Buying a franchise: keeping the business running during illness and parental leave

Buying a franchise means joining a network, but your business remains responsible for its day-to-day operations. If the franchise model requires you to work personally in the business, illness or parental leave can create both financial and contractual problems. You should therefore examine your options for taking time away just as carefully as your options for opening the business.

1. Find out who must do the work

Start by distinguishing between ownership, management and hands-on work. A requirement to own the company is not the same as a requirement to supervise every shift yourself. Terms such as “active participation” or “personal involvement” need to be clarified before you sign.

Ask for the draft agreement and the sections of the operations manual covering staffing and responsibilities. Also check whether a particular individual must be approved as the person responsible for running the business. If your company signs the agreement, establish which obligations still apply to you personally.

Ask the following questions:

• Must I work in the business myself, and to what extent?
• Can an employed site manager take responsibility for day-to-day operations?
• What opening hours and staffing requirements apply even when I am absent?
• Does my replacement need specific training or qualifications?
• Which requirements are set out in the agreement, and which can be changed through the operations manual?

Ask the franchisor to explain how previous extended absences have been handled. Speak to franchisees who have had to hand over the running of their business themselves. Their experiences will help you judge whether the arrangements work in practice, but they are no substitute for written terms.

2. Understand what Swedish law actually protects

Sweden has specific legislation in this area: the Act (2006:484) on Franchisors’ Duty to Provide Information. Under Section 3, the franchisor must provide clear, comprehensible written information about the implications of the agreement and other relevant matters in good time before the agreement is concluded. This information must include a description of the business, the financial terms, and the terms governing changes and termination.

However, the Act does not give franchisees a specific right to suspend operations during illness or parental leave. Nor does it remove the need for a clear agreement on personal involvement and replacement cover. If these requirements are crucial to running the business, ask for an explicit written explanation of what they mean.

Sweden does not have comprehensive franchise legislation governing every aspect of the relationship. General contract law, including the Swedish Contracts Act, therefore matters when assessing the terms. Do not assume that an onerous term is automatically unenforceable.

You should also distinguish between your rights in different capacities. The Swedish Parental Leave Act governs leave within an employment relationship; it does not, in itself, entitle your business to depart from the franchise agreement. Eligibility for sickness benefit or parental benefit is also separate from the business’s obligation to remain open. Check your personal circumstances with Försäkringskassan, the Swedish Social Insurance Agency, and ask a lawyer specialising in franchising to assess the contractual requirements.

3. Negotiate workable replacement arrangements

A promise that “we will work it out together” is a good start, but it is not a complete plan. Try to include clear arrangements for both planned and unexpected absences in the agreement or a signed appendix.

The plan should specify how an absence must be reported, who should receive the notification and which responsibilities you need to hand over. In the event of sudden illness, the procedure must work even if you cannot contact the relevant people yourself.

If the franchisor must approve your replacement, approval should be based on clear competence requirements. Negotiate a deadline for a response and interim arrangements while approval is being considered. Find out whether an employee who has already completed the necessary training can be approved in advance.

Also clarify:

• who recruits and employs the replacement,
• who pays for induction and any additional training,
• what access and authority the replacement needs in the till, ordering and staff management systems,
• whether temporary changes to opening hours can be approved,
• when the parties should review and reassess the arrangements.

The franchisor may have legitimate requirements for quality and consistent operations across the network. The aim is therefore not an unrestricted exemption, but an arrangement that protects the franchise model without every absence creating uncertainty about compliance with the agreement.

4. Work out the costs of running the business without you

Prepare a separate budget for periods of absence. Base it on the cost of covering the tasks you actually perform, not just the salary you intend to draw. If you both manage the business and carry out hands-on work, several people may need to share your duties.

Include wages, employer social security contributions, holiday pay costs, any pension contributions, insurance and induction. Then add the fixed costs and franchise fees that continue under the relevant agreements. Do not assume fees will be waived unless this is confirmed in writing.

Test both a short, unexpected absence and a longer planned period. Assess the effect on cash flow if your replacement also needs time to reach normal productivity. Keep the business’s funding needs separate from your personal living costs.

If you are considering insurance, check who is insured, which events are covered, the waiting period and any exclusions. Do not assume that a standard business insurance policy will pay for a replacement if you are ill.

Practical takeaway: Do not sign until you know who can take over, how they will be approved and how operations will be funded. A sustainable franchise network needs to work even when you cannot be there yourself.