Franchisee councils: what to assess before buying a franchise

Buying a franchise also means joining a community where decisions affect several business owners at once. It is therefore worth investigating how franchisees can raise concerns, discuss changes and track the franchisor’s responses. A council or association can help, but its name tells you little: you need to understand who takes part, what powers it has and how it works in practice.

1. Understand what Brazil’s Franchise Law requires

Article 2, item XX of Law No. 13,966/2019, known as Brazil’s Franchise Law, requires the Franchise Disclosure Document (Circular de Oferta de Franquia, or COF) to state whether a franchisee council or association exists. It must also describe the body’s responsibilities, powers and mechanisms for representing franchisees in dealings with the franchisor, as well as its authority to manage and oversee the use of money in any existing funds.

The law requires transparency about this structure, but does not require every network to establish a council or association. The absence of either body does not, in itself, indicate non-compliance. Equally, a vague reference to an “active council” does not explain how representation works.

A council and an association are not necessarily the same thing. A council may be an internal forum for dialogue within the network. An association may have its own organisational structure, constitution and membership rules. Check the actual arrangements rather than assuming independence or decision-making powers based on the name alone.

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

2. Check who represents franchisees

Ask for the council’s rules or the association’s constitution, where applicable. These documents can help you establish whether representation reflects the range of businesses within the network or is concentrated among a small group.

Structure your assessment around specific questions:

• Selection of representatives: are they elected by franchisees, appointed by the franchisor or selected through a combination of both?
• Terms of office: are there fixed terms, renewal provisions and a process for replacing representatives?
• Composition: can new outlets, smaller operations and different regions participate?
• Concentration of voting power: do multi-unit owners have more influence? How do the rules address this?
• Eligibility: what conditions must candidates meet, and what would disqualify them?
• Access: can any franchisee raise an issue, even without holding a seat?

There is no ideal composition for every network. What matters is whether the structure gives a voice to businesses similar to the one you intend to open.

Also check any membership fees, participation expenses and rules for joining. Ask whether participation is optional or contractually required, and seek clarification on the costs. Do not assume that association membership automatically gives you access to every decision-making forum within the franchise network.

3. Distinguish consultation from decision-making authority

An advisory council offers opinions and recommendations. A decision-making body may have the power to decide certain matters within the authority granted by the relevant documents. This distinction needs to be clear before you buy.

Ask which matters are referred to representatives: operational changes, the introduction of new procedures, implementation timetables or common difficulties faced by outlets. Then check what happens when there is disagreement.

Being heard is not the same as having a right of veto. The presence of representatives does not automatically transfer the franchisor’s decision-making powers to them or change each franchisee’s individual agreement.

Ask for answers to three practical scenarios:

1. If representatives reject a proposal, can the franchisor implement it anyway?
2. If a collective request is approved, is there a deadline for a response or implementation?
3. If a decision affects contractual obligations, how is its implementation formally documented?

Ask a lawyer experienced in franchising to compare the COF, franchise agreement and council or association rules. Any inconsistencies concerning powers and responsibilities should be clarified in writing before you sign. Do not assume that a collective vote can change any contractual obligation.

4. Check whether representation works in practice

Well-drafted documents matter, but they need to reflect day-to-day practice. Where available, and subject to confidentiality requirements, ask for meeting minutes, meeting schedules or summaries of recent agreed actions.

Look for a complete example: an issue raised by franchisees, the discussion that followed, the response received and the outcome. This helps distinguish a meeting that merely shares information from a genuine process of dialogue.

Speak to representatives and to franchisees who do not hold office. Ask whether they receive feedback, can put topics on the agenda and know whom to approach when an issue remains unanswered. Avoid judging the body solely by how often it meets: frequent meetings with no follow-up may offer little value.

If there is no council or association, investigate alternative channels for collective representation and who is responsible for them. The absence of a formal structure warrants scrutiny, but you still need to assess the quality of dialogue.

In practice: before buying, obtain the rules governing representation, identify their limits and verify an example of how the process has worked. Make your choice knowing how your voice can be heard — without mistaking participation for a guarantee of agreement.