COF: how to prepare your first franchise offer in Brazil

Turning an existing business into a franchise network means making explicit what currently exists only in the founder’s head. Brazil’s franchise disclosure document, the Circular de Oferta de Franquia (COF), brings together the essential information a prospective franchisee needs to assess the relationship. Preparing it is not simply a matter of filling in a template: it means checking that the terms offered are documented, consistent and achievable.

1. Understand the purpose of the COF and the statutory deadline

In Brazil, Law No. 13,966/2019, known as the Franchise Law, governs business franchising and replaced Law No. 8,955/1994. Article 2 requires a COF written in Portuguese, in clear and accessible language, containing the information specified by law.

The COF allows prospective franchisees to assess the offer before making any commitments. It does not replace the agreement, but must set out its relevant terms and include the full text of the standard franchise agreement and, where applicable, the preliminary agreement, together with their respective annexes.

The COF must be delivered at least ten days before any agreement or preliminary agreement is signed, or any fee is paid by the prospective franchisee to the franchisor or to a company or person connected with it. Do not collect reservation fees early to secure a territory.

Failure to meet this deadline may provide grounds for seeking to have the agreement annulled or declared void, as applicable, and for recovering payments specified by law. Omitting mandatory information or providing false information may also have legal consequences. Legal review should therefore take place before the offer is made.

2. Gather documents before drafting

Create a central folder and a checklist based on Article 2. For each requirement, record who supplies the information, which document supports it and when it was checked. This prevents the drafting process from relying on assumptions.

Materials to gather include:

• The business’s history and identification details for the franchisor and any companies connected with it, including their respective CNPJ numbers (Brazilian corporate tax registration numbers).
• The franchisor’s balance sheets and financial statements for the two most recent financial years.
• Information on legal proceedings that fall within the criteria set out in the law.
• A description of the franchisee’s activities, the desired candidate profile and the level of involvement required.
• A list of network members and those who have left in the past 24 months, with the required contact details.
• Documents relating to the trade mark and any other intellectual property rights being offered.

If there are no franchisees yet, state this explicitly. Do not present company-owned outlets as operations run by independent partners.

If the franchisor is newly incorporated, discuss how to present its financial history with a lawyer and an accountant. Do not fabricate financial statements or substitute another company’s figures for the franchisor’s documents without making this clear.

3. Turn commercial decisions into verifiable information

Preparing the COF often reveals decisions that have yet to be made. Before stating that support will be provided, define what will be delivered, by whom and under what conditions. Distinguish between initial training, ongoing operational support, advice on premises and the provision of manuals.

Break down the initial investment into understandable components: the franchise fee, premises fit-out, equipment and stock, as well as any other resources needed to set up and begin trading. State the assumptions and payment terms. An estimate without context may lead prospective franchisees to underestimate their cash requirements.

For each recurring charge, specify the amount or calculation basis, purpose and recipient, as applicable. Avoid vague wording such as “a percentage of sales” without explaining what is included in that calculation. Do not present commercial projections as a guarantee of profitability.

Also document the territory, any exclusivity or preferential rights, competition between outlets, mandatory suppliers and the rules for transfer, renewal and exit. These points are part of assessing the relationship, not details to be resolved later.

Check the trade mark’s status with Brazil’s National Institute of Industrial Property (INPI). The law allows the franchisor to be the rights holder, an applicant for registration or a party expressly authorised by the rights holder. An application for registration is not the same as a granted registration: the COF must reflect the actual position and include the required information about these rights.

4. Check consistency between the offer, agreement and sales pitch

Cross-check the COF, agreement, annexes and sales presentation. A promise of territorial exclusivity must not disappear from the agreement. Likewise, support advertised as included should not later appear as an unexpected charge.

Use a simple table with three columns: the term offered, the document in which it appears and the person responsible for delivering it. Resolve any discrepancies before delivering the COF to the prospective franchisee.

This guide does not cover every legal requirement. Ask a lawyer experienced in franchising to check all applicable provisions of Article 2, including any rules specific to your operating model.

5. Keep track of delivery and versions

Identify each version of the COF with a date and reference code. Retain the actual file sent and an acknowledgement of receipt that can establish the recipient, content and date. This record-keeping is an administrative practice, not official approval of the offer.

Record questions and respond in writing. If there is a material change to the terms, submit the new version for legal review and assess whether it needs to be delivered again and the waiting period restarted before proceeding.

In practice: only release the offer when the information, documents and promises are aligned. A clear COF helps build a franchise network based on realistic expectations.