Buying a franchise: how to assess complaints handling

Before buying a franchise in Argentina, ask the brand to explain how it handles a sale that goes wrong. A faulty product, an incomplete service or an order that has been paid for but not delivered can lead to costs and disputes. Within a franchise network, sharing a brand requires co-ordinated customer service, but it does not remove each party’s obligations. Reviewing this process before signing allows you to assess a specific aspect of how the business operates.

1. Separate legal obligations from the internal allocation of costs

In Argentina, franchise agreements are specifically regulated by Articles 1512 to 1524 of the national Civil and Commercial Code. Article 1520 establishes that the parties are independent. However, that independence does not mean a consumer complaint can simply be rejected by attributing the problem to the franchisor, a supplier or another outlet.

Consumer Protection Law No. 24,240 governs matters including consumer information, compliance with offers and guarantees. Article 40 provides for joint and several liability among certain participants in the supply chain where damage results from a defect or risk associated with goods or the provision of a service; this includes anyone whose brand appears on the goods or service. Its application must be assessed in light of the facts: not every commercial disagreement automatically falls within this form of liability.

You should therefore distinguish between two issues: what the consumer can demand and how costs are allocated internally. A clause assigning a cost to the franchisor does not necessarily prevent the customer from pursuing a claim against the outlet. Obtain legal advice on both issues, rather than assuming that the franchise agreement limits third-party rights.

2. Test the procedure against specific situations

A manual that simply says “refer to customer services” is not enough. Request the full procedure and anonymised examples of how it has been applied. The aim is to check whether the outlet can offer a useful response without getting caught up in approval processes.

Ask to work through these situations:

• A product is faulty and the customer asks for a remedy.
• A service has only been partly delivered or does not match what was agreed.
• An online purchase is collected from the outlet, but items are missing.
• A customer wants to redeem at your outlet a benefit sold by another outlet.
• A customer has been charged twice for an order, or the order needs to be cancelled before delivery.

For each case, identify who receives the complaint, what documentation they record, who makes the decision and how the outcome is communicated. Distinguish statutory guarantees and other legal rights from exchanges the brand voluntarily offers for reasons of preference or convenience: they do not necessarily have the same legal basis or scope.

Also ask for an alternative contact when the authorised person is unavailable. A process that only works during office hours may be inadequate if your outlet opens in the evenings or at weekends.

3. Identify who pays upfront and how they recover the money

A return may involve more than refunding the purchase price. There may be transport, repairs, replacements, staff time and stock that can no longer be sold. Before factoring these costs into your financial assessment, request documented examples of cost settlements, with customers’ personal details removed.

Create a table showing, for each cost item, who pays first, who ultimately bears the cost and what supporting document is needed to recover it. If the franchisor promises reimbursement, ask for the procedure, timeframes, conditions and mechanism for resolving discrepancies to be specified.

Pay particular attention to transactions where one party takes payment and another deals with the consumer. If your outlet hands over purchases invoiced by another party, you need to know how refunds are authorised and who issues the relevant documentation. Do not assume that access to the sales system allows you to refund any payment.

4. Put the agreements into the contract and its schedules

Before signing, check that the contract and the complaints procedure are consistent. They should identify the responsible parties, the outlet’s authority, escalation channels, how expenses are handled and how supporting documents are retained. Commercial commitments on responding to complaints must enable compliance with legal obligations, not replace them.

Also agree how formal demands or administrative proceedings will be notified and who will co-ordinate the response with professional advisers. Forwarding a communication to the brand does not guarantee that any deadlines applying to the franchisee will be suspended.

Practical takeaway: ask to work through a complete complaint on paper, from receipt to final reimbursement. If it is unclear who decides, who responds and who pays, an essential part of the operation still needs to be agreed.