Franchise premises: how to approve a site before signing a lease

Strong results at your own outlet do not mean the same concept will work at every site. Before you start building a franchise network, establish a location approval procedure. Its purpose is to reduce the risk of a franchisee signing a long-term lease on premises that cannot be adapted for the business or sustained at a realistic level of sales.

1. Turn experience at your own outlet into criteria

Start by asking which features of your current location actually contribute to profitability. Separate essential requirements from useful extras. A shopfront on a busy street may be crucial for impulse purchases, but less important for services booked in advance.

Prepare a site assessment form covering four areas:

• Surroundings: target customers, neighbouring businesses, competitors and changes in footfall throughout the day.
• Accessibility: pedestrian access, public transport, parking, deliveries and access for people with reduced mobility.
• Technical suitability: usable floor area, building services, ventilation, back-of-house space and the scope for installing equipment.
• Financial viability: the full cost of occupying the premises and the investment needed to open.

Specify how each requirement will be checked. Replace “good footfall” with observations made at comparable times and on comparable days. “Suitable ventilation” should mean an assessment by a qualified professional, not an assurance from an estate agent. Do not set universal thresholds simply because they fit one outlet you operate yourself.

2. Check whether the business can operate there, not just how the premises look

Before granting approval, obtain a floor plan, details of building services, draft lease terms and documents confirming the landlord’s right to let the premises. Establish how the premises have been used to date and the intended scope of works.

Next, check whether the proposed business will require a change of use, notification of building works, a permit or compliance with specific sanitary or fire safety requirements. The obligations depend on the premises and the type of business. Assessing a food outlet will differ from assessing an office providing services.

A visit by a head office representative is no substitute for these checks. Where necessary, involve a designer, a building services specialist or a lawyer. Agree in advance who will commission the assessment and who will pay for it.

The franchisor’s approval does not replace any required administrative approvals or the owner’s consent to works. If it remains uncertain whether the outlet can open, mark the site as “pending clarification” rather than granting unconditional approval.

3. Assess the full cost and the risks of the lease

Rent is only part of the financial burden. Include service charges, utilities, the deposit, any additional security requirements, insurance, fit-out costs and any obligation to reinstate the premises to their previous condition. Separate one-off expenditure from monthly costs and treat VAT consistently.

Prepare a base case and a cautious scenario. The latter should allow for lower sales, a delayed opening and higher costs for the works. Base your assumptions on data from the existing business, adjusting for local differences. Do not present your own outlet’s performance as a guarantee of the franchisee’s results.

The review of the draft lease should cover, in particular:

• the permitted business use and consent for signage;
• the handover date and when rent becomes payable;
• rent indexation and how additional charges are calculated and settled;
• responsibility for repair and improvement costs;
• the ability to exit the lease if opening proves impossible.

Compare the lease term with the intended term of the franchise agreement. A mismatch could leave the franchisee committed to premises they can no longer operate under the shared brand. This risk calls for an informed agreement, not automatic rejection.

4. Put approval rules and responsibilities in writing

Poland has no separate act comprehensively regulating franchising, nor a specific statutory franchise register. A franchise agreement is an “unnamed contract” — one not defined as a distinct contract type by statute — based on the principle of freedom of contract under Article 353¹ of the Polish Civil Code. That freedom is subject to limits arising from legislation, the nature of the legal relationship and the principles of social coexistence.

The Civil Code provisions on leases and contractual liability, Poland’s Construction Law and the requirements applicable to the particular business are also relevant to this procedure. Simply recording “premises approved” does not settle all the parties’ obligations.

The franchise agreement should therefore define the scope of head office’s assessment, the documents the franchisee must provide, the deadline for a response and how decisions will be recorded. Distinguish between a preliminary assessment of the location, technical approval and permission to open. Specify which changes require a further review, such as substantial alterations or a reduction in the available floor area.

5. Use conditional approval before making a commitment

The safest sequence is to collect the documents, assess the location, review the costs and draft lease, and only then enter into binding commitments. If the premises need to be reserved earlier, the reservation terms and conditions for refunding any payment should be unambiguous.

Conclude the assessment with a brief written record setting out the decision, conditions to be met, people responsible, deadlines and supporting documents. Share it with the franchisee. Clear reasons for a refusal or conditional approval help build trust within the franchise network.

Practical takeaway: before your first franchisee signs a lease, prepare a site assessment form and an approval record template. No location, however attractive, should bypass technical, financial and legal checks.