Owning a franchise without a full-time commitment: what to check before buying

Buying a franchise and hiring a manager does not automatically mean you can oversee the business remotely. Each franchise brand sets its own requirements for the owner’s involvement. Before choosing a network in Brazil, check whether the expected workload fits your schedule and whether delegated management is permitted, practical and compatible with the responsibilities you will take on.

1. Check how much involvement the brand requires

Brazil’s Law No. 13,966/2019, the Franchise Law, requires the Franchise Disclosure Document (Circular de Oferta de Franquia, or COF) to set out the ideal franchisee profile and the requirements for direct involvement in running and managing the business. These obligations appear in Article 2, items VI and VII.

This does not mean that every franchise requires an exclusive commitment. It means that prospective franchisees must receive information enabling them to understand the level of involvement required. One brand may accept an investor who hires a manager; another may require a business partner to take direct responsibility for day-to-day operations.

Compare the sales presentation, the COF and the draft agreement. Look for answers to these questions:

• Does the franchisee need to work on site at the outlet?
• Is an exclusive commitment required, or are other activities restricted?
• Can one business partner fulfil the operational role instead of another?
• Does hiring a manager require the franchisor’s approval?
• Which meetings, training sessions and assessments require personal attendance?

Do not treat phrases such as “flexible management” or “a business for investors” as contractual permission. Ask the franchisor to explain what these promises mean in practice and formally document the conditions that apply to your outlet.

2. Turn the requirements into a realistic schedule

The level of involvement needed often changes between the set-up phase and established operations. Even where delegated management is accepted, opening the business may require the owner to recruit staff, attend training, oversee fit-out work and make frequent decisions.

Draw up two schedules: one for the set-up phase and another for a normal working week. Record the tasks, who is responsible, how often they need doing, where they must be carried out and whether immediate availability is required.

Include activities that do not always feature in the franchise presentation: checking takings, approving payments, reviewing performance indicators, dealing with staff absences, overseeing stocktakes and handling complaints beyond the manager’s authority.

Then test difficult scenarios. Who takes over if the manager falls ill? Who deals with an incident during your other job’s working hours? Who makes an urgent hiring decision? An operation that only works when nothing goes wrong does not yet have a reliable system for delegated management.

If you intend to keep a job or another business, check for clashes with its working hours and any exclusivity obligations. Do not assume you will be able to manage conflicting demands simply by sending messages on your phone.

3. Calculate the cost of not running the business yourself

The brand’s financial projections may assume that the franchisee personally runs the outlet. If so, hiring someone to perform that role changes the expected results. Ask explicitly what staffing structure underpins the figures presented.

With an accountant’s help, prepare a forecast that reflects your intended involvement. Allow for:

• the manager’s pay, applicable employment costs and benefits;
• recruitment, training and any replacement costs;
• cover for holidays, other absences and additional hours;
• monitoring tools and access controls;
• the owner’s travel and site visits.

Separate payment for the owner’s work from the return on investment. If a forecast depends on you working every day without corresponding pay, it does not, on its own, demonstrate that an outlet run by someone else is viable.

Compare operating results under both models: an owner-run outlet and one with a hired manager. Use defensible assumptions and keep the other criteria consistent. The aim is not to prove that delegation costs less, but to check whether the business remains attractive after paying for the necessary management arrangements.

4. Define authority, replacement arrangements and responsibilities

Before signing, have a legal adviser review the management clauses. The agreement should make clear who may manage the outlet, which approvals are required and what happens if the person responsible for operations needs to be replaced.

Also check the contractual consequences of failing to meet the involvement requirements. Distinguish explicit obligations from sales recommendations: this helps prevent informal expectations from becoming a source of conflict.

Within the business, set authorisation limits for payments, discounts, recruitment and access to information. Delegating tasks does not automatically transfer the franchisee’s obligations towards the franchisor.

The COF must be provided at least ten days before signing the franchise agreement or preliminary agreement, or paying a fee to the franchisor or any associated person or company. Use this period to clarify any incompatibilities, but do not treat it as a maximum time limit for your review.

The practical takeaway: only proceed if the permitted level of involvement is documented, cover is in place for absences and the forecast can absorb the cost of delegated management. If the brand requires a level of attendance you cannot provide, look for another option.