Buying a Franchise in Colombia: Check Who Is Signing

A brand may be presented by sales advisers, related companies or representatives of a foreign business. But the party selling the opportunity is not always the one that will take on the obligations. Before buying a franchise in Colombia, establish exactly who you will be contracting with and who has authority to bind that person or company. These checks help build transparent relationships within the franchise community and prevent you from handing over money without a clear understanding of your contracting partner’s identity.

1. Distinguish the brand from the contracting party

The trading name alone is not enough to identify the franchisor. Several companies may be associated with the same brand: one may operate outlets, another sell franchises and a third provide services. Do not assume that all of them will be accountable for what has been promised.

Prepare a record of the prospective franchisor’s full registered name, Colombian tax identification number (NIT), registered address and contact details for formal notices. Compare this with the sales proposal, draft contract and payment instructions. If the contracting party is an individual, ask for identification and the relevant business registration documents.

The franchise guide published by the World Intellectual Property Organization notes that the Chamber of Commerce certificate of existence and legal representation provides information about the franchisor’s business and registered address. Obtain a recent copy and verify its authenticity using the issuing body’s verification tools.

If you find different names, ask for a written explanation before proceeding. A corporate relationship between companies does not automatically make all of them liable under the contract. What matters is establishing which party will take on each obligation and the legal basis for that responsibility.

2. Check the signatory’s authority

Check the certificate to see who is listed as the legal representative and whether there are any relevant restrictions on their authority to enter into contracts. Do not simply check that the name matches: there may be financial limits, approval requirements or rules requiring representatives to act jointly.

Before signing, cross-check the following:

• Identity: the signatory’s name and identity document must match the supporting documents provided.
• Authority to represent: check whether they are acting as the legal representative or under a power of attorney.
• Limits: establish whether the transaction requires approval from a corporate decision-making body.
• Additional supporting documents: where relevant, request the applicable power of attorney or approval and have its scope reviewed.

If someone signs under a power of attorney, it must authorise them to enter into the specific transaction. Do not assume that authority to negotiate or submit offers also allows them to sign the contract or receive money.

Where a foreign company is involved, ask for equivalent documents confirming its existence and representation. A lawyer should determine which authentication, apostille, legalisation or translation requirements apply. A sales presentation by a local representative is no substitute for these checks.

3. Link promises and payments to the right party

Once you have identified the parties, check who will be responsible for the commitments made. If the seller says another company will provide essential services, ask whether that involvement is documented and who will be accountable to you if those commitments are not met.

You can organise your review in a simple table: commitment made, company responsible, document recording it and person authorised to confirm it. The aim is not to investigate the entire corporate structure, but to avoid obligations with no identifiable party responsible for fulfilling them.

Apply the same approach to payments. Compare the bank account beneficiary with the party entitled to receive payment under the contract. If you are instructed to pay a third party, request a verifiable instruction from the creditor identifying the recipient, the purpose of the payment and its effect on your payment obligation. The discrepancy may have a legitimate explanation, but a message from the sales adviser alone should not be treated as sufficient evidence.

Keep proposals, confirmations and payment records. If the contracting company changes during negotiations, repeat the checks: do not treat the change as a simple administrative correction.

4. Understand what these checks establish in Colombia

According to Colombia’s Ministry of Justice, a franchise is an atypical contract under Colombian law, meaning that it has no specific statutory framework. The parties’ valid contractual terms apply, alongside the relevant general provisions of the Commercial Code and Civil Code, including those on obligations, representation and good faith.

Nor is there a general statutory pre-contractual disclosure regime specifically for franchises equivalent to the mandatory franchise disclosure document used in the United States. This does not remove general duties of good faith or make sales claims irrelevant.

The Chamber of Commerce certificate does not establish the franchise’s profitability or constitute government approval of the business model. It helps verify legal information; it does not guarantee future performance. Similarly, membership of a trade association does not replace checks on the signatory’s authority.

Practical conclusion: before signing or paying, make sure you can identify the party responsible for the obligations, verify who has authority to represent it and obtain documentary evidence supporting who will receive your money. If any link is missing, resolve it before committing your investment.