Franchising in Portugal: preparing for quality audits

Turning an existing business into a franchise network takes more than teaching others how to operate: you also need to check that every outlet delivers the customer experience you promise. Before expanding, develop a quality audit system that identifies shortcomings, helps put them right and respects franchisees’ independence. The aim is not to assign blame, but to protect a shared promise through transparent criteria.

1. Decide what needs to be checked

Start with risks that could affect customers, the brand’s reputation or business continuity. Do not turn every preference of the founder into an auditable requirement. A useful audit distinguishes essential requirements from suggestions for improvement.

Organise the criteria into three groups:

• Legal compliance: licences, mandatory customer information and requirements specific to the business activity.
• Quality of the customer experience: service delivery, the condition of the premises and complaints handling.
• Consistency of the concept: product presentation, use of visual branding and adherence to essential procedures.

For each criterion, specify the requirement, the evidence accepted and the severity of any failure to meet it. “Appropriate customer service” is too vague. “The customer receives an explanation of the service terms before confirming the purchase” allows for a more objective assessment.

Avoid treating a presentation flaw as equivalent to a situation that could put people at risk. Define critical issues that require an immediate response, regardless of the overall assessment. A good score should not conceal a serious risk.

2. Make checks proportionate and repeatable

Before auditing franchisees, test the checklist in a company-owned operation. This exercise is intended to calibrate the assessment, not to revalidate the entire business model. Ask two people to assess the same situations and compare their findings. Frequent discrepancies point to unclear criteria.

Combine methods according to the risk: on-site visits to inspect premises, document reviews to check records and remote follow-up to verify straightforward corrections. Set a standard audit frequency and define the events that warrant additional checks, such as recurring complaints or significant operational changes.

Prepare a short procedure that explains:

• Who may conduct the audit and what training or preparation they need.
• What will be examined and for how long.
• How evidence will be recorded.
• When the franchisee will receive the report.
• How they can provide clarification or challenge a finding.

Unannounced visits should not come as a contractual surprise. If they are necessary, explain in advance when they may take place and what limits apply. An internal audit is also no substitute for official inspections and does not, in itself, certify full compliance with the law.

3. Establish a contractual basis for quality control

Portugal has no specific franchising law or mandatory register of franchisors. Franchise agreements are not a specifically regulated contract type and are subject to the general rules of the Portuguese Civil Code, including freedom of contract and good faith in negotiation and performance. Depending on the circumstances, rules on standard contract terms, competition law and sector-specific legislation also apply.

The European Code of Ethics for Franchising is a self-regulatory reference, not Portuguese law. Its application through association membership or contractual terms does not remove the obligation to comply with legal requirements.

The right to audit should therefore be clearly set out in the agreement: its purpose and scope, access to premises, required documentation, confidentiality, any costs and the handling of non-compliance. Avoid unrestricted permission to inspect any information or to change all requirements unilaterally.

Where customer or employee data is involved, the General Data Protection Regulation and Law No. 58/2019, which implements it in Portugal, apply. A contractual clause does not automatically make all access to personal data lawful. Use anonymised evidence wherever it is sufficient, restrict access and set retention periods. If data is processed on behalf of another organisation, assess whether a data processing agreement is needed.

Have these provisions reviewed by a legal adviser before presenting the agreement to your first prospective franchisees.

4. Turn findings into verifiable corrective action

The report should distinguish between observed facts, applicable requirements and proposed measures. Include only relevant evidence and give the franchisee an opportunity to explain the context before finalising disputed findings.

For each confirmed failure to meet a requirement, record who is responsible, the corrective action, a deadline proportionate to the risk and how resolution will be verified. A photograph may demonstrate a physical correction; a recurring customer service failure may require further observation.

Look for common causes too. If several outlets fall short on the same point, the problem may lie in an ambiguous instruction, an unsuitable tool or an impractical requirement. Auditing should improve the franchise network, not simply assess each member in isolation. Any sanctions must comply with the agreement and the law, with legal advice sought where necessary.

Next steps: prepare a short checklist, test the consistency of assessments and obtain legal review of the rights to access information and premises and require corrective action. Only then should you present the system to prospective franchisees.