Delays in opening your first franchise: what to agree in advance

The first franchise agreement is signed, but the opening date keeps slipping: equipment has not yet arrived, training is incomplete or the IT system is not working. For a business expanding its franchise network, this is more than an organisational inconvenience. A delay can lead to costs and disputes before the first sale. Before signing, agree how you will establish the causes, revise deadlines and allocate responsibility for the consequences.

1. Break the opening date down into verifiable milestones

A single date in the agreement does not explain who must do what by then. Prepare a launch plan giving each milestone a responsible person, a deadline, evidence of completion and a list of prerequisites. Distinguish between the target opening date and the contractually binding deadline, and explain the consequences of missing it.

For each milestone, answer four questions:

• What exactly needs to be ready?
• Which party to the agreement must ensure this?
• Which earlier tasks does completion depend on?
• How will the parties confirm that the task is complete?

Delivery of retail equipment, for example, is not the same as installation and successful testing. Likewise, attending training does not necessarily mean the team is ready to work independently. Evidence should therefore confirm the outcome, not merely that an activity has taken place.

If several tasks depend on the same earlier task, flag this explicitly. Late approval of technical requirements can delay equipment orders, installation and testing. Without mapping these dependencies, it is difficult to assess fairly who caused the delay.

Both parties should review the plan before signing. The franchisor should not promise contractors’ delivery dates without checking them, while the franchisee should not confirm the availability of staff or premises without a realistic basis.

2. Set out responsibility under Slovenian contract law

Slovenia has no specific franchise law, compulsory franchise register or specific statutory franchise disclosure document. A franchise agreement is an innominate contract, meaning it is not a separately defined contract type under the law. Its performance and the consequences of delay are governed primarily by the general rules of the Slovenian Obligations Code (Obligacijski zakonik, OZ). Freedom of contract is not unlimited: agreements must not conflict with mandatory legal provisions or moral principles.

The OZ also governs a party’s delay in performing its obligations, liability for breach of contract and the options for terminating an agreement for non-performance. When assessing the consequences, it matters whether timely performance is an essential term of the agreement and whether a reasonable additional period for performance must be allowed. A lawyer should therefore tailor the wording to the actual opening plan rather than use a generic delay clause.

Distinguish between three categories of event: delays caused by the franchisor, delays caused by the franchisee and obstacles for which responsibility requires a separate assessment. A delay by an external supplier does not, in itself, mean that neither party is liable. What matters is who undertook the obligation and what circumstances caused the failure to perform.

If you want to include a contractual penalty, have it legally reviewed. Under the OZ, a contractual penalty cannot be agreed for monetary obligations, and a court may reduce a disproportionately high penalty at the debtor’s request. A penalty is therefore no substitute for a clear description of the obligations.

3. Allocate costs for the period without sales in advance

A delay often means costs are already being incurred while no revenue is coming in. Prepare a list of potential expenses: rent, staff costs, equipment storage, repeat training, rescheduled advertising and subscription extensions. For each, record who commissions and pays for it, and how any reimbursement will be assessed if there is a delay.

Specify separately when franchise fees become payable. Is the minimum monthly fee linked to signing, readiness to open or the actual start of trading? What happens if the franchisor has not yet met the agreed conditions? The answer must be clear before signing, not only when the first invoice arrives.

Do not promise automatic cover for all losses. The agreement should set out the procedure for submitting costs, the evidence required and the obligation to take reasonable steps to mitigate losses. Forecast sales are not the same as proven loss, and assessing lost profit requires careful legal and financial analysis.

It is also sensible to specify who can approve additional expenditure. Rebooking launch advertising without agreement can create another dispute, even if it was intended to help.

4. Define the postponement procedure and a final deadline

As soon as a delay becomes likely, the person responsible must send written notice. This should identify the affected milestone, the reason, the expected duration, the implications for other tasks and the proposed action. Confirm any agreement reached by telephone in writing afterwards.

The parties should adopt an updated plan, but changing the date must not inadvertently waive any claims that have already arisen. In their written confirmation, they should clearly state which obligations they are changing and which issues remain unresolved.

They should also agree a final deadline and a procedure to follow if opening by then is not feasible. Address the consequences for services already provided, advance payments, equipment ordered and access to materials. Do not assume that terminating the franchise agreement automatically ends the lease or orders placed with other contracting parties.

Practical takeaway: before expanding your franchise network for the first time, prepare a milestone spreadsheet and a written procedure for handling delays. Every deadline should have a person responsible, evidence of completion and a clearly agreed consequence if the obligation is not met.