Franchising in Argentina: how to vet the franchisor

A familiar brand is not always the same entity as the company selling you the franchise. Before joining a franchise network in Argentina, you need to identify your prospective counterparty and check that it can meet its obligations. This review is not about calculating the outlet’s profitability: it is about knowing who you will be contracting with and what backing there is behind their promises.

1. Identify the person or company you will be contracting with

Ask for the franchisor’s full legal name, CUIT (Argentine tax identification number), address and registration details, where applicable. Compare these with the draft contract, commercial proposal and payment documents. The trading name may differ from the registered company name; this is not necessarily a problem, but the difference should be explained.

If you are contracting with a company, request:

• Its articles of association or other constitutional documents, including relevant amendments.
• Evidence of registration with the relevant public registry.
• Documents confirming the appointment of its officers and their current terms of office.
• The signatory’s power of attorney, if they are acting in that capacity.

Registry checks depend on the jurisdiction. The Inspección General de Justicia (General Inspectorate of Justice) oversees companies within its remit in the Autonomous City of Buenos Aires; in the provinces, you will need to contact the relevant local authority. There is no single company registry search that replaces all the necessary checks.

Also obtain the franchisor’s ARCA tax registration certificate. This can help you cross-check tax details, but does not, on its own, establish solvency, the absence of debts or the authority to grant franchises.

2. Confirm who can sign and who will receive the money

It is not enough for someone to lead the meetings or introduce themselves as the brand owner. Your lawyer should check that they have sufficient authority to bind the counterparty to this particular contract, taking account of company representation rules, powers of attorney and any required approvals.

Also check who holds the account specified for payments. If the contract names one company but you are asked to transfer money to another company, an intermediary or a personal account, insist on a documented explanation before proceeding.

A third party may be authorised to collect payments, but it is advisable to set out explicitly:

• On whose behalf they receive the money.
• Which obligation each payment settles.
• Who issues the relevant documentation.
• Who is responsible for any refund.

If you are dealing with a master franchisor or the local operator of a foreign brand, ask for evidence of their authority to grant the franchise being offered. Membership of a corporate group does not mean that all companies in the group guarantee the obligations of the entity signing the contract.

3. Assess the counterparty’s financial backing

A company may showcase attractive outlets yet still struggle to meet its commitments. Ask for its latest available financial statements, the accompanying notes and the relevant professional report, where applicable. Engage an accountant to examine its net assets, liquidity, debt levels and dependence on income from new openings.

Pay attention to any gap between the business track record being promoted and the age of the company you will be contracting with. A newly incorporated company may be legitimate, but it does not automatically inherit the assets or legal track record of other companies in the group.

Supplement your review with searches using the company’s CUIT in the Argentine Central Bank’s debtor database, the Central de Deudores, and, with professional assistance, in relevant court records and official publications. Any entry needs context: its amount, status and potential impact matter. Equally, the absence of adverse records does not guarantee solvency.

If documents are missing, record which risks remain unchecked. Where the counterparty has limited financial backing, discuss with your adviser whether to request additional guarantees or simply not proceed.

4. Distinguish legal obligations from additional requests

Argentina specifically regulates franchise agreements under Articles 1512 to 1524 of its Civil and Commercial Code. Article 1514(a) requires the franchisor, before signing, to provide economic and financial information covering two years of performance by units similar to the one being offered, which have operated for a sufficient period, either in Argentina or abroad.

This information is not equivalent to an audit of the franchisor’s solvency. The corporate and financial documents you request serve a complementary purpose; you should not present your entire due diligence checklist as an express requirement of that article.

The specific franchise provisions do not prescribe a standard disclosure document or a general twenty-day deadline for providing it. Do not confuse proposed legislation with laws currently in force.

Compile a file containing dated documents, independent checks and outstanding questions. As a practical final check, do not sign until you can answer three questions: who will be legally bound, who can represent them, and what evidence supports their ability to fulfil their obligations.