Franchising in Argentina: what to check in a confidentiality agreement

Before showing you manuals, processes or financial information, a franchisor may ask you to sign a confidentiality agreement. This is a reasonable tool in franchising, but it should not prevent you from assessing the investment with independent advice. Before signing, check what information it protects, who you can share it with and which obligations would remain even if you ultimately decide not to buy the franchise.

1. Understand what Argentine law protects

In Argentina, franchise agreements are specifically governed by Articles 1512 to 1524 of the national Civil and Commercial Code. Franchising involves more than permission to use a brand: the model includes a proven system, technical know-how and ongoing support.

Article 1515(d) requires franchisees to keep confidential the protected information forming part of the technical know-how transferred to them. They must also ensure confidentiality among anyone, whether an employee or otherwise, to whom they need to disclose that information to run the business. This obligation survives the end of the agreement.

Article 992 also matters before an agreement is signed: when one party provides confidential information during negotiations, the recipient must refrain from disclosing it or using it improperly for their own benefit. So deciding not to buy the franchise does not mean you are free to disclose the information you received.

Article 1514(a), meanwhile, requires the franchisor to provide economic and financial information before signing, covering two years of performance at comparable outlets that have been operating for a sufficient period. Confidentiality arrangements can govern access to this information, but they do not replace the obligation to provide it.

2. Define the information covered and its permitted use

A useful agreement makes it clear what you must protect. Check whether it covers documents marked confidential, verbal explanations, digital files, site visits and notes you prepare from those materials.

Ask for a specific definition. Wording such as ‘all information directly or indirectly related to the brand’ can lead to disputes over information that was already public or that you obtained lawfully through another source.

It is worth negotiating explicit exclusions for information that:

• Was already public or becomes public without any breach on your part.
• You can demonstrate you lawfully knew before receiving it.
• You receive from a third party authorised to disclose it.
• You develop independently, without using confidential material.

The permitted use should also be clear: assessing the purchase of a franchise and carrying out the relevant legal, accounting and financial review. Do not confuse that permission with authorisation to use the brand’s recipes, procedures or materials in another business.

Also check whether the confidentiality agreement includes restrictions on competing, recruiting staff or contacting suppliers. These are separate commitments that deserve their own assessment, rather than automatic acceptance.

3. Ensure your advisers can access the information

An agreement that only allows you to read the documents personally can make a thorough review difficult. Before signing, identify who needs access: your lawyer, accountant, prospective business partner or the institution considering your funding application.

Propose wording that allows information to be shared with these people only to the extent necessary to assess the transaction, subject to appropriate confidentiality obligations. If the franchisor’s prior consent is required, agree a clear process for obtaining it to avoid open-ended delays.

Do not assume that an adviser is automatically entitled to access simply because of their profession. Check what the document requires and what liability you accept for their actions. Unlimited liability for any conduct by third parties warrants particular legal scrutiny.

In practice, keep files in one access-restricted folder, avoid forwarding them through messaging groups and record which version each participant received. When consulting other franchisees, ask your own questions without circulating the brand’s confidential documents.

4. Check duration, return of information and consequences

Distinguish between the term of the pre-contractual agreement and the statutory confidentiality obligation that applies to franchisees. Do not assume that all confidentiality obligations disappear when negotiations end or a date on the first page passes.

Agree what happens if you withdraw: the return of documents, deletion of copies and handling of automatic backups. Ask whether your professional advisers may retain a restricted-access copy where necessary to meet legal obligations or document their advice.

Examine any penalties: what conduct triggers them, how the amount is calculated and whether they are intended to apply alongside other claims. Do not accept a substantial penalty hidden in a document presented as a mere formality.

Practical takeaway: before signing, check four points: the information protected, permitted use, adviser access and continuing obligations. A good agreement protects the brand’s know-how without preventing you from making an informed decision.