Franchising in Argentina: how to assess territorial exclusivity

A brand offering you an “exclusive territory” does not, in itself, explain which activities are protected. Before buying a franchise in Argentina, you need to know where other outlets may open and who will handle online sales to customers in your area. In franchising, defining these rights helps prevent disputes and assess the investment without assuming the contract provides protection that it does not contain.

1. Understand the exclusivity provided by law

Argentina specifically regulates franchise agreements under Articles 1512 to 1524 of the National Civil and Commercial Code. Article 1517 provides for exclusivity for both parties, but allows them to limit or exclude it by agreement.

Under that provision, the franchisor cannot authorise another franchise unit in the same territory without the franchisee’s consent. In turn, the franchisee must operate from the specified premises, within the territory granted or, failing that, within its catchment area, and cannot operate competing units or activities.

This means that statutory exclusivity is no substitute for reading the contract. A clause may restrict its scope or exclude it altogether. Nor should you assume that the reference to another franchise unit automatically settles the position on franchisor-owned outlets, e-commerce or corporate accounts: ask for these situations to be addressed explicitly.

Ask a lawyer to identify which protections the proposed agreement retains and which exceptions it introduces. The question is not simply whether exclusivity exists, but which activities it covers and for how long.

2. Turn the promised area into a verifiable boundary

“The whole neighbourhood” or “a radius around the outlet” are inadequate descriptions if they do not establish where the territory ends. Request a geographical schedule incorporated into the contract, with a clear map and a matching written description.

Pay particular attention to:

• The reference point: the exact address or coordinates from which the radius is measured.
• The measurement method: straight-line distance or distance along roads.
• The boundaries: streets, towns, administrative districts known as partidos, or other identifiable features.
• The exceptions: shopping centres, stations, airports, enclosed sites or special locations.
• Existing units: franchisor-owned and franchised outlets, plus openings already committed to, that could affect the protection offered.

If the map and description contradict each other, ask for a correction before signing. It is also worth specifying which document takes precedence if interpretations differ.

Do not confuse the contractual territory with the outlet’s actual trading area. An outlet outside the boundary may attract the same customers. Explore the edges of the territory and look at access routes, transport links and retail clusters: exclusivity does not guarantee demand or eliminate competition from other brands.

3. Separate physical location from sales channels

A contract may prevent new outlets from opening within your territory while reserving all online sales for the brand. This is not necessarily contradictory, but it changes the commercial value of the offer.

Draw up a simple table covering each channel: in-store sales, the brand’s website, delivery apps, telephone sales and business accounts. For each one, ask for written answers to these questions:

• Who can take orders from within the territory?
• Who invoices, collects payment and delivers?
• What determines how an order is allocated: the customer’s address, the delivery address or proximity to the outlet?
• Who bears responsibility for commissions, returns and complaints?
• Is the franchisee paid anything for preparing or delivering an order invoiced by someone else?

Do not assume you will receive commission on every transaction within your territory. If such a share forms part of the offer, it must be agreed in the contract, along with how it is calculated and verified.

Test the rules against specific scenarios: a customer from your territory buys from another outlet; a company places centralised orders for several branches; an app allocates deliveries across territorial boundaries. The answers should be consistent with one another.

4. Check when the protection can change

The territory initially offered may be subject to minimum sales targets, delivery coverage or other conditions. Establish whether failing to meet them allows the franchisor to reduce the territory, make it non-exclusive or authorise another unit.

If targets apply, negotiate how they will be measured, what documentation will demonstrate performance and what procedure will apply before your rights can be changed. Ask for written notice and an opportunity to remedy breaches where appropriate, rather than assuming these safeguards apply automatically.

Also establish what happens if you need to relocate the outlet and how any boundary changes will be documented. Avoid relying on verbal authorisation.

Practical conclusion: before buying, obtain a signed map, a list of exceptions and rules for each sales channel. If these documents do not establish who can sell, where and under what conditions, the exclusivity arrangements still need negotiating.