If the parties do not choose the law, the franchise agreement is governed by the law of the franchisee's habitual residence: the party taking and operating the franchise, rather than the brand owner's country. This follows from the Rome I Regulation's specific franchise rule. We therefore recommend an express choice of law; otherwise, a Slovak franchisor may discover that its Czech network operates under Czech law.
Why franchising has its own conflict-of-laws rule
For most cross-border agreements, the approach is to identify the characteristic performance. This does not work well for franchising: both parties have extensive obligations. The franchisor supplies the brand licence, know-how and support; the franchisee pays fees but also maintains quality, follows network procedures and undertakes marketing. Convincing arguments can be made either way about which performance is characteristic.
The European legislator therefore introduced a specific franchise rule instead of requiring that inquiry.
A franchise agreement is governed by the law of the country where the franchisee has its habitual residence.
Article 4(1)(e) of Regulation (EC) No. 593/2008 (Rome I) (unofficial English translation)
In the Regulation’s terminology, the franchisee is the party taking and operating the franchise. What matters is therefore where the operator does business, rather than where the brand owner is based. A similar rule applies to distribution: the agreement follows the law of the distributor’s habitual residence.
What this means for expansion between Slovakia and Czechia
A Slovak franchisor opening its first Czech outlets without choosing governing law may have a network split between two legal regimes: Slovak agreements under Slovak law and Czech agreements under Czech law. The same provisions are then assessed differently, from contractual penalties and withdrawal effects to security.
The solution is simple and belongs in the agreement, rather than an email: an express choice of governing law, accompanied by a court or arbitration agreement and, for bilingual documents, a prevailing-language provision. A choice of law has limits. It does not remove obligations under rules that apply regardless of that choice, including competition law, but it unifies the relationship’s basic legal structure.
What choosing the law does not solve
A single governing law does not mean the same text will work in both countries. Operational aspects follow other rules: premises leases are governed by the law where the property is located, trade mark registration follows its own rules, and security arrangements differ between Czechia and Slovakia. We therefore prepare documents with a shared core and operational schedules tailored to each country.
How we can help
As a law firm registered with both the Czech and Slovak Bars, we prepare franchise documentation for both countries together, including bilingual versions. We coordinate the choice of law and court so that litigation does not begin with uncertainty about which rules apply.
This answer provides general information on the law as at 11 August 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
