Franchisees in Brazil’s COF: how to maintain the mandatory list

When turning an existing business into a franchise, an entrepreneur must prepare information that may seem straightforward but requires careful record-keeping: a list of network members and those who have left. In franchising, this transparency allows prospective franchisees to learn about real experiences before making a decision. Keeping organised records from the first franchise agreement helps prevent omissions, outdated contact details and a misleading account of the brand’s history.

What Brazil’s Franchise Law requires you to disclose

Article 2, item X of Law No. 13,966/2019, Brazil’s current Franchise Law, requires the Franchise Disclosure Document (Circular de Oferta de Franquia, or COF) to contain a complete list of all franchisees, sub-franchisees and sub-franchisors in the network. It must also include those who have left in the past 24 months, with their respective names, addresses and telephone numbers.

This is not about selecting favourable business references. The obligation is to provide the complete list required by law. A list of satisfied partners put together to support a sale is no substitute for this mandatory disclosure.

It is also important to stop using templates based on Law No. 8,955/1994, which has been repealed. The previous law referred to those who had left in the past 12 months; using that period in a current COF fails to meet the 24-month requirement under the legislation now in force.

The COF must be written in Portuguese, in clear and accessible language. For this list, that means clearly identifying who belongs to the network and who has left, without confusing abbreviations or classifications that conceal their actual status.

How to present a network that is just starting out

If the company does not yet have any franchisees, state this explicitly. Do not fill the list with customers, distributors, licensees or partners simply to create the impression of an established network.

Company-owned outlets can help demonstrate the business’s operational experience, but they must not be presented as independent franchises. List them separately and identify them as company-owned. An operation run by the founder does not give a prospective franchisee the same perspective as someone who has invested in and operates a franchise.

Likewise, someone who is still in negotiations should not automatically be presented as a network member. With legal guidance, establish consistent criteria for recording stages such as an agreement being signed, an outlet being set up, an outlet opening and a member leaving the network.

Consider a network with one company-owned outlet and its first franchisee still setting up their outlet. The presentation should distinguish between these two situations, without suggesting that a franchised outlet is already trading. This precision helps prospective franchisees understand which experiences they can already verify and which are still developing.

Build records that track every change

Internal records need to be more detailed than the list given to prospective franchisees. Alongside the information required in the COF, it is worth recording details that allow you to check each member’s history:

• identification of the franchisee and the corresponding outlet;
• current status, such as being set up, trading or having left the network;
• dates of relevant events and supporting documents;
• the name, address and telephone number to be included in the mandatory list;
• the date of the latest check and the person responsible for updating the record.

These additional fields are recommended record-keeping practices, not a restatement of specific requirements under item X. Their purpose is to enable the company to produce an accurate list without relying on the memory of whoever sold the franchise.

Also decide who is responsible for reporting each change. The team handling agreements can report new signings and terminations, while those overseeing the network can flag changes to contact details or operational status. One person should consolidate this information.

Before issuing each version of the COF, check the list and recalculate the rolling 24-month period. Keep a copy of the list actually supplied, linked to the relevant version of the document. If there is uncertainty about the date of a departure or whether a particular situation counts as leaving the network, seek legal advice rather than simply removing the name.

Make checks easier without controlling what people say

Explain to network members that their legally required contact details will be shared with prospective franchisees. This reduces surprises and helps keep the details usable. The handling of this information must also comply with Brazil’s General Data Protection Law (LGPD), with a defined purpose, appropriate security and suitable access controls.

The legal requirement to supply the list does not justify publishing contact details indiscriminately online. Manage the sharing of information within the franchise offering process and avoid adding unnecessary personal data.

When a prospective franchisee wants to speak to franchisees, do not present rehearsed answers as spontaneous accounts or restrict access to hand-picked contacts. Different experiences can reveal important aspects of day-to-day operations and the network’s maturity.

In practice: before offering the first franchise, create the records, appoint someone to maintain them and establish a check before each COF is issued. Keeping a complete and accurate list is an ongoing commitment to transparency, not merely a bureaucratic appendix.