How to choose your first franchisee in Argentina

Choosing your first franchisee is not simply a matter of accepting whoever can pay. If you plan to franchise your business in Argentina, you need to identify someone capable of running the operation with discipline, managing people and working within a franchise network. A documented selection process helps avoid rushed commitments and makes it easier to explain why one candidate progresses and another does not.

1. Define the profile before looking for candidates

Before advertising the opportunity, write down what the operation actually requires. Do not look for a vague “entrepreneurial profile” without specifying observable behaviours. A business involving intensive interaction with the public requires different skills from one focused on business-to-business sales.

Separate essential requirements from skills that can be acquired during training. Include:

• Commitment: who will run the outlet and how much time they will need to devote to it.
• Relevant experience: team management, customer service, administration or consultative selling, as appropriate.
• Financial capacity: resources to cover opening costs, the initial operating period and the candidate’s personal needs.
• Approach to the franchise system: willingness to follow procedures, report results and accept support.
• Local knowledge: understanding of customers, locations and competitors in the proposed area.

If you accept investors who will not run the business themselves, assess the person responsible for operations too. The investor’s money is no substitute for the capabilities of the person in charge.

Turn these points into a standard assessment form for all applications. Decide in advance which shortcomings rule out further consideration and which can be addressed through training.

2. Structure interviews to gather evidence

Use an initial conversation to check expectations: why the candidate wants to join, what they understand a franchise to be and what they expect from the franchisor. Explain that they will have a legally independent business, not a job or an investment with guaranteed returns.

Then explore further with questions about real situations:

• “Tell me how you resolved a complaint that involved refunding money.”
• “What did you do when a member of staff failed to follow a procedure?”
• “How would you prioritise payments if sales were lower than forecast?”
• “What would you do if you disagreed with a brand promotion?”

Ask for specific examples and record the answers. Hearing that someone “works well in a team” tells you less than understanding a decision they made, its outcome and what they learnt.

You could also include an accompanied visit to a company-owned outlet and a short exercise on operational priorities. Present this as an assessment, not as unpaid work or a promise to award a franchise. Observe whether the candidate asks questions, listens and understands the difference between suggesting improvements and changing the model unilaterally.

3. Carry out proportionate checks on resources and background

A statement of available capital is not enough to approve a candidate. Request relevant documentation to establish which funds are their own, which depend on financing and which are not yet available. Arrange for an accountant to review any aspects that require professional scrutiny.

Do not confuse assets with liquidity: owning a property does not mean having the cash to pay rent, wages and stock replenishment costs. If several partners are involved, identify who contributes funds, who makes decisions and who is accountable for day-to-day management.

Request business or employment references with the applicant’s knowledge. Cross-check relevant responsibilities and behaviour without turning the assessment into an investigation of their private life.

Argentina’s Personal Data Protection Law No. 25,326 is relevant when collecting and storing candidate information. Explain the purpose of processing the data, obtain consent where required, restrict access and avoid requesting sensitive or unnecessary information. Also establish a policy for retaining and deleting candidate records.

A warning sign calls for clarification, not an automatic conclusion. Persistent inconsistencies concerning funds, availability or responsibilities, however, justify stopping the process.

4. Keep selection separate from signing and taking payments

In Argentina, franchise agreements are governed by Articles 1512 to 1524 of the Argentine Civil and Commercial Code, enacted by Law No. 26,994 and in force since 1 August 2015. Franchising is not an area without specific regulation.

Commercial selection does not replace pre-contractual obligations. Among these, Article 1514 requires the franchisor, before signing, to provide economic and financial information covering two years of performance of outlets similar to the one being offered, which have been operating for a sufficient period.

Do not confuse legislative proposals with laws in force: the proposal to create a Register of Franchisor Companies and require twenty days’ advance disclosure does not, in itself, impose applicable obligations.

Before taking a reservation payment, have its terms reviewed: its purpose, validity period, refund arrangements and implications for the territory. Avoid verbal promises of exclusivity. Conclude the assessment with a written decision, the reasons supporting it and any outstanding matters that must be resolved before entering into the agreement.

Practical conclusion: choose on evidence, not enthusiasm. A defined profile, comparable interviews and proportionate checks provide a stronger foundation for bringing the first member into your franchise network.