Delayed Franchise Opening: What to Agree Before You Buy

Between buying a franchise and making your first sale, you will need to prepare the premises, obtain approvals and receive materials. If one stage takes longer than expected, you could be left with no revenue but still have rent and mandatory payments to cover. Before joining a franchise network, agree not only on the planned opening date but also on what happens if it is postponed. Below is a step-by-step guide to assessing this particular risk before buying a single outlet in Russia.

1. Turn the promised date into a sequence of obligations

The phrase ‘you will open in two months’ is of little help unless it is clear what starts the clock. This might be signing the agreement, paying the initial fee, taking possession of the premises or obtaining approval for the design. If the parties use different starting points, even preparations made in good faith can end in a dispute.

Ask the franchisor for a launch plan and compare it with the draft agreement. Each stage needs four elements: a deliverable, a responsible party, a deadline and evidence of completion. For example, approval of the layout should result in an approved file with a specific version number, rather than a verbal message from a manager.

Propose including the following in a schedule to the agreement:

• a list of the initial information the franchisee must provide;
• deadlines for the rights holder to supply instructions and requirements;
• a procedure for approving the design and addressing comments;
• the conditions the outlet must meet before it can open;
• documents confirming completion of each stage.

Set out dependencies separately. If purchasing can begin only once a specification has been approved, a delay in that approval affects the subsequent delivery date. The agreement should allow for this link, rather than automatically treating every delay as a breach by the franchisee.

Also check what counts as opening: a technical launch, the first sale or full operation to the brand’s standards. These events may happen on different days. The same term should be used consistently in the plan, the agreement and the provisions governing when payments start to accrue.

2. Calculate the cost of waiting, not just launching

To assess the risk, draw up a separate budget for the period without sales. This is not another payback calculation: the aim is to understand which obligations remain in force while the outlet is still closed.

Divide costs into three groups. The first is payments to independent third parties: rent, stock storage and loan servicing. The second is payments to the franchisor: fees, system access and agreed services. The third is additional costs caused by the postponement: another visit by a specialist, extended storage or revisions to materials already prepared.

For each item, record the basis for charging it, the start date, whether it can be suspended and the procedure for refunding any advance payment. Do not assume a payment is waived simply because you are not yet using the relevant resource.

The absence of sales does not, in itself, exempt you from paying fees for the right to use the intellectual property granted to you. This approach is reflected in paragraph 40 of Resolution No. 10 of the Plenum of the Supreme Court of the Russian Federation, dated 23 April 2019. Any deferral or waiver of specific pre-opening charges therefore needs to be expressly agreed, not assumed.

Test two scenarios: a postponement caused by you and one caused by the rights holder’s actions. Discuss which payments remain due in each case. If a grace period ends on a fixed calendar date, clarify whether it will be extended if the franchisor delays approvals. Otherwise, the promised payment deferral could expire before you are able to start trading.

3. Distinguish between causes of delay and agree postponement procedures

It is more useful to define a procedure in advance than to argue over who is to blame after the opening date has been missed. Distinguish between delays caused by the franchisee, the rights holder, third-party contractors and circumstances where responsibility has yet to be established.

For each situation, agree how notice must be given, the response deadline and the evidence required. This could include correspondence sent to the addresses specified in the agreement, records of materials handed over, comments on the design and supplier notices. An everyday messaging app is convenient for work, but its status as a channel for legally effective notices should be expressly agreed.

Pay particular attention to approvals with no deadline. A clause stating ‘opening is subject to the rights holder’s approval’ leaves matters uncertain if there are no readiness criteria or review deadline. Propose specifying the requirements to be checked, a deadline for providing reasoned comments and a procedure for reviewing the outlet again once corrections have been made.

Do not assume that silence automatically means consent. If the parties want such a mechanism, it should be developed separately with a lawyer, taking account of the type of approval involved. For safety matters, the mere expiry of a deadline is not enough.

When postponing the opening, document an updated timetable showing the effects on dependent stages and payments. Changing the date should not quietly become a waiver of claims that have already arisen: read any wording stating that the parties have no claims against each other carefully.

4. Check the legal basis for launching

In Russia, commercial concession agreements—the legal framework commonly used for franchising—are specifically governed by Chapter 54 of the Civil Code of the Russian Federation. Under Article 1028, the agreement must be in writing, and the grant of the right to use a package of exclusive rights must be registered with Rospatent, Russia’s intellectual property authority. Without registration, the grant of rights is deemed not to have taken place. It is the grant of rights that is registered, not merely the fact that an agreement has been signed.

The launch timetable should therefore allow for preparing and submitting documents, responding to queries and receiving the registration outcome. A manager’s promise of a quick opening does not replace the legal basis for using the brand. While the agreement can set deadlines for a party’s actions, a contractual date alone cannot guarantee a public authority’s decision.

Russian law does not prescribe a single mandatory pre-contractual franchise disclosure document. Request information about the launch process yourself and ensure that material commitments are included in the documents you sign. The presentation and working plan should not contradict the main agreement.

Practical takeaway: before paying, prepare three agreed documents: a launch timetable, a budget for the waiting period and rules for postponing deadlines. If an opening date has been given but responsibility for approvals and payments during a delay remains unclear, you do not yet know the true cost of launching.