Buying a franchise: check the cost of mandatory software

Your till, ordering, bookings and reporting may all rely on software chosen by the franchisor. As a prospective franchisee, you therefore need to look beyond the initial fee and ongoing franchise fees. Before joining the franchise network, you should also understand which digital systems you will have to use, who you will pay for them and how their costs might change. Carry out this review before signing, not when the equipment is being installed.

1. List all mandatory digital systems

Software may be an integral part of the franchise’s business system, but the phrase “system access” does not tell you what the price actually includes. The offer may cover a basic user account but exclude the point-of-sale module, online ordering or integration with accounting software.

Ask the franchisor for a list of the systems you must use when opening and throughout your operations. For each one, distinguish mandatory features from optional extras you can decline. Include any requirements for devices, internet connectivity and third-party services without which the software cannot function.

For each system, record:

• its purpose and why its use is mandatory;
• the provider and who will invoice you;
• the number of users, devices and outlets included;
• the basic price and any features charged separately;
• the licence or subscription term;
• the document setting out the terms of use.

In particular, check whether the software is included in the franchise fees or charged separately. If the sales presentation promises that use is included but the contract refers to a separate price list, ask for the discrepancy to be resolved in writing. A sales representative’s verbal explanation is not a sound basis for a multi-year financial plan.

2. Calculate the full cost, not just the subscription

Initial installation may account for only a small part of the expense. Your review should cover account set-up, product configuration, data migration, integration with other software and any compatible devices you may need to buy. Also check whether you need a separate contract for online payment processing or another supporting service.

Ongoing charges may depend on the number of users, orders, locations or modules used. A single monthly figure is therefore not always useful for planning. Ask the provider to explain the basis of its charges and calculate the cost for your intended way of operating.

It is useful to assess three scenarios: opening an outlet, normal operations and business growth. Hiring another member of staff or introducing delivery may mean you need a different package. Check whether you can subsequently downgrade from a higher-tier package and whether a minimum billing period applies.

Include the cost of regular upgrades and any mandatory device replacements in your financial plan. Note whether prices include VAT and check the tax treatment with your accountant, particularly if the provider is based abroad.

Do not assume that “updates included” also covers the introduction of an entirely new system. Ask the provider to clarify this distinction explicitly. It could determine whether you have to pay again for installation and customisation during the contract term.

3. Use the contract to limit unpredictable changes

Slovenia has no specific franchising act, mandatory franchise register or specific statutory pre-contractual disclosure document. A franchise agreement is an innominate contract, meaning it is not a separately defined contract type under Slovenian law. It is governed by the general rules of the Obligations Code (OZ), including the principle of good faith and fair dealing. The Copyright and Related Rights Act (ZASP) is also relevant to rights in computer programs.

This does not mean that the law automatically guarantees a fixed subscription price or permanent access to the software. You need to check the permitted scope of use, payment obligations and provisions for changes in the franchise agreement and the accompanying licence or subscription terms.

With a lawyer, review in particular who can change the price, what procedure they must follow and how much notice they must give. If the franchisor requires you to use a particular program but the external provider can change its prices at will, you may face an obligation without any effective choice.

Propose a clear mechanism for changes: advance notice, defined criteria for price increases and provisions addressing the consequences of a significant change. If a system replacement is mandatory, agree who will pay for migration, customisation and overlapping subscriptions. These are matters for negotiation, not specific rights guaranteed to franchisees by law.

4. Check when payments actually stop

The franchise agreement and software subscription will not necessarily end at the same time. If you subscribe directly with the provider, the subscription may have its own minimum term, automatic renewal or notice period. Ending the franchise relationship does not, in itself, stop all the bills.

Before signing, compare the start dates, minimum commitment periods and termination provisions. Clarify who must give notice and whether the subscription can end alongside the franchise agreement without further payments for a service you can no longer use.

Also check the cost of a final export of business records, any temporary access needed for accounting purposes and removal of the software from devices. Access for winding-up tasks should be expressly agreed, rather than left to the provider’s goodwill later.

Practical takeaway: before buying, prepare a consolidated overview of all mandatory software, charges and termination terms. Sign only once you understand the costs of growth, price increases and exit—not just the price at opening.