Franchising in Portugal: preparing pre-contractual information

Before turning an existing business into a franchise network, you need to prepare the information you will share with anyone considering joining. A pre-contractual information pack helps prospective franchisees understand the proposition and helps the franchisor maintain consistency across documents, meetings and the contract. It is more than a sales presentation: it should enable candidates to assess the commitments, restrictions and actual operating conditions.

1. Understand the rules that apply in Portugal

Portugal has no specific franchising law requiring a disclosure document in a prescribed format, a standard disclosure period or a special register of franchisors. Brazil’s franchise disclosure document, known as the Circular de Oferta de Franquia, and its associated statutory disclosure period should not be presented as Portuguese requirements.

This does not mean there are no rules. Article 227 of the Portuguese Civil Code requires good faith when negotiating and entering into contracts. Material omissions or misleading information may, depending on the circumstances, give rise to pre-contractual liability. Freedom of contract, provided for in Article 405, operates within legal limits.

Where standard contract terms are used, Decree-Law No. 446/85 applies, particularly its duties to communicate and provide information about those terms. Providing a summary is no substitute for properly communicating the full terms. Portuguese and European competition rules and industrial property rules also apply where relevant.

The European Code of Ethics for Franchising is a self-regulatory benchmark, not a Portuguese law that is universally binding. Whether it is binding should be checked in light of association membership or commitments undertaken. Before using the information pack, have it reviewed by a legal adviser with your specific business model in mind.

2. Build an information pack that allows candidates to assess the proposition

Organise the information around candidates’ practical questions, distinguishing between verified facts, proposed terms and matters still to be decided. For a business just starting to franchise, transparency about its experience to date is particularly important.

Include at least:

• Who is granting the franchise: the entity’s identity, contact details and business history, without confusing the age of the company with its experience of managing franchisees.
• What has already been tested: existing company-owned outlets, the context in which the concept was tested and any significant differences from the future franchised operation.
• What rights are being offered: the trade mark, working methods and key limits on their authorised use.
• What commitments are involved: the expected investment, payments to the franchisor, mandatory purchases and other identified costs, with clear assumptions and exclusions.
• How the relationship works: training, support, operational obligations and key terms governing duration, renewal and termination, with references to the full contract.

If there are no franchised outlets yet, say so explicitly. A successful company-owned outlet is not the same as a franchise network with proven results.

3. Align documents and explanations

The information pack should be consistent with the draft contract and the accompanying schedules provided. A promise made in a meeting does not cease to matter simply because it is absent from the written presentation.

Create a simple internal checklist with four fields: topic, information communicated, supporting document and person responsible for verification. Use it to check points such as on-site support, travel expenses, IT tools and supply terms.

For example, if the presentation mentions opening support, explain what that support involves, who provides it and which costs are included. Avoid allowing candidates to interpret remote guidance as the permanent presence of a support team.

Confidential operational materials can be shared in stages, with proportionate confidentiality safeguards. However, those safeguards should not be used to conceal significant obligations until after signing. Explain in advance any requirements that could affect the investment decision.

4. Allow time for review and clarification

Establish an internal procedure for providing documents before the contract is signed or binding financial commitments are made. As Portuguese franchising has no specific, uniform statutory disclosure period, do not present the period chosen by the company as a legal requirement.

The time allowed should reflect the complexity of the proposition and allow candidates to seek independent legal and accounting advice. Avoid handing over lengthy documents at the signing meeting itself.

Keep a record of questions received and provide written answers to significant requests for clarification. If there are material changes — for example, a new mandatory charge — provide the updated version and give candidates a genuine opportunity to reassess the proposition.

5. Keep evidence without creating false assurances

Give the information pack, draft contract and schedules a date and version number. Record which documents were sent, when they were delivered and which subsequent clarifications changed or supplemented the information.

An acknowledgement of receipt can help demonstrate delivery, but does not, by itself, prove that the information was properly understood or remove liability for inaccurate information. Avoid blanket statements declaring that the candidate accepts all risks or waives the need for any clarification.

Practical conclusion: before recruiting franchisees, prepare a verifiable information pack, cross-check it against the contract and establish a process for delivery, questions and updates. An informed decision provides a stronger foundation for the network than a rushed signature.