Buying a Franchise in Colombia: Checking Permits

A brand may operate successfully in several cities yet still face restrictions at your proposed location. Before buying a franchise in Colombia, check which requirements apply to the business activity, which relate to the premises and who must meet them. In franchising, sharing a business model does not automatically mean sharing its regulatory approvals.

1. Distinguish the brand licence from the requirements for operating

The franchise agreement allows you to operate a business model and use certain intellectual property rights. That private authorisation does not replace requirements imposed by the authorities. Nor does it, on its own, establish that any premises can accommodate the activity or that all products are authorised for sale.

In Colombia, a franchise agreement is an atypical contract: it has no specific contractual regulatory framework. It is governed by the parties’ agreement, within legal limits, and by the applicable general provisions of the Commercial Code and Civil Code. Andean Community Decision 486 is relevant to industrial property rights.

There is no mandatory franchise disclosure document under a dedicated franchise regime. The document published by Colombia’s Ministry of Trade, Industry and Tourism (MinCIT) in 2021, which proposed providing information twenty working days in advance, was a draft proposal and should not be presented as a current legal obligation.

This does not remove the general obligations that apply to the business. Article 87 of Law 1801 of 2016 sets out requirements for conducting economic activities, including compliance with land-use rules and maintaining a current commercial registration, as applicable. There may also be health, environmental or activity-specific requirements.

2. Build a requirements matrix for your activity and location

Ask the franchisor for a list of the requirements it applies at comparable outlets. Use this as a starting point, not as certification that your outlet will be authorised to operate. Check it with the relevant municipal authorities and an adviser familiar with the business activity.

Create a matrix with five columns: requirement, competent authority, responsible party, evidence and compliance deadline. Include at least the following categories:

• Operator: commercial registration, tax registration and other obligations relating to the person or entity running the business.
• Premises: compatibility with land-use rules, hygiene standards, safety and other requirements applicable to the property and its operation.
• Products or services: specific registrations, permits, notifications or authorisations, where required.
• Additional activities: signage, music, alcohol sales or other offerings that may bring their own requirements.

Not all these items are permits that must be obtained in advance, nor is compliance demonstrated through the same type of document. Ask what must be in place before trading begins, what must be notified to the authorities and what is subject to subsequent inspection. Avoid paying for a supposed ‘general operating licence’ without checking its legal basis.

3. Check the evidence, not just the claims

A file from another outlet does not demonstrate compliance at yours. Check whose name appears on each document, which address it identifies, what activity it covers and whether it has an expiry date or outstanding conditions.

If you will be selling products subject to health regulation, check which authorisation is required. Not all products follow the same procedure: depending on the product and its classification, a sanitary registration, permit or notification may be required. Consult official information from Colombia’s food and drug regulator, Invima, where it is the competent authority.

For example, if a franchise sells packaged food made by a central supplier, verify that the applicable authorisation covers the product being offered and that its details are consistent with the labelling. This check does not replace the hygiene requirements applicable to the premises where you will store or sell it.

Keep a file of documents, enquiries and dated responses. If an authority provides only verbal guidance, ask how to obtain confirmation through an official channel. A sales claim such as ‘all our shops can do this’ does not resolve a local restriction.

4. Assign responsibilities before committing your investment

Incorporate the matrix into the agreement or an annex. For each procedure, agree who prepares the documents, who submits the application, who pays and who keeps the evidence. Distinguish support from the franchisor from a guarantee of approval: the regulatory decision is not in either party’s hands.

Also clarify who will handle inspections, renewals and changes to requirements. Even if the franchisor takes on a task under the agreement, that allocation does not necessarily release the operator from its responsibilities towards the authorities.

If a significant uncertainty affects the legal viability of the operation, negotiate a verifiable condition before making substantial payments. Define what will happen to payments if an essential authorisation is not obtained and how that situation will be documented.

Practical conclusion: do not buy on the assumption that permits come with the brand. Proceed when every requirement has a responsible party, sufficient supporting evidence and contractual provisions covering any outstanding issues.