Buying a franchise in Portugal: can you delegate management?

Buying a franchise does not mean buying an investment that runs itself. In franchising, the franchisee’s legal independence sits alongside shared operating rules, which may require the investor’s personal involvement. Before choosing a brand, check whether its model allows you to hire a manager or expects you to be there every day. This distinction affects your choice of franchise network, how you organise your team and the investment required.

1. Distinguish between ownership, management and day-to-day work

Owning the company, managing the business and handling daily operations are different roles. You can invest in a company without serving customers, but that does not mean the franchisor will accept an outlet run entirely by other people.

Start by defining the role you want to take: working full-time at the outlet, overseeing a manager or focusing solely on strategic decisions. Then ask the brand to describe the specific tasks expected of a prospective franchisee, rather than accepting vague expressions such as ‘active involvement’.

Seek answers to these questions:

• Must the franchisee be physically present at the premises? If so, on what terms?
• Who is expected to oversee sales, quality, complaints and staff?
• Does a hired manager need the brand’s prior approval?
• Are there meetings or training sessions that the investor must attend in person?
• Are you allowed to keep another job or run other businesses?

Compare the same management model across all brands. An offer that suits an owner who works at the outlet every day may not suit someone who wants to keep their current job. Do not confuse standardised procedures with freedom from supervisory work.

2. Check what the contract requires in Portugal

Portugal has no specific law dedicated to franchise agreements. They are contracts without a specifically defined statutory framework, governed, among other things, by the general contract provisions of the Portuguese Civil Code. The freedom of contract provided for in Article 405 allows the parties to set obligations for personal involvement, within legal limits. Good faith also governs the negotiation and performance of the agreement.

Where standard contract terms are used, Decree-Law No. 446/85 of 25 October may apply, including its rules on communicating and explaining terms and reviewing prohibited clauses. The absence of a dedicated franchising law therefore does not leave franchisees without legal protection.

Ask a lawyer to identify who is obliged to do what. The agreement may be signed with your company while referring to your personal role, the retention of particular company managers or the approval of an operational manager. Do not assume that all these references have the same legal effect.

Pay particular attention to expressions such as ‘exclusive commitment’, ‘personal management’, ‘key person’ and ‘change of management’. An exclusivity obligation may be incompatible with your intention to continue another professional activity. A requirement for the manager to be approved should be accompanied by clear criteria and a clear procedure.

Hiring staff remains subject to Portuguese employment law. The brand’s approval of a manager does not replace the employer’s responsibilities or automatically transfer authority over employees to the brand.

3. Calculate the true cost of delegating

If the projected profitability assumes that the owner works at the outlet, hiring someone to perform those duties changes the budget. Ask for any owner’s remuneration included in the figures to be identified, along with the tasks it covers.

Prepare two versions of the operating budget: one in which you manage the business yourself and another with a hired manager. In the second, allow for the following, where applicable:

• Pay, employer contributions and compulsory insurance.
• Recruitment, induction and training for the manager.
• Cover during holidays, absences or after the manager leaves.
• The investor’s time and travel costs for on-site oversight.
• Systems for monitoring cash, stock and team performance.

Avoid counting the same cost twice, but do not put a zero value on your own work either. Even with a manager, you will need to review results, authorise certain expenses and make decisions as an employer.

Also test a scenario in which the manager leaves unexpectedly. Could you temporarily take over operations? If not, identify an alternative and its cost before committing.

4. Agree how replacing the manager will work

Delegation also needs to work when someone falls ill or resigns. Seek to agree in writing who must notify the franchisor of a replacement, what requirements the new manager must meet and how the outlet will keep operating during the transition.

If the franchisor’s approval is required, propose objective criteria, a response deadline and an interim arrangement. Also check who pays for any additional training. These are points for negotiation, not rights automatically guaranteed by a specific franchising law.

Speak to franchisees who employ managers. Ask how much time they still devote to their outlets and which decisions they cannot delegate. Their experience will help you assess whether the model fits the time you have available.

Practical conclusion: before signing, align three things: the role you want to take, the role the contract requires and the cost of hiring someone to handle the remaining work. If they do not align, negotiate or choose another brand.