Buying a franchise: changes to the operations manual

When buying a franchise in Portugal, understanding your obligations on day one is not enough. The operations manual may change, introducing new requirements for equipment, premises or procedures. Updating standards across a franchise network is important for maintaining brand consistency. Before signing, however, prospective franchisees should understand who can change those standards, what limits apply and who bears the costs.

1. Understand the manual’s contractual status

The operations manual usually describes how the outlet should operate, covering premises layout and appearance, customer service, working routines, digital tools and quality requirements. It may be supplied as an appendix or referred to in the contract as a document you must comply with.

A reference to the manual should not replace a clear understanding of the obligations you are accepting. Ask for the applicable version, its date and details of any supplementary documents. Also check which takes precedence if there is a conflict: the contract, its appendices, the manual or subsequent communications.

The franchisor may protect confidential information and make access conditional on signing a non-disclosure agreement. This does not remove the need to understand the relevant obligations in good time. If you are not given a complete copy, suggest reviewing it with your lawyer under controlled access arrangements, and ask for any requirements with a financial impact to be documented.

Before proceeding, obtain written answers to these questions:

• Does the manual form part of the contract, and on what terms?
• Which version will apply when the outlet opens?
• Who can approve changes, and how will they be communicated?
• Are any significant obligations spread across platforms, circulars or other documents?

2. Understand the rules that apply in Portugal

Portugal has no franchise-specific legislation or mandatory pre-contractual disclosure document with content and deadlines prescribed specifically for franchising. Nor is there a specific register of franchisors or franchisees as such. This absence does not mean there is unlimited freedom to impose or change obligations.

The Portuguese Civil Code applies to the contract. Article 405 establishes freedom of contract within legal limits; Article 227 requires good faith in negotiations; and Article 762(2) requires good faith in performing obligations and exercising the corresponding rights.

The rules on standard contract terms, set out in Decree-Law No. 446/85 of 25 October, as amended, are also relevant. Where pre-drafted terms are used without individual negotiation, these rules may apply, including in business-to-business relationships.

Articles 5 and 6 establish duties to communicate terms and provide information: terms must be communicated in full and sufficiently in advance, and explanations must be provided where clarification is warranted. Failure to comply may result in terms being excluded from the contract under the applicable legal provisions. Whether these rules apply to provisions in a manual depends on their content and how they are incorporated into the contractual relationship.

The European Code of Ethics for Franchising is a self-regulatory framework, not Portuguese law. It does not replace legal requirements or a legal review of the specific contract.

3. Identify the financial risks of updates

Distinguish routine adjustments from changes that require further investment. Updating a customer service procedure does not have the same impact as replacing working equipment or refurbishing the premises.

Ask for documented examples of previous changes: what changed, how much time was allowed and which costs individual outlets had to bear. Past practice is no guarantee of future conduct, but it helps you understand how the franchise network manages change.

Prepare a simple table with four columns: potential change, estimated cost, implementation deadline and who pays. Where relevant, include:

• Building work and rebranding during the contract term;
• Replacement of equipment that is still usable;
• Software migration and data transfer;
• New tasks requiring additional working hours;
• Temporary closure to implement changes.

Also assess indirect costs, such as materials that can no longer be used. An update advertised as free may still require installation, adjustments and staff time. Obtain quotes once enough information is available, and test whether your cash flow can absorb these costs without jeopardising wages, rent and taxes.

4. Negotiate a predictable process for changes

The aim is not to freeze the business concept, but to establish proportionate rules. A clause allowing any obligation to be changed at any time, without defined criteria, warrants careful legal review; its validity should neither be assumed nor dismissed without analysis.

Seek agreement on objective criteria for changes, written notification, deadlines suited to their complexity and a clear breakdown of costs. For substantial investments, discuss phased implementation, spending limits or a requirement for further agreement. Distinguish urgent changes required by law or for safety reasons from commercial updates that can be planned in advance.

Also clarify the consequences of a justified delay and the procedure for requesting explanations or challenging a requirement. Do not assume you can ignore an update: if a disagreement arises, document the facts and seek advice before withholding compliance.

In practice: before signing, obtain the applicable version of the manual, draw up a list of potentially costly changes and agree written rules for implementing them. Predictability protects your investment without preventing the network from evolving.