Franchise customer complaints: what to check before buying

Customers see a shared brand, but the business selling the goods or providing the service is often an independent franchisee. That is why a promise that “head office handles all complaints” deserves just as much scrutiny as the franchise’s payment terms. A shared reputation matters to a franchise network, but it does not replace a clear allocation of legal liability. Before buying, establish who receives complaints, who makes decisions and whose funds cover the losses.

1. Separate liability to customers from responsibility within the network

In Russia, commercial concession arrangements—the legal framework commonly used for franchising—are specifically regulated by Chapter 54 of the Russian Civil Code. The absence of a separate statutory term for “franchise” does not mean that franchising is unregulated. When assessing liability, what matters is the substance of the agreement and each party’s actual role, not the name given to the service package.

Article 1032 of the Russian Civil Code requires the user of the rights (the franchisee) to ensure that the quality of the goods it produces, work it carries out or services it provides matches that of comparable goods, work or services supplied by the rights holder (the franchisor). The franchisee must also make it clear to customers, in the most readily apparent way, that it uses the branding and other identifying marks under a commercial concession agreement.

The rights holder also bears liability. Under Article 1034 of the Russian Civil Code, it has subsidiary liability for claims brought against the franchisee concerning inadequate quality of goods, work or services supplied under the agreement. This is a secondary form of liability, and the procedure for bringing claims is governed by law. For claims against the franchisee as a manufacturer of the rights holder’s products, the rights holder’s liability is joint and several: the claimant may seek performance from both parties together or from either one individually.

These rules should not be read as a promise that the franchisor will pay out on every complaint. The nature of the claim and the circumstances of the breach must be established. If the customer is an individual buying goods or services for personal use, Russia’s Consumer Protection Law also applies. Internal approval processes involving head office do not suspend statutory deadlines for meeting consumer claims.

2. Check the complaints process from first contact to payment

Before signing the agreement, ask for the complaints-handling procedure and anonymised examples of resolved cases. Russia has no specific mandatory format for pre-contractual franchise disclosure, so it is best to list the documents you need explicitly in your request. A general promise of support is not enough: the sequence of actions matters.

Check the following:

• Who is named as the seller or service provider on the receipt, order and customer contract?
• Where does a complaint go: to the individual outlet, a central support team or an app?
• How quickly does head office forward the complaint to the franchisee, and how is receipt acknowledged?
• Who has authority to approve a refund, replacement or repeat service?
• Who arranges quality checks and, where necessary, an expert assessment?
• Who keeps the correspondence, receipts and records of the outcome?

Pay particular attention to orders placed through a shared website. If one company receives payment and another fulfils the order, their respective roles need to be clearly documented and customers must receive accurate information. Placing an order on the brand’s website does not, by itself, establish who must meet a particular claim.

Try a simple test: ask the brand’s representative to walk you through a complaint received on a weekend evening. If a decision depends entirely on a response from one particular employee, your future outlet faces an operational risk.

3. Agree how costs will be allocated according to the cause of the problem

Refunding a customer and deciding who ultimately bears the cost within the network are separate matters. Valid customer claims must be met regardless of whether an internal dispute over responsibility has been resolved.

Prepare a schedule to the agreement covering common scenarios. These might include an outlet employee’s mistake, defective raw materials that the franchisee is required to use, incorrect operating instructions or a misleading description of a service in network-wide advertising. For each scenario, define how the cause will be established, what evidence is needed and how reimbursement will work.

Do not agree to treat every instance of customer dissatisfaction as a proven breach by the franchisee. Equally, do not assume that following instructions automatically releases your company from liability to the consumer. The agreement should address obligations to customers separately from financial settlements with the rights holder.

Clarify which costs can be reimbursed: replacements, delivery, expert assessments, remedial work and court-ordered payments. Set out an approval process for voluntary compensation beyond statutory requirements. If head office can award customers bonuses at the outlet’s expense without seeking approval, those decisions need clear limits and supporting documentation.

Check the deduction mechanism too. Automatically deducting a disputed amount without explaining the reasons puts the franchisee at a disadvantage. Propose advance notice, access to the complaint records and a period in which to submit reasoned objections.

4. Check whether the rules can work in practice

Before buying, assess not only the legal wording but also the resources available. Who trains staff to handle complaints? Are there response templates, a complaints log and a procedure for urgently reporting potential safety risks? Who helps if complaints arrive at several outlets at once?

Request anonymised complaints data for outlets with a comparable operating format: causes, handling times, actual payments and recurring problems. This does not guarantee future results, but it helps you assess whether the procedure works. A lack of data does not in itself prove that the business is unreliable, but it does call for a more cautious assessment of costs.

Only share customers’ personal data between network members where there is a lawful basis and the requirements of personal data legislation are met. Anonymised material is usually sufficient for preliminary franchise due diligence.

Practical takeaway: before paying for a franchise, agree on three things: how complaints are routed, who has authority to resolve them and how costs are allocated. Give your lawyer not only the main agreement but also the customer-facing documents, complaints procedure and terms for shared online orders. Together, these reveal the liability your future outlet will actually face.