Buying a franchise: whose interests does the broker represent?

A broker can introduce you to brands, arrange meetings and help with negotiations. But helping you find a franchise does not necessarily mean representing your interests. Before sharing financial information, commissioning advice or paying an invoice, establish who they work for and what they are actually promising. In the franchise sector, clearly defined roles matter more than a persuasive sales pitch.

1. Distinguish between a brand representative and your own adviser

When buying a franchise, you may encounter a franchisor’s representative, an independent broker or an adviser you appoint yourself. The same person may perform several roles, so the title ‘franchise adviser’ alone does not tell you whose interests they represent.

A brand representative generally looks for suitable candidates for the brand’s business model. They may provide useful explanations of the offer, but their work is not the same as an independent assessment of your risk. A broker may work with several brands, but that does not mean they compare every option available in Slovenia.

Before your first substantive meeting, ask for written answers to these questions:

• Which company will enter into the service agreement with me?
• Do you represent the franchisor or me, or do you work with both parties?
• Which brands do you include in your shortlist, and what criteria do you use?
• Can you also recommend a brand with which you have no commercial agreement?
• Does your role include reviewing documentation, or only introducing the parties?

A limited selection is not necessarily a poor selection, but its limits must be made clear. Do not mistake a list of the broker’s commercial partners for an overview of the entire franchise market.

2. Check who pays and when payment becomes due

If the service is free for prospective franchisees, ask whether the franchisor pays the broker. Payment on signing a contract creates a different incentive from payment for an independent analysis that might conclude with a recommendation not to buy the franchise. This is not evidence of dishonesty, but it is something you need to know.

If you will be paying for the service yourself, request a quotation setting out the tasks, price, tax treatment and any additional costs. Specify exactly what triggers payment: an introduction to a brand, an arranged meeting, a completed report or the signing of a franchise agreement. Without an explanation, the term ‘successful introduction’ leaves room for differing expectations.

Check any exclusivity clauses too. Can you approach other brands yourself while working with the broker? Would you have to pay commission for a brand you already knew about? What happens if you sign an agreement with the franchisor after your relationship with the broker has ended?

Ask the broker to disclose any payment from both parties and explain how they manage conflicts of interest. If they will not disclose the amount paid by the other party, at least establish whether such a payment exists and how it is calculated. Take any refusal to explain into account when assessing the independence of their recommendation.

3. Turn promises into verifiable deliverables

An advisory agreement should contain more than a promise to find you ‘the most suitable franchise’. Specify concrete deliverables: a comparison of selected offers, a list of documents reviewed, a record of outstanding questions and an explanation of the criteria used. The adviser should distinguish between information supplied by the franchisor, their own findings and assumptions they have not verified.

If, for example, they present projected earnings, ask whether the figures come from an actual outlet, represent an average across a particular group of outlets or are simply a forecast. Ask for the source and an explanation of what has been checked. A broker repeating a sales claim does not give it any greater evidential weight.

Also clarify their authority. Someone who arranges meetings is not necessarily authorised to promise a discount, a special right or a contractual amendment on the franchisor’s behalf. Have any important promise confirmed in writing by an authorised representative of the party you will be contracting with, then include it in the appropriate contractual document.

Choose your own lawyer and accountant independently. If the broker recommends them, check their business connections and agree the scope of their engagement and responsibilities directly with them. Brokerage services are no substitute for a legal or financial review.

4. Understand the Slovenian legal framework

Slovenia has no specific franchising law, compulsory franchise register or dedicated statutory franchise disclosure document. Do not therefore assume that a public authority has already assessed the substance of an offer presented by a broker.

The Slovenian Obligations Code (Obligacijski zakonik, OZ) is relevant to negotiations and contracts, including the principle of good faith and fair dealing and the rules on liability during negotiations. The Code also governs brokerage agreements, but the application of individual provisions depends on the actual substance of your arrangement. A service advertised as advice may involve various obligations, so ask a lawyer to review the document itself, not just its title.

Franchise association codes can provide useful standards of conduct within the sector, but they are neither government authorisation nor a guarantee of profitability. If a broker refers to association membership, check which legal entity holds it, which code applies and whether there is a complaints procedure.

Practical takeaway: before working with a broker, clarify three things in writing: whom they represent, who pays them and what they will check. Base your final decision on evidence and an independent review, not solely on their recommendation.