Franchise software: what to check before you buy

Your tills, stock control, customer bookings and reporting may all run on software chosen by the franchisor. For a prospective franchisee, this is more than a matter of convenience: access to these systems becomes essential to day-to-day operations. Before joining a franchise network, establish who provides that access, what it really costs and whether you can obtain your own business data without the brand owner's permission.

Map out the mandatory software

Ask the franchisor to list every system needed for a single outlet: point-of-sale software, stock management software, a customer relationship management system, a booking service, an online account portal, analytics and staff apps. Clarify which are mandatory under the agreement and which are merely recommended.

For each system, record:

• its name and purpose;
• the supplier and the party you will contract with;
• who holds the main account;
• the number of users and workstations included;
• available features and restrictions;
• connections to other mandatory services.

Ask for demo access that lets you try typical tasks, rather than just a presentation. Check whether you can process a refund, correct an error, export sales data and generate a report for your accountant. Do not use customers' real personal data for testing.

Pay particular attention to dependencies between systems. For example, an affordable booking system may require separate payments for messaging, telephony and data exchange with the till. As a result, the mandatory package may be considerably larger than the sales proposal suggests.

The outcome of this review should be an agreed software list, not a vague promise to provide a ‘modern digital platform’.

Check the legal basis for access

In Russia, commercial concession arrangements 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 bundle of exclusive rights must be registered with Rospatent, Russia's intellectual property office. It is the grant of rights that is registered, not simply a document labelled a ‘franchise agreement’.

However, a commercial concession agreement does not in itself mean that the franchisee has acquired all the rights needed to use the network's software. Software use is also governed by Part Four of the Russian Civil Code. Depending on how the service is structured, access may be provided under a licence, sublicence, services agreement or a mixed agreement. Have a lawyer assess the legal arrangement based on the substance of the documents.

Find out whether the software belongs to the franchisor or an external developer. If an intermediary grants the right to use it, ask for evidence of their authority. A sublicence requires the licensor's written consent.

Check that the permission covers your legal entity or your registration as an individual entrepreneur in Russia, as well as the required number of outlets and staff. An account held by the network's management company does not necessarily give an independent franchisee a lawful basis for using the software.

Request the external supplier's terms before signing the main agreement. Pay attention to the access period: if you are buying a franchise for several years but an essential service is available only for a short period with no clear renewal procedure, that is a risk in its own right.

Calculate the full cost of the software package

Separate set-up costs from ongoing charges. The first category may include configuration, migration of reference data, till integration, training and the creation of additional accounts. The second may include subscriptions, technical maintenance, customer messages, data storage and per-transaction charges.

For each payment, clarify who receives it, when it is due, how tax applies to the quoted price and the basis for any price changes. The phrase ‘access included in the package’ is not enough: you need to know how long it is included for and what it covers.

Compare costs under different operating scenarios:

• low activity levels just after opening;
• the planned number of orders;
• a larger team and more workstations;
• higher messaging volumes and more stored data.

This is not a profit forecast. It is a check on how the cost of mandatory software changes as usage varies. Ask for a separate breakdown of charges that apply when you exceed the limits.

Propose recording the included services, pricing basis, procedure for notifying price changes and rules for paying for additional features in a schedule to the agreement. If an external supplier sets the prices, do not assume that the franchisor can keep them unchanged. Discuss an acceptable alternative and how the costs of switching would be shared.

Agree access controls and data exports

Find out who can create users, change staff permissions, disable the account and view information about the outlet's operations. As a franchisee, you need to understand which actions you can take independently and which require a request to the network's management company.

Ask for the grounds for suspending access to be set out. Where permissible, propose advance notice and a period in which to remedy a breach. Discuss separately whether you can obtain accounting and operational data exports while access is restricted: a payment dispute should not leave you without the records needed to meet your obligations.

If the system contains customer or staff information, Russia's Federal Law No. 152-FZ ‘On Personal Data’ applies. The parties' roles depend on how processing is actually organised, not merely on the title of the agreement. Establish who is the personal data operator, who is entrusted with processing, the purposes for which information is shared and the safeguards in place. Membership of the same franchise network does not, by itself, permit unrestricted sharing of customer databases.

Ask for a sample data export and review it with an accountant or technical specialist. Record which data will be available, the format, delivery times, costs and the procedure after access ends. Assess the ability to transfer personal data separately, taking account of the legal grounds for processing it.

Practical takeaway: before buying a franchise, obtain three schedules to the agreement: a list of mandatory software, a complete table of charges and rules governing data access. Clear terms you can verify are more useful than a promise that everything will run through one convenient system.