Buying a franchise: how to agree terms for opening delays

Between signing a franchise agreement and serving your first customer, delays can arise that change your budget. A well-planned franchise opening needs more than an estimated date: it requires verifiable commitments and clear rules for handling delays. Before buying a franchise in Argentina, check who is responsible for each step, when charges begin and what happens if the business is not yet able to operate.

1. Separate signing, handover and opening

An offer may promise an ‘opening within a specified period’ without explaining when that period starts. Counting from the date of signing is not the same as counting from the handover of the premises, approval of the plans or receipt of equipment. That difference could leave you paying expenses while waiting for something essential to be provided.

Ask for a schedule that identifies, at a minimum:

• The starting point: what event triggers the deadline and how it is evidenced.
• The preparatory tasks: design, building work, deliveries, training and operational testing.
• Responsibility for each task: the franchisor, franchisee or contracted supplier.
• Dependencies: which activities cannot begin until others are complete.
• Authorisation to open: who grants it and against which objective criteria.

Simply stating ‘subject to brand approval’ is not enough. Set out what the franchisor must review, how long they have to respond and how they must communicate any changes required. You also need to distinguish an indicative target date from an enforceable contractual commitment.

2. Understand what the law covers and what you need to agree

In Argentina, franchise agreements are specifically governed by Articles 1512 to 1524 of the National Civil and Commercial Code. Article 1512 provides for the use of a proven system and the provision of technical know-how and ongoing technical or commercial assistance. Article 1514 sets out the franchisor’s obligations, including supplying an operations manual and providing the relevant assistance.

This framework does not replace a specific timetable for your opening. The law does not set a universal deadline for opening every franchise or provide automatic compensation for each day of delay. Assessing a breach depends on the agreed terms, the circumstances and the general rules governing obligations and contracts.

The schedule should therefore form part of the agreement or a signed annex, specifying responsibilities and consequences. An Argentinian lawyer can help you distinguish firm obligations from mere estimates and review clauses that seek to give either party broad exemptions from liability.

Do not confuse a delay with force majeure. Whether force majeure applies, and what its effects are, requires legal assessment; it is not enough for the contract or a supplier to label any difficulty that way. It is also worth agreeing how the event will be notified, what supporting documents will be provided and what steps will be taken to limit its consequences.

3. Calculate the cost of waiting without sales

Prepare a separate budget for the pre-opening period. The aim is not to estimate the business’s profitability, but to identify expenses that accrue even before sales begin: rent, utilities, staff already hired, storage, insurance and finance repayments, as applicable.

Then link each contractual payment to a specific event. Ask:

• Is the initial franchise fee payable in full on signing or in stages?
• Do any recurring charges start before opening?
• What happens to contracted services that cannot yet be used?
• Who pays for repeat training if the delay makes it necessary?
• When does the contractual term begin?

Do not assume that the contract term starts with the first sale or that it will be extended to make up for lost time. Any adjustment must be expressly agreed and comply with the applicable legal framework.

As an exercise, compare the planned schedule with one that includes a plausible delay for that particular project. Ask your accountant to identify the additional cash needed, and avoid treating potential compensation as available funds: payment may be disputed or delayed.

4. Agree a procedure for resolving delays

The contract should explain what to do when a milestone is missed. A practical approach is to require written notice, identification of the cause, a proposed remedy and a documented revised schedule. Rescheduling should not automatically remove liability for earlier delays.

Distinguish delays attributable to either party from those involving third parties. If you select and contract a supplier directly, do not assume the brand guarantees their performance; if the franchisor hires them, check what obligations the franchisor assumes towards you.

It is also worth negotiating a final deadline and the options if it is missed: continuing on revised terms or considering termination, with clear rules on payments, work completed and goods delivered. These consequences need legal review, rather than a vague promise of a refund.

Practical conclusion: before signing, insist on three consistent documents: a project schedule, a payment timetable and a procedure for handling delays. If a date changes, you should be able to identify who takes action, who pays and how the agreement is documented.