Franchising in Portugal: setting up a franchisee council

Turning an existing business into a franchise network requires more than passing on methods: it means learning from independent business owners who work with customers every day. A franchisee council can provide a structured way to listen, identify shared challenges and improve decisions. To work effectively, it needs a clear purpose, balanced representation and rules that distinguish participation from contractual authority.

1. Define the council’s purpose

A franchisee council is a structured forum for consultation between the franchisor and representatives of franchise outlets. It does not replace the management of each business, nor should it be presented as a body with powers that the franchise agreements do not grant it.

Before recruiting the first franchisees, the business owner can draw up a simple framework for participation. However, while there is only one franchisee, documented one-to-one meetings will usually be more useful than a formal structure. A council becomes worthwhile when there are different local experiences to bring together.

Start by writing a short mission statement: to gather recurring concerns, discuss operational proposals and monitor trials authorised by the franchisor. Suitable topics include the clarity of instructions, difficulties using tools and ongoing training needs.

Separate shared issues from individual cases. A common technical difficulty may warrant discussion. An outlet’s debt, an employment dispute or a complaint from an identifiable customer should be handled through separate channels, with restricted access to information.

Avoid turning the council into a mechanism for endorsing decisions that have already been made. Each consultation should make clear what can still change and where the boundaries of the discussion lie.

2. Align participation with Portuguese rules

Portugal has no specific franchising law, nor is there a legal requirement specific to this business model to establish a franchisee council. A franchise agreement is an atypical contract — one without a dedicated statutory framework — and is governed, among other provisions, by the general rules of the Portuguese Civil Code, including freedom of contract and good faith.

Where pre-drafted contractual terms are used, the rules on standard contract terms set out in Decree-Law No. 446/85 also apply. Portuguese and EU competition rules likewise remain applicable to relationships and meetings within the network.

The European Code of Ethics for Franchising is a self-regulatory instrument, not a Portuguese law of general application. It can guide good practice in franchise relationships, but should not be cited as though it requires every network to establish a council.

In practice, draw up rules of procedure and ensure they are consistent with the franchise agreements. Clarify:

• Whether the council is purely advisory or has expressly agreed powers;
• Who can participate and how representatives are selected;
• What information may be shared and what confidentiality obligations apply;
• How recommendations are recorded and responses communicated.

A vote does not, in itself, amend individual agreements. If a proposal requires contractual changes, these must follow the appropriate legal procedure. Have the council’s rules legally reviewed before presenting them as a commitment to the network.

3. Choose representatives and safeguard discussions

A council made up solely of the best-performing outlets may overlook important obstacles. Aim to represent different locations, operating formats and levels of experience, where that diversity exists.

Define a transparent application or election process, the length of members’ terms and arrangements for replacing them. The group should be small enough to discuss issues in depth, while still allowing other franchisees to submit proposals.

Participation also carries costs: travel, preparation time and time away from the outlet. Establish in advance whether meetings will be held remotely, who will cover expenses and what materials will be needed.

Pay particular attention to competition law. Franchisees are independent business owners, so the council must not become a forum for agreeing resale prices, allocating customers or exchanging commercially sensitive information without appropriate assessment. The franchisor’s presence does not automatically make such practices lawful.

Use aggregated information where this is sufficient, and assess whether participants could identify an individual outlet’s data. Remove unnecessary personal data from documents and restrict access to minutes and appendices.

4. Turn contributions into actions that can be tracked

Circulate an agenda before each meeting. For each topic, state the problem identified, the information available and the decision or recommendation sought. This reduces vague discussion and helps participants prepare useful contributions.

Then record four elements: the proposal, the franchisor’s response, the person responsible for follow-up and the planned review date. When a recommendation is not accepted, explain why without disclosing confidential information.

For example, if several outlets find an operational instruction ambiguous, the council can propose alternative wording. The franchisor assesses it, tests it where necessary and communicates the approved version through official channels. The minutes alone should not be mistaken for an update to the operating manual.

Review periodically whether the council is solving problems or simply adding more meetings. Consider the diversity of contributions, follow-up on proposals and how useful participants find it.

Practical takeaway: start with a written mission, rules on representation and an action log. A useful council gives franchisees a voice without undermining the independence of their businesses or the accountability of those who make decisions.