Franchisee autonomy: set boundaries before expanding

When turning an independent business into a franchise, the founder needs to stop making every decision. The challenge is to preserve what makes the brand recognisable without running the franchisee’s business for them. In franchising, this division calls for clear rules, consistent responsibilities and genuine scope for local management. Before offering the first franchise, it is worth drawing up a decision map: who decides, within what limits and when they must consult the franchisor.

1. Separate brand standards from business decisions

Start by listing the decisions that currently reach the business owner. Include common situations: recruiting staff, changing opening hours, offering discounts, substituting a raw material or supply item, responding to a complaint and taking part in a local event.

Then organise each decision into three categories:

• Mandatory standard: a requirement needed to preserve the brand’s identity, safety or consistency of customer experience.
• Autonomy within limits: a local choice permitted provided it meets predefined criteria.
• Prior approval: a change that could affect other franchise businesses, compromise the brand or alter essential elements of the model.

For example, product presentation may follow a mandatory standard, while staff rotas are a matter for local management, subject to legal obligations. A proposed new service may need to be assessed before it is advertised.

Do not turn the founder’s personal preferences into network-wide requirements. For each restriction, ask: what risk does it prevent, and how will compliance be checked? If the only justification is ‘we have always done it this way’, reconsider whether it is necessary.

2. Define the franchisee’s involvement in line with the law

Brazilian Law No. 13,966/2019, known as the Franchise Law, governs business franchising in Brazil. Article 2, item VII, requires the franchise disclosure document, known locally as the Circular de Oferta de Franquia (COF), to state the requirements for the franchisee’s direct involvement in operating and managing the business.

This means clarifying whether the model requires the franchisee’s day-to-day involvement, whether management by a hired professional is permitted and which responsibilities remain with the franchise owner. Vague phrases such as ‘commitment to the business’ do not help prospective franchisees understand what is expected of them.

Describe specific activities: monitoring performance, ensuring standards are applied, attending scheduled meetings and keeping someone in charge of operations. Do not advertise a passive investment opportunity if the business depends on the franchisee being present frequently.

Article 1 states that a franchise does not create a consumer relationship or an employment relationship between the franchisor and the franchisee or the franchisee’s employees, including during training. This provision should not be used to justify ignoring how the relationship works in practice. The franchisor should guide compliance with the model without informally taking over the franchisee’s employment management responsibilities.

Have this division of responsibilities legally reviewed, and keep the COF, contract and operational guidance consistent. The COF must be provided to the prospective franchisee at least ten days before they sign the contract or preliminary agreement, or pay any fee to the franchisor or a person or company connected with it.

3. Create a simple responsibility matrix

A useful matrix does not need to be lengthy. For each topic, record who is responsible for the decision, the applicable limits, whether approval is required and the channel for submitting the matter.

Use real situations to complete the document:

• Staff recruitment: the franchisee handles selection and hiring; the franchisor explains the skills needed to deliver the model.
• Local communications: the franchisee uses approved materials; new materials go through a brand approval process.
• Complaints: the local business resolves routine issues; cases involving safety risks or potentially significant repercussions are reported immediately.
• Changes to the offering: proposals for new products or services are reviewed before implementation.

Issues such as resale pricing and commercial restrictions require specific legal assessment, including under competition law. Do not copy another network’s rules on the assumption that they suit your business.

Set internal response deadlines too. An approval requirement loses its value when nobody knows who reviews the request or when to expect a response. Make it explicit whether a request remains pending if no response is received; do not leave each franchisee to interpret this differently.

4. Test exceptions before expanding the network

Bring together those responsible for the planned franchise network and simulate difficult situations: a supplier lets you down, an employee is absent, a customer demands a solution outside the usual procedure or an urgent promotional opportunity arises.

Check whether the matrix allows people to act without relying on a personal call to the founder. Where there is uncertainty, adjust the limits or referral process rather than adding approval requirements to every decision.

Document authorised exceptions, including the reason, scope and duration. A temporary concession should not become a permanent rule through lack of documentation. Review recurring incidents to identify overly rigid standards or poorly defined responsibilities.

In practice: before franchising, turn the most frequent decisions into a map of franchisee autonomy. Franchisees need to know where they can act independently, when they must consult the franchisor and which results they are accountable for.