Which Parts of Your Business Can You Franchise in Spain?

Franchising an existing business does not mean replicating everything the company does. It may make sense to franchise just one part: a service line, an outlet format or a specific commercial offering. The key is that this part must work as a complete business, rather than simply a selection of its most attractive activities. Defining its scope before recruiting prospective franchisees helps build a franchise network with clear commitments and a consistent proposition.

1. Separate your existing company from the business you will franchise

A company may combine retail sales, services delivered at customers’ homes, bespoke orders and contracts with major clients. Just because all these activities share a brand does not mean they should be part of the same franchise.

Start by drawing up an inventory of what you actually sell and how you deliver it. For each activity, identify the customer, the resources required, how you charge and the tasks needed to fulfil the order or deliver the service. Then classify it into one of three groups:

• Included: it will form part of the franchised outlet’s standard offering.
• Excluded: it will remain outside the format, even if the original company continues to provide it.
• Conditional: it may only be added once defined requirements are met, such as having particular equipment or qualified staff.

For example, a repair business might franchise its in-store service while excluding bespoke technical projects. What matters is checking that the shop does not depend financially on those projects to remain viable.

The result should be a format profile: what it sells, to whom, from where and with what resources. Describing it as ‘the same business under our brand’ is not enough.

2. Check that the chosen part still forms a complete business model

The risk of narrowing the offering is that you may leave out an activity that funded or enabled the others. An apparently profitable service may rely on staff, premises or customer acquisition paid for by another business line.

Review these dependencies before offering the format. Ask whether customers buy that service separately, who will carry out shared tasks and what costs an outlet will have to bear without the whole original company behind it.

It is also worth distinguishing between resources provided to the franchisee and services that head office will continue to deliver. If head office prepares technical quotations, handles certain enquiries or supplies an essential tool, that involvement is part of the business model and must be defined.

The decisive test is the format’s commercial and operational independence, not its visual resemblance to the original outlet. It must be able to serve customers and complete sales using the resources provided for in the model.

You should also document your actual experience with that specific combination of activities. Successfully developing a broader business does not, in itself, prove that a scaled-down version will achieve the same results. If you substantially change the offering, you will need to test how it works before presenting that experience as transferable.

3. Turn the scope into clear commitments

Spain has specific franchise regulations. Article 62 of Law 7/1996 on Retail Trade and Royal Decree 201/2010 are key references. Article 2 of the Royal Decree links franchising to a business activity previously carried out with sufficient experience and success, and includes the use of distinctive branding, the transfer of know-how and ongoing assistance.

Defining the offering therefore means more than simply authorising certain products to be sold under a brand. You must specify what knowledge and support will accompany that offering.

The chosen scope should be reflected consistently in three places:

• Pre-contractual information: an explanation of the business system, its characteristics and the resources needed to operate it.
• Contract: authorised activities, exclusions and conditions applicable to optional services.
• Operational documentation: instructions for delivering the included products or services and handling requests that fall outside the scope.

Article 3 of Royal Decree 201/2010 requires written, truthful and non-misleading information to be provided at least twenty working days before the contract or preliminary agreement is signed, or before any payment is received from the prospective franchisee. That information must describe the format being offered, rather than confuse it with the full capabilities of the original company.

4. Resolve borderline cases before recruiting prospective franchisees

Consider situations that could create uncertainty: a customer requests an excluded service, asks for a service outside the outlet or wants to combine a local service with one provided by head office.

For each case, define who accepts the order, who contracts with the customer, who issues the invoice and who is responsible for delivering the work. If the customer is referred to head office, explain to the franchisee how this works and avoid presenting that revenue as theirs when it is not.

Review your sales presentations too. Photographs, examples of work and explanations from the franchise development team must match the format available. Showing excluded capabilities without making this clear can create false expectations.

Practical conclusion: before offering your franchise, write a one-page outline of the included, excluded and conditional activities. Check it against your actual operations and legal documentation. If you cannot explain precisely what business the franchisee will receive, you have not yet finished defining the offering.