Buying a Franchise: How to Formalise Sales Promises

A special offer can make a franchise seem more attractive: a temporary discount, an extended deadline or an additional service included in the deal. The risk arises when the sales presentation promises something that the contract does not confirm. To join a franchise network with expectations aligned, a prospective franchisee needs to turn every decisive term into a clear, verifiable commitment accepted by someone authorised to undertake that obligation.

1. Distinguish between promises, estimates and obligations

Before negotiating the wording, organise what you have been told. Not every sales statement amounts to an obligation to deliver a guaranteed result. A performance estimate, for example, is different from a commitment to provide a particular discount for a defined period.

Draw up a list with three categories:

• Specific term: something that can be checked, such as a reduced fee during the first few months.
• Estimate: an expectation based on assumptions, such as sales volume or the time needed for the business to become established.
• General sales claim: phrases such as “close support” or “a straightforward operation”, which need clarification before you base a decision on them.

For each relevant item, record who said it, when, through which channel and which document confirms the information. Keep presentations, proposals, messages and all versions of documents you receive.

This record does not replace the contract, but it helps prevent an important term from disappearing during negotiations. It also allows you to identify contradictions while you are still free to walk away.

2. Check the negotiated terms against the franchise documents

In Brazil, Law No. 13,966/2019, known as the Franchise Law, governs business franchising. It requires the franchise disclosure document, known locally as the Circular de Oferta de Franquia (COF), to include the full standard-form agreement and, where applicable, the preliminary agreement, including annexes and conditions governing their validity.

The COF must be provided at least ten days before the franchise agreement or preliminary agreement is signed, or any fee is paid to the franchisor or a company or person connected with it. This is a minimum advance disclosure period, not a deadline for completing your review.

Use these documents to compare the offer presented with the obligation actually proposed. A simple table can have four columns: negotiated term, provision in the COF, contractual clause and outstanding query.

Pay particular attention to clauses stating that the contract supersedes earlier proposals or that changes are valid only if set out in a signed written document. These make it even more important to incorporate individually agreed terms into the contractual documents.

A standard-form contract is not necessarily unchangeable. You can propose amendments, although the franchisor is not obliged to accept every request. If there is a material change to the information disclosed, seek legal advice on whether the documentation needs updating and whether the applicable statutory advance disclosure period must be observed again.

3. Put terms in writing so they can be checked

A useful promise needs to answer these questions: who will do what, by when, under what conditions and with what consequences if they fail to comply? Replacing one vague phrase with another equally general one does not solve the problem.

Imagine an offer to reduce a particular fee temporarily. The document should clarify:

• Which fee will be reduced and how the reduction will be applied.
• When the benefit starts and ends.
• Whether the period runs from signing, opening day or another milestone.
• Which requirements must be met to retain the benefit.
• How other charges not covered by the agreement will be treated.

If the benefit depends on future approval, identify who grants that approval, which criteria will apply and what happens if approval is refused. Do not treat a possibility as a guaranteed discount.

Ask for the terms to be included in the contract itself or in a separate document signed by the parties and expressly linked to it. Where documents conflict, it should be clear which takes precedence, without concealing incompatible obligations.

Also check who is granting the benefit. Do not assume that a sales intermediary making a promise has unrestricted authority to bind the franchisor. Request confirmation from a representative authorised to do so.

4. Carry out a final check before committing

Compare the version ready for signature with the one actually negotiated. Check names, dates, annexes, cross-references and special terms. Do not rely solely on an assurance that “the document is the same”.

Messages and emails may have evidential value, depending on the context, so they are not irrelevant. Even so, relying on scattered conversations to establish an obligation usually creates more uncertainty than recording it clearly in the contractual document.

Have any discrepancies reviewed by a solicitor or lawyer with experience in franchising. If an essential term remains no more than a verbal promise, postpone signing and making any payment until the discrepancy is resolved, while continuing to comply with the legal requirements.

In practice: list the promises that matter to your decision, find where they are reflected in the contract and confirm who is responsible, the deadlines and the conditions. Buy the franchise on the strength of obligations you can understand and verify, not just the sales presentation.