you can lawfully run another business, change the use of the premises or end the lease. Take account of contractual restrictions and the cost of removing the branding.

The lease ends before the franchise agreement. Establish whether the network will allow relocation and what criteria it will use to approve a new site. Do not leave the decision subject solely to an undefined requirement for ‘head office approval’.

The owner refuses consent for the required works. Check whether you can withdraw from both agreements and how expenditure already incurred will be dealt with.

The practical takeaway: do not treat signing the lease and the franchise agreement as two unrelated formalities. First, agree your right to occupy the premises, a coordinated timetable and the consequences of losing either the site or the brand. Only then commit money to the fit-out.