Resolving Franchise Disputes in Argentina

Before granting your first franchise, it is worth deciding how to resolve disagreements that cannot be settled through day-to-day discussions. A dispute over the interpretation of an obligation can damage a business relationship even when both parties want it to continue. To protect the franchise network, the agreement needs a clear, accessible procedure that complies with Argentine law.

1. Separate operational queries from disputes

Not every disagreement requires a formal notice. A query about how to apply a promotion may be resolved with the operations manager; a disagreement over who should pay a particular expense needs a different approach.

Before drafting the contractual clause, define two processes:

• Day-to-day management: queries, administrative errors and requests for clarification, with named people responsible for handling them.
• Formal disputes: disagreements over rights or obligations that require a documented response and the involvement of people authorised to agree on a solution.

Set out how an issue moves from one process to the other: for example, when a query goes unanswered or the parties maintain incompatible interpretations. The formal notice should identify the issue, its background, the available documentation and the proposed solution.

It is also worth distinguishing operational communication channels from the addresses and methods valid for contractual notices. A message to a supervisor should not be confused with a formal notice if the agreement requires a different method. This distinction must be clear to the person managing the outlet, not just to lawyers.

2. Design a short, documented negotiation process

Direct negotiation gives the parties a chance to resolve problems before taking them to court. For it to work, simply stating that the parties will act in good faith is not enough: you need to specify who takes part and what happens if no agreement is reached.

The procedure could include the following stages:

1. Notice of the disagreement: a clear account of the problem and its background.
2. Response: the other party’s explanation, supported by relevant documents.
3. Meeting: involvement of representatives with sufficient authority to negotiate.
4. Conclusion: a record of the agreement reached or the issues that remain unresolved.

Time limits should be reasonable for the business. There are no universally applicable legal deadlines for these stages: they should be set with professional advice, taking account of the complexity of likely disputes.

If a solution is agreed, document its scope, who is responsible for implementing it and the deadlines for doing so. Clarifying whether it settles a specific case or changes a contractual term helps prevent a one-off concession from being interpreted as a new rule for the entire network.

The process must not prevent either party from seeking urgent court protection. A clause requiring an indefinite wait can worsen harm or jeopardise rights. Nor should you assume that private negotiations automatically suspend statutory time limits for bringing a claim.

3. Choose a dispute resolution route within Argentina’s legal framework

In Argentina, franchising is specifically regulated by Articles 1512 to 1524 of the Civil and Commercial Code of Argentina, enacted by Law 26,994. This framework operates alongside general contract rules and the procedural rules applicable to each dispute.

The clause must specify what happens if negotiations fail: mediation, court proceedings or, where legally permissible, arbitration. These are not interchangeable options.

Mediation aims to help the parties reach an agreement with assistance from a neutral person; the mediator does not issue a judgment. Law 26,589 establishes mandatory pre-court mediation for matters within its scope. Argentina’s provinces have their own rules, so a single procedure should not automatically be applied across the country.

Arbitration allows arbitrators to decide the dispute, but requires particular care. Article 1651 of the Code excludes contracts of adhesion — contracts on pre-drafted terms accepted without negotiation — from arbitration agreements, regardless of their subject matter. If you use a pre-drafted template without genuine negotiation, do not include an arbitration clause on the assumption that it will be valid.

The choice of courts also requires professional review: jurisdiction, and the extent to which the parties can agree on it, depend on the applicable rules. Choosing a city for the franchisor’s convenience does not guarantee that the clause will be enforceable.

4. Test the procedure before offering the franchise

Run through a specific disagreement: the franchisee challenges a charge because they believe the agreement does not provide for it. Who do they write to? Who reviews the background? Who can authorise a settlement? What route remains available if the disagreement persists?

Also consider whether the cost and travel distance involved in the chosen process are proportionate. An inaccessible procedure can increase tension rather than resolve it. Finally, check that the agreement and internal instructions describe the same process.

Practical takeaway: before signing, define who is responsible, how communications must be made, the stages to follow and a legally valid final route for resolving the dispute. Agreeing on how to handle disagreements is part of preparing a business for franchising.