Franchising in Argentina: how to negotiate your territory

Buying a franchise does not, in itself, give you exclusive access to every customer in a neighbourhood. The scope of exclusivity depends on the law and what you agree in writing. Within a franchise network, a clearly defined territory helps prevent disputes between outlets and with the brand itself. This guide explains how to assess that protection before paying a reservation fee, taking on a lease or signing an agreement.

1. Understand the protection provided by law

In Argentina, franchise agreements are expressly governed by Articles 1512 to 1524 of the Argentine Civil and Commercial Code, which has been in force since 2015. They should not be treated as contracts without specific regulation, nor should proposed legislation be confused with laws already in force.

Article 1517 provides for exclusivity for both parties, but allows it to be limited or excluded by agreement. It also states that the franchisor may not authorise another franchise outlet in the same territory without the franchisee’s consent. Simply seeing the word ‘exclusivity’ in a sales presentation is therefore not enough: you need to check its limits in the agreement and its annexes.

Exclusivity can also impose restrictions on you. The same article provides for the franchisee to operate from the specified premises, within the territory granted or, failing that, its catchment area, and not to engage in competing activities, subject to any agreed modifications.

Have the full set of contractual documents reviewed by a legal adviser, rather than just one clause. An exception elsewhere in the documents could significantly reduce the protection you thought you had.

2. Turn the sales promise into a clearly defined map

Terms such as ‘northern area’, ‘town centre’ or ‘catchment area’ may not be enough to establish where your protection begins and ends. Ask for a territorial annex that makes the boundaries clear without relying on verbal explanations.

This annex should specify:

• Boundaries: streets, street numbers, towns or a clearly marked polygon on a map.
• Authorised premises: the address and the procedure for approving a relocation.
• Formats covered: standard outlets, kiosks, temporary stands and other service points.
• Existing presence: company-owned and franchised outlets, plus planned openings already committed to that could affect the area.
• Exceptions: establishments or locations that the brand expressly reserves for itself.

If the territory is defined by a radius, specifying the point from which it is measured and the method used will help prevent disputes later. It is also worth setting out what happens if a street name or an administrative boundary changes.

Ask specifically about franchisor-owned outlets and alternative formats. Do not assume that protection referring to ‘other franchises’ covers all these situations to the same extent. Ask for the agreement to state what the brand may and may not open.

3. Agree how online sales and deliveries will work

A map protects physical locations, but it does not automatically explain who handles an online purchase. Before signing, ask to be shown how an order moves through the system: from receipt to delivery and the allocation of the resulting revenue.

Raise specific scenarios:

• A customer in your area buys from the brand’s online shop.
• An app assigns a delivery within your territory to another outlet.
• A customer collects an order from your premises after paying head office.
• A nearby business negotiates directly with the franchisor.

For each scenario, establish who makes the sale, issues the invoice, delivers the order and handles exchanges or complaints. If the outlet receives compensation, set out how it is calculated and when it is paid.

Distinguish between exclusive territory, delivery radius and order allocation: these may be separate concepts. Making that distinction clear avoids the assumption that every address you deliver to falls within a protected area.

Also ask who can change the rules for online sales. A changing operational policy should not leave the scope of your agreed territorial protection uncertain; its relationship with the agreement needs professional review.

4. Negotiate changes and a procedure for handling disputes

The commercial value of your territory may change because of new openings, a relocation or changes to the network. Check whether exclusivity depends on sales targets and, if so, how those targets are measured, what information is used and what opportunities you have to remedy a failure to meet them.

Ask for a clear, documented procedure for any territorial changes. Do not accept a promise of permanent protection if another clause allows it to be reduced unilaterally without defined criteria.

Also agree on a complaints channel, who is responsible, response times and dispute resolution mechanisms. Keep the signed version of the map and the annexes. Speaking to existing franchisees about territorial disputes can help you check how these rules work in practice.

Practical takeaway: before paying, bring together three consistent elements: the map, the exclusivity clause and the rules for online sales. If any of them contradict the others, resolve the issue in writing with legal advice before proceeding.