Licences for your first franchise: what does not transfer automatically

A successful business will often already have its registrations, licences and professional qualifications in place, so an owner preparing to franchise can easily overlook them. Yet a new member of the franchise network operates as an independent sole trader or company. The right to use the brand does not, in itself, authorise them to carry out every business activity. Before expanding for the first time, check which requirements they must meet themselves and what your existing business cannot simply transfer to them.

1. Separate the franchise agreement from authorisation to operate

Slovenia has no specific franchising act, dedicated state franchise register or legally prescribed franchise disclosure document. A franchise agreement is an innominate contract — one not specifically defined by law — governed by the general rules of Slovenia’s Obligations Code. The Companies Act, competition law and sector-specific regulations are also relevant.

The absence of a dedicated franchise registration requirement does not mean there are no requirements for operating a business. Registering a business, registering its activities and obtaining any necessary licence are separate matters. Setting up a business through Slovenia’s SPOT business support system does not replace checking whether the intended work requires additional authorisation, registration or a suitably qualified person.

A franchisor can contractually grant permission to use its brand and know-how. It cannot, however, replace authorisation from the competent authority with a clause in an agreement. Nor should an internal certificate confirming that a franchisee has completed training be presented as an officially recognised qualification unless it is one.

Start by asking: what services or products will the new business actually offer? The concept’s trading name is not precise enough. Individual ancillary services may require different checks from the core offering.

2. List the requirements and identify who must meet them

Prepare an overview of all the requirements underpinning your existing business operations. Do not simply copy the list of documents in your business files. For each requirement, establish who or what it applies to and whether the new outlet will need it at all.

A useful spreadsheet includes the following columns:

• Activity: the specific task for which you are checking requirements.
• Legal basis: the applicable legislation and competent authority or organisation.
• Responsible holder or entity: the business, named individual, establishment or other specified unit to which the requirement applies.
• Evidence: an official decision, registration, certificate or other required documentation.
• Validity: duration, renewal requirements and events that require an update.
• Responsibility: who checks the requirement, submits the application and retains the evidence.

For certain craft activities, for example, you need to check the requirements of Slovenia’s Crafts Act concerning a craft licence and the person responsible for the activity. For food businesses, depending on the activity, you need to check establishment registration or approval requirements and food hygiene rules. These are not universal requirements for every franchise: they illustrate why the review must be based on what the business will actually offer.

Flag any requirements currently met by the founder personally. Their education, professional examination or other personal qualification does not become a qualification of the franchisee’s business simply because an agreement has been signed.

3. Test the model without the founder’s licences

Before offering your first franchise, carry out a desk-based test: imagine a new business with none of your existing registrations, official approvals or employees. Could it use the guidance you have prepared to establish which requirements it must meet?

Prepare brief instructions for each requirement: where the prospective franchisee should turn, what information they need to check and what evidence they need. Where the answer is unclear, seek clarification from the competent authority or a specialist in the relevant sector. Do not assume that the arrangements for your existing outlet automatically apply to another business.

This exercise may reveal an important limitation of the business model. If a particular professional qualification is essential to a core service, you need to know before recruiting franchisees whether they must hold it themselves or whether another suitably qualified person can fulfil the requirement under the applicable regulations.

Check the contingency scenario too: what happens if the person through whom the business meets a requirement leaves or loses the necessary status? The business cannot continue the affected work simply because the franchise agreement remains in force. Establish a procedure in advance for checking compliance and, where necessary, suspending the activity concerned.

4. Set out checks and renewals in the agreement

Allocate tasks in the agreement precisely enough for both parties to understand the distinction between support and responsibility. The franchisor can prepare a checklist or help with documentation, but the franchisee must ensure that the requirements applying to them are met. A contractual allocation of costs and tasks does not alter statutory obligations towards the competent authorities.

In particular, agree:

• what evidence the franchisee must provide before starting each activity;
• who monitors licence validity and changes in legislation;
• which changes the franchisee must report immediately;
• what happens when a licence expires or is revoked, or a requirement is no longer met;
• who bears the agreed costs of obtaining and renewing the required documentation.

Limit checks to the information needed. Where supporting documents contain personal data, comply with the General Data Protection Regulation and Slovenia’s Personal Data Protection Act (ZVOP-2); collecting complete personal records merely ‘just in case’ is not appropriate.

Practical takeaway: before launching your first franchise, map the requirements for each activity, identify who must meet them and require appropriate evidence. A franchise network is ready to expand only when a new member’s lawful operation no longer depends on the unchecked assumption that the founder’s licences cover them too.