Who Signs a Franchise Agreement in Argentina?

Before franchising a business, one question is often overshadowed by the commercial proposal: who will be legally responsible for each commitment? The outlet’s name may be familiar, but it does not necessarily identify the person or entity entitled to grant the franchise. Clarifying who is entering into the agreement, what authority they have and which documents support it helps build a franchise network with clear responsibilities from the outset.

1. Identify the person or entity granting the franchise

A party to a franchise agreement may be an individual or a legal entity. There is no requirement to set up a new company solely to franchise a business. However, with legal and accounting advice, you should decide whether the existing business operator or a different entity will enter into the agreement.

This decision should not be based on administrative convenience alone. The chosen party will need to fulfil obligations such as transferring technical know-how, supplying the manual and providing support. They must also hold the rights needed to grant use of the system.

Prepare an identification record containing:

• Full name or exact registered company name.
• CUIT (Argentine tax identification number) and relevant address.
• Company registration details, where applicable.
• The identity and position of the person signing.
• Documents proving their authority.

The trade mark, trading name and registered company name are not interchangeable. If the business trades under one name but issues invoices under another, the agreement must unambiguously identify the party bound by it. The trade mark can be described separately as part of the system being licensed.

2. Check that the proposed franchisor can grant rights to the system

In Argentina, franchise agreements are specifically regulated by Articles 1512 to 1524 of the national Civil and Commercial Code. They should not be treated as contracts without their own statutory framework.

Article 1512 requires the franchisor to be the exclusive holder of the intellectual property rights included in the system, or to have the right to use them and pass those rights on to the franchisee. Choosing a company to sign the agreement is therefore not enough: there must be a documentary trail supporting the rights it promises to grant.

For example, if an individual developed the business and later set up a company to expand it, you should not assume that all assets and permissions automatically transferred to that company. Check who has authority over the materials, software, designs and other elements included in the proposal.

The review should answer three questions:

1. Who owns, or is authorised to use, each relevant right?
2. Can the prospective franchisor authorise third parties to use it?
3. Does that authorisation cover the scope and duration of the commitments the franchisor will undertake?

The same article states that the franchisor may not hold a direct or indirect controlling equity interest in the franchisee’s business. If you plan to invest capital in a prospective franchisee’s company, seek a legal review first: the ownership structure matters too.

3. Verify both signatories’ authority

Being a shareholder, founder or commercial contact does not, in itself, prove that someone can represent a company. Before arranging the signing, check the documents establishing the authority of both parties’ representatives.

Depending on the type of company and the circumstances, you may need to review its constitutional documents, the appointment of its officers, whether those appointments remain valid, the relevant registrations and the rules governing how it acts. Some companies require joint signatures; others act through representatives authorised to sign individually.

If someone is signing under a power of attorney, check the document, its scope and whether it remains valid. A general authorisation is not enough without confirming that it permits the representative to undertake the obligations set out in the agreement.

Avoid contracting with a company that has yet to be formed as though it were already fully incorporated and registered. If the prospective franchisee is still setting up their company, a lawyer will need to establish who can enter into binding commitments at that stage and how any later addition or substitution of a party will be documented. Simply changing the name on the final page can leave inconsistencies throughout the agreement.

4. Compile a file before completing the agreement

Create a file for each transaction containing identification documents, tax records, company documents, powers of attorney and the final version of the agreement. Cross-check the details in the section identifying the parties, the schedules and the signature blocks: they must refer to the same people or entities, acting in the same capacities.

As a general rule under the franchise framework, the Code does not require special registration of the agreement or registration on a general national register of franchisors as a condition of entering into an agreement. This does not remove company registration requirements, tax obligations or any authorisations required for the activity and jurisdiction concerned. A CUIT does not prove authority to represent a company either.

Identity checks do not replace the other pre-signing obligations. These include the requirement under Article 1514 to provide economic and financial information on the performance of similar units over a two-year period.

Practical takeaway: before sending the agreement for signature, check who will be bound by it, who can represent that party and what rights they hold. Answering these three questions helps prevent a sound commercial proposal from being undermined by a signature that lacks the necessary authority.