Buying a franchise: how to choose the right format in Argentina

A well-known brand may offer full-sized outlets, shopping centre kiosks or small service points. Sharing a name does not mean operating in the same way: each format changes the customer experience, day-to-day tasks and conditions needed to run the business. Before entering Argentina’s franchise market, check that you are choosing a clearly defined, proven model, rather than simply a cheaper version of an appealing brand.

1. Define exactly what the format includes

The format’s commercial name is not enough. Terms such as ‘compact’, ‘express’ or ‘full-service’ can mean different things across franchise networks. Ask for a written specification describing what the unit can do and what falls outside its scope.

The description should specify:

• Which products and services you can offer, and which are excluded.
• Which activities take place on site and which depend on another unit.
• How customers are served: in-person sales, collection, home delivery or appointments.
• Expected operating capacity and relevant physical constraints.
• Roles that must be covered each day.
• External dependencies, such as centralised production or order preparation at another premises.

A small format is not necessarily a simple business. It may reduce the customer service area while increasing reliance on frequent deliveries or a supporting unit.

For example, a kiosk receiving finished products does not operate in the same way as an outlet that prepares them on site. Even if both use the same brand, their critical operational issues differ. Compare them as distinct operating models.

2. Look for the format’s track record, not just the brand’s

The network’s experience matters, but it does not, on its own, prove that every format works. Ask when the proposed format first began operating, how many units use it and what changes have been made since its launch.

In Argentina, franchise agreements are specifically regulated by the National Civil and Commercial Code, Articles 1512 to 1524. Article 1512 defines commercial franchising around the right to use a proven system. This makes it particularly important to distinguish between adapting an existing model and offering a format that is still experimental.

Article 1514(a) also requires the franchisor, before signing, to provide economic and financial information covering two years of performance at units similar to the one being offered, which have operated for a sufficient period in Argentina or abroad.

The key word for this decision is similar. This does not mean that all units must be identical, but it does require you to examine how comparable they are. If you are offered a collection point but shown the track record of dine-in restaurants, ask for an explanation of the differences and which aspects of that experience are transferable.

Ask for the reference units and their characteristics to be clearly identified. If the format is new, do not let the brand’s overall track record close the discussion: seek legal advice on the scope of the disclosure obligation and the requirement for a proven system.

3. Check what conditions it needs to work

The question is not just ‘Can I afford it?’ but ‘Can I reproduce the conditions this format needs?’

Prepare a table with three columns: required condition, available evidence and person responsible for checking it. Include factors such as customer footfall, waiting space, storage, delivery access and reliance on shared services.

Then consider specific scenarios:

• What happens if several orders arrive at once?
• Where can customers or delivery drivers wait without obstructing service?
• How does the business keep operating if the supplying unit is delayed?
• Which products cannot be sold because of limited space or capacity?
• Can service be maintained when a member of staff is absent?

These questions help identify a format that looks viable in a presentation but requires conditions that are difficult to reproduce. This is not about asking for guarantees of success: it is about understanding the limits before making commitments.

If you are comparing two versions of the same brand, do not automatically choose the smaller one. A reduced floor area may remove an activity that accounts for much of the business’s appeal to customers.

4. Clearly identify the version you are signing up for

The agreement and its schedules should unambiguously identify the format you are buying. Check that the commercial proposal, operating description and authorised activities all match.

Also ask for clarification of the conditions for any future conversion: whether switching to another format is optional, what approval it requires, what charges might apply and who assesses its feasibility. Do not assume that buying a small unit includes the right to convert it later.

If an essential service depends on another unit, document who provides it and what alternative arrangements are planned if it becomes unavailable. Review this with a lawyer before signing.

Practical conclusion: choose the format for its demonstrable operational track record, not its label or entry price. Proceed when you can describe what you will be operating, what track record supports it and what conditions you need to reproduce.