Croatia tends to perform especially well for franchises that benefit from:

• Tourism-driven foot traffic

• Premium coastal locations

• Strong seasonal revenue combined with lower off-season operating costs

• Growing domestic demand in major cities

Common investor goals include:

• Entering the EU market using an established brand

• Testing a concept in a smaller country before expanding regionally

• Leveraging tourism while building a loyal local customer base

A common and effective strategy is combining:

• One flagship, year-round location (usually Zagreb)

• One or more seasonal coastal locations designed specifically for peak tourism periods

No franchise statute, but full enforceability

In Croatia, franchising is governed through:

• General contract law principles under the Civil Obligations Act

• Intellectual property law for trademarks, branding, and know-how

• EU-aligned competition and vertical agreement rules

• Standard business, accounting, and consumer regulations

There is typically no franchise registration requirement that determines whether a franchise is valid. The franchise agreement itself—and how it is structured—is what creates enforceability.

The franchise agreement does the heavy lifting

A properly drafted Croatian franchise agreement should clearly define:

• Initial franchise fees, ongoing royalties, and marketing contributions

• Territorial rights and exclusivity (if any)

• Brand standards, training requirements, and operational controls

• Audit and inspection rights

• Term length, renewal conditions, and termination triggers

• Transfer and exit rules if the franchise is sold

• Confidentiality, know-how protection, and post-termination obligations

Foreign franchise agreements should never be used in Croatia without proper localization. Translation alone is not enough—legal adaptation is essential.

Franchise agreements often include provisions such as:

• Exclusive territories

• Approved suppliers

• Non-compete clauses

• Pricing guidance

Because Croatia is an EU member state, these clauses must comply with EU competition and vertical agreement rules. Certain restrictions—especially around pricing and market access—can create compliance risks if drafted improperly.

Investor takeaway:
A franchise agreement that works in the US, UK, or another non-EU jurisdiction may not automatically be compliant in Croatia.

At its core, a franchise is a combination of:

1. A protected brand

2. A repeatable operating system

Before investing, you should confirm:

• Who legally owns the trademark

• Whether the trademark is protected in Croatia or at EU level

• The scope of the license (territory, duration, permitted uses)

• Whether sublicensing is allowed

• What happens to branding, signage, domains, and manuals upon termination

A clean intellectual property structure protects both the franchisor and the franchisee and reduces the risk of disputes.

Most franchisees in Croatia operate through a d.o.o. (limited liability company). Some smaller operations explore a j.d.o.o. (simplified limited liability company).

In practice:

• A d.o.o. offers greater credibility, flexibility, and long-term scalability

• A j.d.o.o. may work for very small or experimental operations, but often comes with restrictions

Many franchisors prefer franchisees to operate through a d.o.o. due to capitalization, governance, and financial transparency considerations.

Corporate income tax

Croatia applies a two-tier corporate income tax system:

• 10% for companies with annual revenue below EUR 1,000,000

• 18% for companies with revenue at or above that threshold

Correct revenue forecasting is essential, as crossing the threshold impacts profitability.

VAT

VAT is often the most significant factor in franchise cash flow and pricing.

Croatia applies:

• A 25% standard VAT rate

• Reduced rates of 13% or 5% for certain categories

The applicable rate depends on the exact nature of the business, whether goods or services are being sold, and how those services are delivered.

Royalties and cross-border payments

Royalties, management fees, and brand licensing payments may trigger withholding tax obligations depending on:

• The nature of the payment

• The residency of the recipient

• Applicable double taxation treaties

These payments should be reviewed carefully before signing the franchise agreement.

While every concept requires local validation, strong franchise locations often include:

• Zagreb – consistent year-round demand and strong purchasing power

• Split – long tourism season combined with a solid local base

• Dubrovnik area – premium spending but high seasonality

• Zadar region – growing tourism infrastructure and seasonal upside

Successful operators plan for both peak and off-season performance rather than relying solely on summer revenue.

Before signing the agreement

• All fees clearly defined and commercially reasonable

• Territory and exclusivity properly drafted

• Termination and renewal provisions balanced and enforceable

• Exit and transfer rules clearly spelled out

Intellectual property

• Trademark ownership verified

• License scope matches actual business operations

• Post-termination obligations enforceable

Tax and compliance

• Corporate tax rate modeled correctly

• VAT treatment aligned with the business model

• Royalty and fee payments reviewed for withholding implications

Operational readiness

• Staffing and training plan in place

• Lease terms aligned with franchise duration

• Permits and licenses identified early

Relocation Croatia supports franchise investors by ensuring that every legal, tax, and operational element works together as a single system. Support typically includes:

• Company formation strategy and execution

• Franchise agreement coordination and localization

• Tax and VAT planning aligned with the business model

• Market entry and launch planning

• Location strategy and expansion planning

The best next step is a paid consultation to review your franchise structure before capital is committed.

Franchising in Croatia is not only legal—it can be highly profitable when structured correctly. The absence of a dedicated franchise law means that success depends on proper contract drafting, intellectual property protection, competition compliance, and tax planning.

For investors who approach franchising strategically, Croatia offers a powerful gateway into the EU market with real growth potential.