Franchising in Portugal: putting franchisee support into the contract

When turning an existing business into a franchise network, promising ‘ongoing support’ may seem natural. Yet the phrase says little about who will resolve an IT failure, oversee an opening or help when sales fall. Before signing the first agreement, a prospective franchisor should turn the support it can realistically provide into commitments that can be checked. This guide explains how to define those obligations without promising results or creating a structure that is impossible to sustain.

1. Take stock of the support the business can provide

Start with the tasks your team already carries out in company-owned outlets. Separate those that depend directly on the founder from those that someone else can handle with clearly identified resources and skills. If every decision still requires your involvement, you have yet to build the capacity to support franchisees.

Organise support into three stages:

• Before opening: assessing the premises from an operational perspective, preparing the team, installing tools and coordinating the timetable.
• At launch: having a designated person on site, checking essential procedures and resolving initial difficulties.
• During ongoing operations: answering queries, monitoring performance indicators, refreshing knowledge and providing technical or commercial assistance.

For each task, identify the person responsible, their backup, the resources required and any external dependencies. For example, the franchisor may coordinate software installation but depend on the supplier to fix a fault.

Also test your capacity to handle simultaneous demands: who will support an opening if another outlet has an urgent problem? This question exposes limits that need to be addressed before taking on new obligations.

2. Understand the applicable Portuguese rules

Portugal has no specific legislation governing franchise agreements and no compulsory registration specifically for franchisors. Business registration, tax obligations and the requirements of the relevant business activity still apply.

A franchise agreement is a contract type not specifically regulated by statute and is based on the freedom of contract provided for in Article 405 of the Portuguese Civil Code. That freedom does not allow parties to disregard mandatory rules or duties of good faith. Article 227 is particularly relevant during negotiations; Article 762 requires good faith in performing obligations and exercising the corresponding rights.

Presenting a support team that does not yet exist, or suggesting availability that the business cannot guarantee, may therefore have legal consequences. The absence of a legally prescribed, standardised pre-contractual disclosure document does not remove the general duties to provide information and deal fairly.

Where pre-drafted terms are used without individual negotiation, Decree-Law No. 446/85, on standard contract terms, must be considered, including its requirements to communicate and explain those terms. Clauses on support, limitations and liability should not be hidden in schedules supplied at a late stage.

The European Code of Ethics for Franchising is a self-regulatory reference, not a Portuguese law of general application. Its provision for continuing assistance helps guide good practice within franchise networks, but does not replace specific contractual terms. Have the draft agreement and its schedules reviewed by a lawyer before using them.

3. Set out clear and proportionate commitments

Create a contractual schedule dedicated to support, consistent with the main agreement. It does not need to describe every internal procedure: it needs to allow both parties to understand what they can require of each other.

Include at least:

• Scope: the types of problems and requests covered.
• Access: contact channels, operating hours and the people authorised to submit requests.
• Priority: criteria for distinguishing an operational disruption from a routine query.
• Response: agreed timescales for acknowledging receipt and starting an assessment.
• Follow-up: how progress and closure of the request will be communicated.
• Limits: excluded services, reliance on third parties and the terms for additional assistance.

Distinguish response times from resolution times. It may be possible to commit to assessing a fault promptly; guaranteeing a fix within a set period may be unwise where it depends on third parties.

Also define the franchisee’s duties: supplying sufficient information, providing authorised access to systems and carrying out agreed measures. Commercial support should not be presented as a guarantee of turnover or profitability. The franchisee remains responsible for running a legally independent business.

4. Plan for failures, changes and evidence of support

A useful commitment also explains what happens if it is not met. Establish an escalation process: the operational contact, the person responsible for the franchise network, and a formal meeting to agree corrective measures. Keep this mechanism distinct from the dispute resolution procedures set out in the agreement.

Record requests, responses, visits and agreed actions in a system accessible to the relevant people. A brief follow-up record should identify the problem, the chosen action, the person responsible and the deadline. Avoid collecting unnecessary personal data and comply with applicable data protection rules.

Set out how support may evolve. Changing a contact tool is not the same as withdrawing contractually agreed on-site assistance. Material changes must comply with the agreement and, where necessary, be agreed in writing; they should not be introduced through a simple operational update.

Practical conclusion: before entering into an agreement, simulate an urgent request and a routine query. If you cannot identify who will respond, what resources they will use and what commitment they will be working to, clarify your support capacity before promising it.