How to Agree Changes to a Franchise Model in Spain

When franchising a business, describing how it works today is not enough: you also need to agree how it can change tomorrow. A new app, a brand refresh or an additional service may require investment and affect day-to-day operations. To build a stable franchise network, agree from the outset what the franchisor can update, what limits apply and how franchisees will be involved.

1. Separate operational improvements from fundamental changes

Not all changes have the same impact. Revising a cleaning instruction is not the same as requiring a complete refurbishment or replacing an IT system with one that carries a higher monthly fee.

Before drafting the agreement, divide foreseeable changes into three groups:

• Routine updates: procedural adjustments that do not substantially alter obligations or require significant investment.
• Mandatory adaptations: measures needed to comply with rules applicable to the business, with responsibility and costs assessed case by case.
• Significant changes: rebranding, new business activities or technology replacements with a substantial financial or organisational impact.

This classification is a management tool, not a fixed set of legal categories. Its purpose is to assign a procedure to each group: notification, an implementation period, a financial assessment and, where appropriate, agreement between the parties.

Prepare real examples from your business. If you plan to introduce digital ordering, specify whether installing an app will be enough or whether equipment, training and additional staff will be needed. Your rules for updates should reflect that distinction.

2. Define the right to make updates within the legal framework

In Spain, franchising is specifically regulated by Article 62 of Law 7/1996 on Retail Trade and Royal Decree 201/2010. These provisions do not give franchisors an unlimited right to alter the model during the relationship.

The general rules on contracts in the Spanish Civil Code are also relevant. Article 1256 states that the validity and performance of contracts cannot be left to the discretion of one of the contracting parties. A clause allowing the franchisor to change any obligation at any time, without limits, therefore warrants particularly careful legal review.

The agreement should specify:

• Which aspects may be updated and for what purpose.
• What financial and operational limits apply.
• How each change will be communicated and justified.
• Which changes require express acceptance or an addendum to the agreement.
• How disagreements about their scope will be resolved.

Referring to the operations manual does not make every change enforceable. The manual sets out operational details; it should not be used as a shortcut to alter fundamental obligations beyond what has been agreed.

Royal Decree 201/2010 also requires written, truthful and non-misleading pre-contractual information to be provided at least twenty working days before the contract or preliminary agreement is signed, or before the prospective franchisee makes any payment to the franchisor. If the system includes significant obligations to refurbish or update the business, these must be explained consistently in both that information and the agreement.

3. Establish who pays and how the impact is calculated

The cost of a change goes beyond the supplier's invoice. It may include installation, removal of equipment, training, business interruption and stock that can no longer be used.

Prepare a financial assessment for each significant change. It should record the reason for the change, the alternatives considered, the estimated outlay, recurring costs and the effects on the outlet's operations. Distinguish expected benefits from proven results: a projected improvement does not guarantee a return on investment.

The agreement can provide for mechanisms such as advance cost estimates, agreed caps on certain investments, phased implementation or cost-sharing. No approach automatically suits every business; it must fit the model and undergo legal review.

Also consider how much time remains on the agreement. Requiring substantial investment shortly before expiry raises different issues from introducing it at the start. Agree how these situations will be assessed, without promising that every investment will be recovered or automatically linking it to renewal of the agreement.

4. Design a procedure before the first change

Even a well-justified change can fail if it is communicated too late. Establish a straightforward process: proposal, trial where feasible, assessment, formal notification and implementation.

The notification should identify the version being amended, describe the action required, state its contractual basis and set the applicable deadline. Avoid relying on an informal message as the only record of an obligation with financial consequences.

Listen to franchisees operating in different circumstances. A small outlet may need a different implementation sequence from a larger one. Documenting justified exceptions, using objective criteria and a defined duration, helps maintain consistency across the network without confusing uniformity with rigidity.

Keep communications, cost estimates and agreements, and check afterwards whether the change delivered the expected result.

Practical takeaway: before franchising, choose three foreseeable changes and check whether your agreement makes clear who decides, who pays and when they will be implemented. If any answer depends solely on ‘the franchisor will decide’, the system still needs clearer rules.