Franchise supply chains: how to prepare your business for growth

A supplier that serves your own outlet efficiently may not be ready to work with several independent businesses. Before expanding your franchise network, develop a supply model that can withstand delays, complaints and sudden shortages. This is not just about securing favourable prices. It is about ensuring franchisees know what to order, from whom, on what terms and what to do when a delivery fails to arrive.

1. Identify the supplies your brand promise depends on

Start by listing the products, materials and services used in your existing business. Include not only your core range, but also packaging, cleaning products, equipment parts and technical support. A missing minor component can bring sales to a halt just as effectively as a shortage of a core product.

Assign each item to one of three groups:

• Critical to brand identity — changing it affects the product’s characteristics or the customer experience.
• Critical to operational continuity — the outlet cannot operate safely without it, even if customers do not always notice it.
• Readily replaceable — it can be bought locally, provided it meets clearly defined specifications.

For the first two groups, record the specification, lead time, storage requirements and availability of substitutes. Rather than a vague requirement for a “product of suitable quality”, specify characteristics that can be checked on receipt. In food service, these might include ingredients and transport conditions; in a service business, they might include a material’s compatibility with equipment.

Also review what you currently sort out yourself. A phone call from the owner that persuades a wholesaler to make an exception and send a missing box is not yet a solution you can roll out to franchisees.

2. Choose a purchasing model and agree responsibilities

You can resell goods to franchisees, negotiate terms for their direct purchases or allow them to buy from approved suppliers. These models can be combined, but for each category it must be clear who the seller is, who pays and who is responsible for fulfilling the delivery.

If head office resells goods, account for storage, transport, stock financing and handling complaints. For direct purchases, do not assume that your existing discounts and payment terms will automatically apply to a new franchisee. The supplier may assess their creditworthiness separately and require payment in advance.

Before offering terms to franchisees, agree the following with the supplier:

• delivery coverage, minimum order quantities and how transport charges are calculated;
• deadlines for placing orders and confirming availability;
• how price changes and product discontinuations will be communicated;
• procedures for complaints, returns and settling delivery shortfalls;
• capacity to serve new outlets and rules for allocating stock during shortages.

Do not promise more in the franchise agreement than your supplier agreement provides. If the supplier does not guarantee next-day delivery, do not present it as a standing entitlement for franchisees. Also disclose whether head office receives any remuneration linked to their purchases, and explain how it is calculated and paid. Transparency reduces conflict within the franchise network.

3. Check the legal limits on mandatory purchasing

Poland has neither a separate law comprehensively regulating franchising nor a dedicated franchise register. A franchise agreement remains an “unnamed contract” — a contract type not specifically defined in legislation — based primarily on the Polish Civil Code, including the principle of freedom of contract under Article 353¹. This does not give the parties unlimited discretion: contractual provisions must comply with legislation, the nature of the legal relationship and the principles of social coexistence.

When organising purchasing arrangements, particular attention should be paid to Poland’s Act on Competition and Consumer Protection and, where applicable, EU competition law. Requiring franchisees to use a specified source of supply is not automatically prohibited, but its scope, duration and justification need to be assessed. The parties’ market positions and the conditions for any exemption from the prohibition on restrictive agreements also matter.

Do not simply copy a clause requiring franchisees to buy everything exclusively from head office without reviewing it. Distinguish goods essential to maintaining brand identity from materials for which an objective specification is sufficient. A lawyer should assess both the purchasing obligation and any restrictions on using alternative suppliers.

Also take account of the rules applicable to the products you offer, such as food safety or product safety requirements. Allocating tasks by contract does not remove obligations that the law imposes directly on an individual business.

4. Test a delivery failure before a franchisee experiences one

Prepare a contingency procedure for the most important items. Specify who flags the risk, who approves a substitute and how quickly a decision must be made. Franchisees should know whether they can buy locally or must temporarily remove a product from their range. A lack of response from head office must not be treated as permission to use an unverified material.

Run an exercise at an existing outlet: assume the primary supplier fails to fulfil an order. Check the availability of an alternative, quality documentation, transport costs and the effect of the substitution on customer service. Record the results rather than basing your plan solely on assurances from a backup supplier.

Then prepare a simple supply reference sheet for franchisees: a list of purchasing sources, product specifications, contacts for complaints and a contingency process. Appoint someone to keep the information up to date and communicate changes to everyone concerned.

Practical takeaway: before launching your franchise, check not only that you can order stock, but that an independent franchisee can do so without your personal intervention — even when the usual delivery arrangements fail.