Keeping Employment Responsibilities Separate When Franchising in Argentina

Turning your own business into a franchise changes more than who owns the outlets: it also changes who manages the people working in them. If you continue allocating shifts, approving leave or disciplining employees at each outlet, you risk blurring that separation. A franchise network needs shared standards, but it also needs clear responsibilities. This guide explains how to establish that independence before offering your first franchise.

1. Understand the independence recognised by law

In Argentina, franchise agreements are governed by Articles 1512 to 1524 of the Argentine Civil and Commercial Code, which came into force on 1 August 2015. Franchising is therefore subject to a specific legal framework.

Article 1520 states that the parties are independent and that no employment relationship exists between them. It also provides that the franchisee’s employees have no employment relationship with the franchisor, without prejudice to the application of rules on employment fraud.

It further states that the franchisor is not liable for the franchisee’s obligations unless the law expressly provides otherwise. This does not amount to blanket immunity: a contractual clause cannot prevent scrutiny of how the relationship actually works or override mandatory legal provisions.

Employment Contract Law No. 20,744 and other applicable employment provisions must be considered alongside the franchise framework. Assessing potential liability requires examining the specific facts, not simply the label given to the agreement.

Nor should independence be confused with freedom from your own obligations. For example, Article 1521 provides for the franchisor’s liability for defects in the design of the system that cause proven losses to the franchisee, where those losses do not arise from the franchisee’s gross negligence or wilful misconduct.

2. Separate commercial standards from staff management

Before franchising, review the decisions you currently make as the owner of your outlets. Some belong to the business system you will pass on; others should remain with the future employer.

You can define the customer service experience, hygiene requirements or skills needed to carry out a task. Deciding which employee covers a shift, how much they earn or what disciplinary action they face is a different matter.

Prepare a simple decision matrix:

Decision	Franchisor	Franchisee
Customer service standards	Defines the expected outcomes	Organises the team to achieve them
Staff recruitment	May provide suggested role profiles	Selects and hires staff
Individual working hours and leave	Communicates the system’s requirements	Makes and administers decisions in line with applicable rules
Pay and social security contributions	Does not take over the employer’s role	Processes payroll and meets its obligations
Service failures	Reports them to the person responsible for the outlet	Determines any appropriate employment-related action

This matrix is an organisational tool, not an automatic safeguard against claims. It must align with the agreement and, above all, with day-to-day conduct.

3. Document responsibilities without creating a false sense of risk transfer

The agreement should identify who operates each outlet and establish that the franchisee organises its own business and meets the obligations arising from employing its staff. It is also sensible to designate a responsible contact for each outlet.

Arrange a legal review covering at least the following points:

• Identifying the employer: employment records must name the party that actually hires and manages the team.
• Applicable compliance requirements: employee registration, pay, contributions, occupational risk insurance and the relevant collective bargaining agreement, depending on the activity and circumstances.
• Communications: commercial requirements should be addressed to the franchisee or its designated representative.
• Claims: each party should know how to report a formal demand or an accident and preserve the necessary records.
• Internal allocation of liability: any reimbursement or indemnity arrangement should undergo legal review; it does not remove workers’ rights or statutory obligations towards third parties.

Simply stating that “each party is responsible for its own obligations” is not enough. You need to plan for claims involving both parties and avoid promising complete exemption from liability when the agreement cannot guarantee it.

4. Align your working practices before opening the first outlet

Train your head office team to work with independent business owners. Anyone who previously supervised company-owned branches may need to change their habits: a direct instruction to an employee is not the same as a contractual requirement addressed to the franchisee.

For example, if customers face delays, tell the person responsible for the outlet which standard is not being met and ask for a corrective action plan. Avoid resolving the issue by unilaterally assigning new shifts to their staff.

Review access permissions in your management system too. Head office may need commercial data, but that does not mean it should approve leave or manage personnel files. Limit access to personal information to what is necessary and check the applicable data protection obligations.

Practical conclusion: before selling your first franchise, prepare a decision matrix, establish a communication process and arrange a legal review of the agreement. Independence must be reflected in your documents, your tools and the way you work every day.