Franchise business interruptions: prepare a contingency plan

An owner-run business can often deal with a breakdown through personal contacts and a quick decision by the owner. Before developing a franchise network, you need to turn that improvisation into a plan that an independent partner can use too. It should specify when an outlet must stop operating, who arranges assistance and how fees and costs are handled during a closure. This is a distinct part of preparing an established business for franchising, not simply a matter of providing a repair technician’s phone number.

1. Identify situations that could bring an outlet to a halt

Start with incidents that have occurred in your business, along with those that could prevent you from serving customers safely. These might include the failure of a critical piece of equipment, a power cut, flooding, an unavailable sales system or a temporary ban on using the premises. Not every incident requires the entire outlet to close: sometimes it is enough to suspend one service or close off part of the premises.

Prepare a short procedure sheet for each scenario. It should answer five questions:

• How does an employee recognise that work must not continue?
• How should they protect people, stock, documents and equipment?
• Who should they notify first?
• Which activities can continue under alternative arrangements?
• What conditions must be met before reopening?

Alternative operating arrangements must be lawful and safe. Do not assume that a breakdown allows you to bypass tax, hygiene or data protection requirements. Arrangements suitable for a shop may not be permissible in catering or in services requiring specific professional qualifications or authorisations.

Also appoint someone to keep emergency contact details up to date. A list of repair technicians without backup contacts or availability hours may prove useless just when it is needed most.

2. Separate contractual obligations from emergency procedures

In Poland, a franchise agreement remains an ‘innominate contract’: there is no separate statute comprehensively regulating franchising. The legal basis for the relationship includes the Polish Civil Code, notably the principle of freedom of contract under Article 353¹, as well as provisions on the performance of obligations and liability for breaches. Depending on the business, administrative, consumer protection, competition and intellectual property rules also apply.

A breakdown does not automatically entitle either party to suspend all its obligations. Nor does it automatically waive fees. The consequences depend on the cause of the incident, the terms of the agreement and the applicable law. Similarly, describing an event as ‘force majeure’ does not, in itself, settle every question of financial liability.

The agreement should therefore set out the duty to report an interruption, the extent to which the parties must co-operate, responsibility for costs and the conditions for resuming operations. Put the sequence of actions, contact details and an incident reporting form in the operations manual. The manual should not quietly introduce new fees or alter the allocation of liability agreed in the contract.

Make decision-making responsibilities clear too. A franchisee should be able to stop unsafe work immediately without waiting for head office approval. A technical assessment of equipment, however, must be carried out by someone with the appropriate qualifications. Head office approval is no substitute for legally required inspections or decisions by the relevant authority.

3. Agree costs and communication during a closure

The contingency plan should make clear who calls out a repair service, who approves the cost and who pays for replacement equipment. It is particularly important to distinguish head office’s obligations from services provided by an external contractor. A promise that ‘we provide support’ does not explain whether this means passing on contact details, arranging repairs or paying the bill.

Before signing your first agreement, also decide:

• whether the fixed fee remains payable during a closure;
• how turnover-based fees are calculated when the outlet is operating only partially;
• whether fee relief requires an application and how the interruption must be documented;
• who bears the cost of protecting stock and restarting operations;
• how customer orders already accepted will be handled.

Review insurance cover, but do not treat it as a universal solution. Business interruption cover depends on the terms of the individual policy, the events covered, exclusions and the insured party’s obligations. Record who reports the claim and gathers supporting documents; do not assume that head office’s policy covers an independent partner.

Prepare a simple customer notice explaining what is unavailable, what will happen to orders and where customers can get further information. A franchise network needs a consistent message, but the notice must clearly identify the business responsible for each order. Do not promise a reopening date that has not yet been confirmed.

4. Test the plan before recruiting partners

Run a scenario-based exercise at your own outlet, without actually disabling any safeguards. For example, assume that a key piece of equipment fails during peak trading hours. Ask the manager to use the documentation to identify the sequence of actions, the people to contact and the available alternative arrangements.

Check whether assistance can be arranged outside office hours and whether instructions remain accessible if the system is unavailable. Also assess whether it is clear who approves additional expenditure. Every question that requires a call to the owner reveals a gap in the plan.

After the exercise, revise the documentation and assign responsibility for keeping it up to date. Keep the reporting template, contact list and reopening conditions together in one place. Decide where decisions made during a real incident will be recorded.

Practical takeaway: before signing your first franchise agreement, test one complete closure and reopening scenario. Your partner should know not only how to stop operating, but also who will help, who will pay and when it is safe to start serving customers again.