Franchising in Portugal: Defining Essential Equipment

When preparing an existing business for franchising, it is easy to turn the original outlet’s equipment list into a requirement for every future franchisee. Yet what has been bought over the years does not always reflect what is needed to replicate the concept. Across a franchise network, clear technical specifications help maintain quality, control investment costs and prevent each opening from relying on improvised decisions.

1. Separate the essential from the useful

Start by taking an inventory of the equipment used in the business, noting the function of each item. Do not simply copy invoices: observe which items are actually used, when they are used and how they affect the service provided.

Place each item of equipment in one of these categories:

• Essential to the concept: without it, the product or service cannot be delivered to the promised standard.
• Capacity-dependent: needed only above a clearly justified workload threshold.
• Optional: improves comfort or productivity but is not essential at the outset.

A higher-capacity machine may make sense at the original outlet but impose an unnecessary cost on a smaller operation. The reverse can also be true: choosing the cheapest option may create a bottleneck at peak times.

For every mandatory requirement, record the operational justification. If you cannot explain what problem it solves, reconsider it before imposing it on the franchisee. Also distinguish between equipment needed at opening and items that can be purchased later, based on objective criteria.

2. Specify performance, not just brands

A particular model may be discontinued, have its specifications changed or lose access to servicing. The equipment specification sheet should therefore set out the performance required, alongside any approved models.

Depending on the business activity, include:

• Usable capacity and operating speed under real working conditions.
• Dimensions and installation requirements, such as power supply, water or ventilation.
• Safety, hygiene and ease-of-cleaning requirements.
• Compatibility with other equipment and systems in use.
• Servicing arrangements, spare parts availability and expected maintenance requirements.

These specification sheets should draw on the existing business’s experience. Record any observed limitations, recurring faults and differences between advertised capacity and actual performance. If an alternative has not yet been used, treat it as a proposal to be validated, not a proven equivalent.

Also establish a procedure for assessing replacements: who receives the technical specification sheet, who checks compatibility and how the decision is communicated. Approval should be based on clear criteria, avoiding both unsuitable purchases and unjustified refusals.

3. Calculate running costs and plan for breakdowns

The purchase price is only part of the investment. Before presenting an equipment package to a prospective franchisee, set out the known costs and identify those requiring a separate quotation for each installation.

Consider transport, assembly, alterations to the premises, user training, consumables, maintenance and any software licences. Separate one-off expenses from recurring costs. State the date and terms of quotations without presenting estimates as guaranteed prices.

Compare purchase, rental and other equipment supply arrangements by examining their respective contractual terms. A lower monthly payment may involve a longer commitment, restrictions on use or charges for returning the equipment.

Prepare a response plan for failures of critical equipment, too. Who contacts the service provider? Is a temporary alternative available? Which activities must stop for safety or quality reasons? Do not promise business continuity unless you have the means to ensure it.

A maintenance sheet should specify tasks, responsibilities and records to be kept. The franchisor may set operational standards but should make clear which services are included in its support and which must be arranged and paid for by the franchisee.

4. Make requirements clear before signing

Portugal has no specific franchising law or mandatory pre-contractual disclosure document in a prescribed format. This does not remove the need to provide relevant information: Article 227 of the Portuguese Civil Code requires good faith in negotiations and may provide grounds for pre-contractual liability.

Mandatory equipment and its foreseeable costs should therefore be explained before signing. General contract law, the rules governing standard contract terms where relevant, and Portuguese and EU competition rules also apply. The applicable safety legislation and technical requirements depend on the equipment and business activity.

The contract and technical annexes should clarify who purchases the equipment, who owns it, who pays for repairs and how equivalent alternatives are approved. Requirements to buy from a particular supplier should undergo legal review, rather than being assumed valid simply because they appear in the manual.

Practical conclusion: before recruiting franchisees, prepare a justified equipment list, performance specification sheets and a schedule of costs and maintenance requirements. The aim is to replicate the business’s operating capability, not every purchase made by the original outlet.