How to Approve Franchise Premises in Argentina

When franchising an existing business, accepting unsuitable premises can undermine an otherwise strong commercial proposition. Looking like the original outlet is not enough: the premises must allow you to replicate operations, meet local requirements and cover operating costs. To grow your franchise network, establish an approval process before a prospective franchisee makes commitments that are difficult to reverse.

1. Turn business needs into verifiable criteria

The first step is to distinguish which features of the original premises are essential and which reflect particular circumstances. A spacious corner location may have helped your sales, but that does not mean every outlet needs a corner site.

Prepare an assessment form with three groups of requirements:

• Operational: usable floor area, storage, circulation space, accessibility, toilets and separation of activities where required.
• Technical: available electrical capacity, ventilation, extraction, water supply, drainage and the ability to install the necessary equipment.
• Commercial: visibility, access, customer profile, busy periods and loading and unloading arrangements.

Classify each requirement as mandatory, adaptable or desirable. Add the document or check needed to verify it: a floor plan, technical inspection, enquiry with the relevant authority or cost estimate for alterations.

Avoid setting floor areas or specifications on intuition alone. If the business requires particular workstations, calculate the space needed from their layout. The result should help rule out unviable properties, not justify one that has already caught the prospective franchisee’s imagination.

2. Separate commercial approval from regulatory feasibility

In Argentina, franchise agreements are governed by Articles 1512 to 1524 of the National Civil and Commercial Code, which came into force on 1 August 2015. Article 1512 provides for the use of a proven system, supported by technical know-how and ongoing assistance. However, this contractual framework does not replace the authorisations needed to operate from a particular property.

Operating approvals and permitted-use requirements depend on the jurisdiction and business activity. Before giving final approval to a site, check with the competent authority that the proposed use is permitted and establish which procedures must be completed. Depending on the circumstances, health and hygiene requirements, fire safety, accessibility, and building work or signage permits may also need to be reviewed.

The franchisor’s approval is not a licence from the public authorities to operate. Nor does a seemingly similar previous business guarantee that the new venture can operate there without changes.

Arrange two independent assessments: one covering suitability for the business model, and another covering technical and regulatory feasibility. Use appropriately qualified and authorised professionals for the latter where required.

Do not confuse proposed legislation with obligations currently in force. The bill proposing a Register of Franchisor Companies does not, in itself, create a national registration requirement. References to that proposal are no substitute for checking the rules applicable to the premises.

3. Assess the full cost before committing to a lease

An attractive rent can conceal expensive alterations. Request a cost estimate covering building work, installations, equipment, professional fees, administrative procedures and expenses incurred before opening. Also identify which works require permission from the landlord or the building’s owners’ association.

Compare the outlay with the prospective franchisee’s financial resources, looking beyond the money needed to open. There must be enough headroom to support the initial operating period and cope with delays. Assess conservative scenarios; do not turn a sales forecast into a guarantee.

Aim to complete critical checks before paying a property reservation deposit or signing a lease. If any remain outstanding, seek legal advice on contractual conditions that address their outcome and the consequences if operating approval cannot be obtained.

Also check that the period for which the premises will be available is consistent with the franchise agreement. Article 1516 refers, as a general rule, to a minimum term of four years, with exceptions for special circumstances. Do not plan the operation without considering when the right to use the premises could end.

4. Document the decision and the conditions for opening

Keep a file for each property, containing photographs, plans, reports, cost estimates and dated decisions. Assign responsibility for supplying documents, reviewing technical matters and communicating the decision.

The approval should specify:

• The premises and the authorised outlet format.
• Mandatory alterations and who is responsible for them.
• Outstanding documents and submission deadlines.
• Circumstances requiring a fresh assessment.

Distinguish between preliminary approval to continue investigations and internal authorisation to open. The latter should confirm that the agreed conditions have been met and all required authorisations obtained. Set out responsibilities clearly in the contractual documents, without attempting to remove legal obligations through a general disclaimer.

Practical conclusion: before offering franchises, prepare a premises assessment form, a checklist and an approval process. Rejecting an unsuitable property early protects both the prospective franchisee and the wider franchise network.