Buying a Franchise in Colombia: Checking the Trade Mark

A well-known brand does not guarantee that the business offering a franchise can authorise its use in Colombia. Before investing in signage, packaging or fit-out work, check which rights you will receive and for how long. In franchising, this review protects an essential part of your investment: the ability to operate under the commercial identity that prompted you to buy the franchise.

1. Check the registration, not just the name

Ask the franchisor for details of every trade mark you will use: the name, logo, owner, application or registration number, goods or services covered, and registration term. Then cross-check those details using the distinctive signs search provided by Colombia’s Superintendence of Industry and Commerce (SIC).

A pending application is not the same as a granted registration. It may face objections, opposition or refusal. If the business depends on a trade mark whose application is still pending, you need to understand that risk before committing funds and agree what will happen if protection is not granted.

Do not confuse a company’s commercial registration, a trading name or an internet domain with a trade mark registration. These are different things, and none on its own replaces this check.

Pay particular attention to:

• The exact mark: check that the name and logo offered match those your outlet will use.
• The coverage: check that the protected goods or services are relevant to the proposed operation; registration in one class does not automatically cover every activity.
• The status and registration term: check that the right is in force and identify any upcoming renewals or proceedings that could affect it.
• The territorial scope: a foreign registration does not, on its own, establish protection in Colombia.

If you find discrepancies, ask for a documented explanation and a specialist review, rather than simply accepting assurances from the sales team.

2. Trace the chain of authorisations

The trade mark owner may be a different company from the one signing the franchise agreement. This does not necessarily invalidate the offer: a licence or master franchise agreement may authorise the development of the franchise network in Colombia.

The crucial step is to verify the entire chain. Request evidence that the party entering into the agreement with you has the power to authorise third parties to use the trade mark under the proposed business format and within the intended territory. Permission to use a mark directly does not necessarily include the right to sublicense it.

Compare the terms of the agreements too. If the franchisor’s authorisation expires before your agreement ends, ask how continuity will be ensured and what remedies you will have if that authorisation is not renewed.

If the underlying agreement is confidential, propose a review by your lawyer or ask for sufficient extracts and certifications. Confidentiality should not prevent essential matters from being substantiated, including the powers granted, their limits and their duration.

3. Understand the rules protecting these rights

In Colombia, a franchise agreement is an ‘atypical’ contract: there is no comprehensive, franchise-specific regulatory framework setting out all its terms. Validly agreed contractual provisions apply, alongside the general rules of the Commercial Code and, where relevant, the Civil Code, including the duty of good faith in contractual dealings.

Trade marks, however, are governed by a specific framework: Andean Community Decision 486, on industrial property. As a general rule, exclusive rights to a trade mark are acquired through registration. This legislation also provides for trade mark licences and their recordal with the competent authority; an unrecorded licence has no effect against third parties. It is worth reviewing how to document and record the authorisation included in the franchise agreement.

Do not confuse that procedure with mandatory registration of franchisors. Nor should you treat the draft published by Colombia’s Ministry of Commerce, Industry and Tourism (MinCIT) in 2021 as legislation in force. It proposed a Franchise Offering Circular and advance disclosure of information, but the draft does not, in itself, create a legal disclosure obligation. You should therefore make the necessary checks express conditions of the deal.

4. Agree what happens if you lose the right to use the trade mark

A clause allowing you to use the logo is not enough. The agreement should identify the authorised marks and specify who maintains the registrations, handles renewals and notifies you of claims that could affect the operation.

Negotiate specific arrangements for the following scenarios:

• A third party claims that use of the trade mark infringes its rights.
• The owner terminates the authorisation granted to the franchisor.
• A ruling prevents continued use of the mark.
• A legal problem involving the trade mark requires changes to signage, packaging or other materials.

Specify who will manage and pay for the defence, how you will cooperate, and who will bear replacement or business interruption costs. If you cannot continue operating, agree the termination conditions and any applicable compensation or refunds, rather than assuming these will arise automatically.

Practical conclusion: before investing, obtain three things: evidence of a relevant registration, sufficient authorisation and contractual protection if you lose the right to use the mark. If any is missing, resolve the gap before committing your money.