Buying a Franchise in Argentina: Who Signs and Who Gets Paid?

A well-known brand does not, on its own, identify the person or company that will owe you contractual obligations. Franchise sales can involve salespeople, representatives and related companies with different roles. Before buying, check who will sign, what authority they have and who will receive your money. These checks establish whom you can hold responsible for fulfilling the contract.

1. Identify the contracting party behind the trading name

In Argentina, franchise agreements are specifically governed by Articles 1512 to 1524 of the Argentine Civil and Commercial Code. Article 1512 describes a relationship in which the franchisor grants the right to use a proven system under a trading name, emblem or brand, and provides technical know-how and ongoing support in return for payment.

Identifying the name customers will see is therefore not enough. You need to establish who will be legally responsible for providing those benefits and services.

Ask for the draft agreement to specify:

• The franchisor’s full name or legal company name.
• The contracting party’s CUIT (Argentine tax identification number) and address.
• Registration details, where applicable.
• The name and capacity of the person signing on their behalf.
• The addresses and communication channels to be used for contractual notices.

Compare these details with the quotations, payment instructions and supporting documents you receive. A discrepancy does not necessarily indicate anything improper, but it must have a documented explanation before you proceed.

If the salesperson refers to a “group”, ask them to identify the specific company that will contract with you. Membership of the same group does not mean that every company in it is automatically liable for another member’s obligations.

2. Check that the signatory can bind the franchisor

Your sales contact may be authorised to present the proposal without having sufficient authority to enter into the agreement. A branded email address, business card or title such as “commercial director” is no substitute for documentary evidence of authority.

If the contracting party is a company, request its constitutional documents and evidence of the current appointment of its officers. If someone will sign under a power of attorney, ask to see it. A lawyer should check whether those documents authorise the proposed agreement and whether any limits, expiry dates or joint-signature requirements apply.

Checking with the relevant public registry — for example, the Inspección General de Justicia, where applicable in the Autonomous City of Buenos Aires — can help verify company records. It does not replace a review of the documents themselves or, on its own, establish the company’s financial standing.

Check your own position too: if you intend to buy through a company, establish who the franchisee will be and who can represent it. Avoid documentation that names your company in some places and you personally in others without explaining the distinction.

The key question is straightforward: will the proposed signatures actually bind the parties named in the agreement?

3. Trace every payment

Before transferring any money, draw up a table with four columns: payment purpose, party entitled to payment under the contract, receiving account holder and expected supporting document. Include every payment requested during the contracting process, even if it appears in a separate document.

If the account holder is not your contracting party, ask for a written explanation. There may be an arrangement authorising a third party to collect payment, or another legitimate structure, but you need to verify its scope and how your payment will be acknowledged.

Agree expressly:

• On whose behalf the third party is receiving the money.
• Which obligation the payment will be credited against.
• What documentation will confirm that the obligation has been discharged.
• Who must return the money if a refund is due under the agreed terms.

Do not assume that paying an intermediary always amounts to paying the franchisor. Nor should you confuse the recipient of the money with the party responsible for providing support or fulfilling other obligations.

Confirm any change of bank account through a previously verified channel, particularly if it arrives as an urgent message. Keep payment instructions, bank confirmations and receipts. Ask your accountant which tax document is required for each transaction.

4. Complete your checks with a clear allocation of responsibilities

Prepare a sheet identifying the franchisor, its representative, the sales intermediary and each payment recipient. Beside each, note their role and the document supporting it.

If another company will perform important tasks, ask how that involvement is structured and whom you can hold responsible for performance. A third party’s involvement should not leave any uncertainty about who has assumed each contractual obligation.

Do not treat company registration as a certification of franchise quality. These checks confirm identity and authority to act; they do not, on their own, establish that the business is profitable or that the contracting party has sufficient financial resources.

Practical conclusion: before signing or paying, make sure three things align: the identified contracting party, the documented authority to represent it and the documented destination of your money. If they do not, resolve the discrepancy in writing with professional advice.