Brazilian franchise disclosure documents: checking the COF and statutory waiting period

Receiving a sales presentation is not the same as receiving Brazil’s franchise disclosure document, the Circular de Oferta de Franquia (COF). To enter the Brazilian franchise market with greater confidence, prospective franchisees need to identify which document they have received, check that it is complete and allow time to review it. This guide explains how to organise this stage before making commitments or payments.

1. Understand what the law requires before you commit

In Brazil, Law No. 13,966/2019, known as the Franchise Law, governs business franchising. It replaced Law No. 8,955/1994, which is still cited in older materials. The current legislation requires the franchisor to provide a COF written in Portuguese, in clear and accessible language, containing the information required by law.

The COF must be delivered at least ten days before the franchise agreement or preliminary agreement is signed, or before the prospective franchisee pays any fee to the franchisor or to a company or person connected with it.

The key trigger is therefore not just the signing of the final agreement. A preliminary agreement or a request for an advance payment also needs careful attention. If you are asked to pay to ‘reserve the opportunity’, request written confirmation of who will receive the payment, its purpose and the terms that apply. Do not assume that using a different commercial label removes the legal requirement.

This is a minimum waiting period, not a guarantee that ten days will be enough to investigate the proposal. You may need more time to resolve queries and obtain professional advice.

2. Check that you have received the complete COF

Create a dedicated folder for the negotiations and save the original file, the message accompanying it and all annexes. Record the date, sender and document version. If access is provided through a platform, download the available materials and retain evidence of access and receipt.

During your initial check, look in particular for:

• Franchisor details: registered company name, registration details and information about connected companies.
• Financial documents: the franchisor’s balance sheets and financial statements for the two most recent financial years.
• Required litigation disclosures: franchise-related proceedings that challenge the system or could jeopardise its operation in Brazil, as specified by law.
• Investment and obligations: estimated set-up costs, fees and payment terms, alongside operational responsibilities.
• Contract documents: the complete standard franchise agreement and, where applicable, the standard preliminary agreement, including annexes, terms and validity periods.

This list is an initial screening tool, not a substitute for checking every legal requirement. A lengthy document may still be incomplete. Equally, a presentation with attractive projections cannot replace balance sheets, contractual terms or other mandatory information.

If a referenced annex is unavailable, request it and record it as outstanding. Do not acknowledge receipt of documents you have not yet been able to access.

3. Compare sales promises with the COF and agreement

Your review will be more effective if each query is linked to a specific passage. Use a spreadsheet with four columns: topic, sales information, provision in the COF or agreement, and clarification required.

Suppose the presentation promises on-site assistance at launch, but the draft agreement mentions only remote support. The useful question is not simply ‘Is support provided?’ Ask how many days of assistance will be offered, who will provide it, in what format, and who will pay for travel and accommodation.

Take the same approach to training, systems implementation, initial equipment purchases and refurbishment requirements. The aim is to turn general statements into obligations that can be checked.

Ask for written answers and for important commitments to be formally included in the relevant documents. Sales correspondence helps create a record of the negotiations, but it does not resolve ambiguities in an agreement that says something different.

If the franchisor sends a new version, keep the previous one and request a list of changes. A lawyer should assess whether significant changes or additions to mandatory information affect proper delivery of the COF and the statutory waiting period. Do not treat a substantive revision as a mere formatting correction.

4. Know when to put signing on hold

Postpone your decision if annexes are missing, inconsistencies remain unresolved or you are pressured to sign a backdated acknowledgement of receipt. Evidence of receipt should reflect what actually happened, rather than artificially adjusting the negotiation timetable.

Failure to observe the statutory waiting period may allow the franchisee to seek to have the agreement set aside or declared void, as applicable, and to demand repayment of the amounts specified by law, adjusted for inflation. The legislation also provides for consequences where mandatory information is omitted or false information is disclosed in the COF. These outcomes depend on a legal assessment of the particular case; they do not mean that every obligation is automatically cancelled.

If you have already signed or paid, retain all documents and payment records, and seek legal advice before stopping payments or abandoning the business.

Practical conclusion: proceed only once the COF is complete, receipt has been documented, the statutory waiting period has been observed and significant discrepancies have been resolved. The franchise network’s sales timetable should not take the place of your own assessment.