Suppliers and purchasing when franchising a business in Spain

A business may run well with a trusted supplier and orders handled personally by its founder. When that business is franchised, this dependence can lead to delays, extra costs and inconsistent quality. Before adding outlets, you need a supply system that can be replicated. This guide explains how to organise purchasing for your future franchise network without confusing brand consistency with absolute control over every commercial decision.

1. Define which purchases need common controls

Start by reviewing the products, raw materials, equipment and consumables your business uses. They do not all need the same degree of control. A signature recipe may depend on a particular ingredient; office supplies generally do not.

Divide purchases into three groups:

• Essential items: those whose composition, safety or performance determines the customer experience.
• Items subject to approval: those that can come from different suppliers, provided they meet verifiable specifications.
• Unrestricted purchases: those that do not materially affect the identity or quality of the business concept.

For each essential item, document what you need to protect: composition, tolerances, technical compatibility, traceability, presentation or storage conditions. Avoid vague explanations such as ‘because we have always bought it this way’.

The result should be a purchasing matrix listing each product, its specification, approved supplier, delivery lead time and available alternative. This matrix helps distinguish a genuine operational need from the founder’s personal preference. It also makes it easier to explain to prospective franchisees why certain purchases are subject to restrictions.

2. Check that suppliers can support expansion

An excellent supplier for your existing outlet may not be able to handle small orders going to multiple locations. Before promising terms to others, negotiate with suppliers and check their logistical capacity.

Ask for written details of geographical coverage, minimum orders, lead times, delivery arrangements, returns, warranties and price reviews. Clarify whether the terms change when each franchisee buys separately, and whether any discount depends on a combined purchasing volume that has not yet been reached.

Do not present a price list negotiated for your own outlet as guaranteed terms for the whole network. If those terms depend on future purchases, explain that dependency and prepare a scenario without the discount.

Also decide who buys the goods and who issues the invoices:

• If the supplier sells directly to franchisees, specify who handles complaints and what role the franchisor plays.
• If the franchisor buys and resells, factor in storage, financing, non-payment, delivery and returns, as well as the trading margin.
• If a platform consolidates orders, define who is responsible for each delivery and who keeps the records.

Place a test order for delivery to another location. Check the full landed cost, not just the catalogue price. A cheap order may no longer be cheap once you account for delivery charges, high minimum quantities or goods that expire before they can be sold.

3. Set out the terms in the contract, with clear limits

In Spain, Article 62 of Law 7/1996 on Retail Trade and Royal Decree 201/2010 govern specific aspects of franchising. They do not provide a complete legal framework for franchise contracts, which are also subject to general contract law. Purchasing obligations must also comply with competition law.

Law 15/2007 on Competition and, where applicable, the European framework for vertical agreements, including Regulation (EU) 2022/720, are particularly relevant. An obligation to buy exclusively from the franchisor is not automatically valid simply because it appears in a franchise contract. Its assessment depends on its purpose, scope, duration and competitive context, among other factors.

Commission a legal review of exclusivity clauses, restrictions on alternative suppliers and mechanisms for changing terms. Nor should you turn a recommended retail price into a mandatory one through threats, penalties or incentives: resale price maintenance raises serious competition-law concerns.

The contract should make clear which purchases are mandatory, how alternatives are approved and how changes are communicated. Also explain any margins the franchisor earns on resale, or supplier commissions or rebates, that affect the financial model being offered. Avoid describing a purchase as being ‘at cost’ if it includes remuneration.

4. Prepare a response to supply failures

For each critical item, identify an alternative that has been checked against technical requirements. If none exists, determine how much safety stock the business needs and which service will have to be suspended if that supply runs out.

Set out a short procedure: who reports the problem, who authorises a substitution, what checks are required and how affected outlets are informed. Urgency does not justify ignoring applicable safety, labelling or allergen-information requirements.

Regularly review whether deliveries arrive in full, along with delays, defects and actual costs. Discuss recurring problems with the supplier and agree corrective measures before opening more outlets.

Practical conclusion: before franchising, prepare your purchasing matrix, verify supplier terms and run a supply-disruption exercise. If the system only works when you intervene personally, it still needs refining.