Premises for a Franchise: What to Check Before Signing a Lease

Suitable premises are about more than a good address. For a franchise buyer, they must meet the brand’s requirements, the landlord’s conditions and applicable regulations at the same time. In franchising, approval of a location is often treated as the go-ahead to start fitting out. Yet the franchisor’s approval alone does not confirm that the property can be used for your chosen business activity. Here is what to check before signing a lease or making substantial payments.

1. Get the premises specification before you start looking

Ask the franchisor for a written technical specification for your chosen format: a mall kiosk, shop, café or service centre. A presentation featuring photographs of successful outlets is not enough. You need measurable criteria to rule out unsuitable properties and estimate the cost of preparing the premises.

The specification should cover:

• minimum usable floor area and layout requirements;
• electrical capacity, water supply, drainage and ventilation;
• a separate entrance, unloading facilities and waste storage;
• requirements for the shopfront, signage and opening hours;
• restrictions on floor level, neighbouring premises and accessibility for customers.

Separate essential requirements from preferences. If the brand allows exceptions, establish who is authorised to approve them and how approval must be recorded. A manager’s message saying ‘we can definitely open here’ is no substitute for a decision by an authorised representative.

Also clarify exactly which outlet format has been approved. Otherwise, after leasing a small unit, you may discover that the franchisor approved the address only for a larger outlet requiring a different set of equipment.

2. Assess the property independently of the franchisor

Request an up-to-date extract from Russia’s Unified State Register of Real Estate (EGRN), documents confirming the landlord’s authority to let the property, a floor plan and a draft lease. Check that the address, floor area and boundaries match the premises you are shown. For a sublease, examine the head lease, whether subletting is permitted and how much of the lease term remains.

Next, engage a suitably qualified technical specialist. Their task is not to assess the property’s appearance, but to establish whether it can accommodate your specific business. The promised electrical capacity must be supported by documents; the feasibility of installing ventilation ductwork must be established through a survey and the necessary approvals. The presence of a pipe or socket does not mean that the building services have sufficient capacity.

Mandatory requirements differ for food service, healthcare, education and other activities. Depending on the business, checks may cover hygiene, fire safety, licensing and other requirements. Operating under a franchise does not exempt the business owner from compliance: another company’s licence, where one is required, does not automatically cover your organisation.

Record the findings in a table with columns for the requirement, supporting document, identified shortfall, proposed remedy and responsible party. If approval for layout alterations or additional utility connections has merely been promised, record it as an unresolved issue rather than an established possibility.

3. Link premises approval to the franchise agreement

Russia has no standalone franchising law, but commercial concession agreements are specifically governed by Chapter 54 of the Russian Civil Code. Under Article 1027, such an agreement grants a package of exclusive rights that includes the right to use a trade mark or service mark. Where other contractual structures are used, the relevant licensing rules and general provisions governing obligations apply.

Under Article 1028 of the Russian Civil Code, a commercial concession agreement must be in writing. The grant of the right to use the package of exclusive rights must be registered with Rospatent, Russia’s intellectual property authority; without registration, the grant is deemed not to have taken effect. This is a separate procedure and does not confirm that the premises are suitable.

Russia does not require a specific pre-contractual franchise disclosure document equivalent to those prescribed in some other countries. It is therefore important to agree your own procedure for assessing the premises.

Specify the following in the agreement or an appendix:

• which documents you must submit for the property assessment;
• the deadline for the franchisor to provide a reasoned response;
• what the franchisor will assess: commercial potential, compliance with brand standards or technical characteristics;
• how final approval will be recorded;
• what happens to your opening obligations if the premises are not approved.

Do not accept an unconditional opening deadline that starts running before the property search and checks are complete. Propose linking it to specific, verifiable milestones instead.

4. Align the lease with preparations for opening

Leases are governed primarily by Chapter 34 of the Russian Civil Code. A lease of a building or structure for a term of at least one year requires state registration; this rule also applies to leases of non-residential premises. Lease registration must not be confused with registration of the grant of rights under a commercial concession agreement.

The draft lease should specify the permitted use of the premises and the rights you need to carry out fit-out works, install equipment and signage, and give contractors access. If the works affect common parts of the building, the landlord’s consent alone may not be sufficient. Check separately which approvals are required.

Discuss a preparation period during which no base rent is payable. Clarify whether utility bills, service charges and other payments will still be due. Record the handover date and the condition of the premises in a signed handover report, supported by photographs and meter readings.

Agree what will happen if necessary permissions are refused or technical obstacles emerge: who will resolve the problem, who will pay, the deadline for doing so and when the lease may be terminated. These protections do not arise automatically from the landlord’s assurance that ‘the property is suitable’.

Practical takeaway: before signing a lease, secure three things: the franchisor’s written approval, an independent assessment confirming the property’s suitability, and agreement with the landlord on the necessary works. Only then commit to fit-out works and an opening deadline.