Technology in a franchise: what to check before you buy

Buying a franchise also means accepting a particular way of using technology. Your till, bookings, orders and customer records may all depend on tools chosen by the franchisor. Before joining the network, check which services you will have to sign up for, who controls the information and how you will continue serving customers if the system fails. These decisions affect both your independence and your legal responsibilities.

1. Identify the tools and your actual obligations

Ask for an inventory of mandatory systems: point-of-sale terminals, stock management, accounting, bookings, e-commerce and customer management. Distinguish between tools included in the franchise agreement and those requiring an additional licence or a separate agreement with another supplier.

For each one, request written details of:

• The company providing the service and who signs the agreement with it.
• The features included and any limits on users, devices or premises.
• The equipment and internet connection needed to use it.
• The integrations available with your accountant’s systems and your payment services.
• The conditions for replacing it or adding your own applications.

Do not settle for a sales presentation. Ask for a demonstration covering a sale, a refund, cashing up and exporting information. If the business uses appointments, also test cancelling and retrieving a booking.

Ask which documents can change these obligations. If the operations manual allows the franchisor to impose new applications, the agreement should clarify the procedure, notice period and who pays. An open-ended technology obligation makes it difficult to understand the commitment you are taking on.

2. Calculate the costs of use and future changes

The monthly software fee does not necessarily represent the full cost. There may be charges for installation, migration, configuration, additional users, storage, maintenance or out-of-hours support. Also check whether there are transaction fees and whether these are charged on top of your payment provider’s fees.

Prepare a table with four columns: cost item, payment recipient, frequency and conditions for price changes. Separate upfront costs from recurring charges and those that only arise as business activity grows.

Ask for clarification on three specific situations:

• Price increases: who can approve them, how they are communicated and what alternatives you have.
• Equipment replacement: which requirements trigger it and who decides that a device is obsolete.
• Platform changes: who pays for migration, training and any period when both systems need to run in parallel.

In Spain, Article 62 of Law 7/1996 on the Regulation of Retail Trade and Royal Decree 201/2010 govern aspects of franchising and pre-contractual disclosure. This information must be provided in writing at least twenty working days before you sign an agreement or preliminary agreement, or make any payment to the franchisor. Use this period to check the financial obligations and request any technology-related annexes, without assuming that the legislation requires a separate technology document.

3. Clarify data access and responsibilities

Avoid reducing the discussion to ‘who owns the customers’. Personal data is not property that can be divided up without restriction. What matters is establishing who decides how it is used, on what legal basis and who can access it.

The General Data Protection Regulation, Regulation (EU) 2016/679, and Spain’s Organic Law 3/2018 also apply to data processing within franchise networks. The roles of the franchisor, franchisee and supplier depend on what they actually do, not simply on the labels assigned to them in the agreement.

If a supplier processes data on your behalf, an appropriate data processing agreement must be in place. If the franchisor and franchisee jointly determine the purposes and means of processing, you will need to assess whether they are joint controllers and document how their responsibilities are allocated.

Before buying, ask:

• What information will the franchisor see, and what will it use it for?
• Who provides privacy information to customers and handles requests to exercise their data protection rights?
• Who manages marketing communications and opt-outs?
• Where is the data hosted, and are there any international transfers?
• What measures protect accounts and log access?

Also ask for clear terms on your access to sales data, invoices and reports needed to run the business and meet your obligations. Being technically able to export data does not mean you are entitled to use personal data however you wish afterwards.

4. Check how you will operate when problems arise

A centralised system can simplify tasks, but it can also concentrate risk. Ask for a procedure covering connection failures, account lockouts and platform outages. It should explain how to record transactions, recover information and report incidents.

Check support hours, committed response times, backup arrangements and who can restore backups. Do not confuse a quick response with a guarantee that the problem will be resolved.

Also ask how you will retrieve documents you are required to keep if the supplier changes or your access ends. Agree on usable formats, timescales and costs, while complying with data retention and protection obligations.

Practical conclusion: before signing, gather the technology inventory, cost breakdown and data access rules. If you cannot explain how much you will pay and how you will operate when the system fails, you still need more information before making a decision.