Buying a Franchise in Colombia: Organising the Contract Annexes

A franchise agreement may refer to a commercial proposal, an operating manual, a cost estimate and several annexes. If these documents do not match, it can be difficult to establish what each party must do. Before entering the Colombian franchise market, review not only the main agreement but also how its accompanying documents are identified and incorporated.

1. Understand why annexes matter legally

In Colombia, a franchise agreement is an ‘atypical’ contract: there is no specific legislation comprehensively governing this type of arrangement. It is governed by the terms validly agreed between the parties and by the general rules that apply, principally those in the Commercial Code and Civil Code. Decision 486 of the Andean Community is also relevant to industrial property rights.

This does not mean that every clause is valid or that the contract is your only protection. Mandatory rules and duties of good faith also apply. Nevertheless, clearly documenting obligations reduces uncertainty and makes it easier to demonstrate what was agreed.

Two common misconceptions are worth clearing up. Law 1429 of 2010, which concerns bringing businesses into the formal economy and creating jobs, is not a franchise-specific law. Likewise, the 2021 document from Colombia’s Ministry of Commerce, Industry and Tourism (MinCIT), which proposed a Franchise Offering Circular and a period of twenty working days, was a draft proposal. It should not be presented as a current legal requirement simply because it was published.

Nor is there a general franchise-specific pre-contractual disclosure regime that replaces this document review. A properly incorporated annex helps define commitments, but it does not replace compliance with the law.

2. Make an inventory of every document referred to

Read the draft and highlight phrases such as ‘as set out in the annex’, ‘in accordance with the proposal’ or ‘according to the specifications’. Each reference should lead to an identifiable, available document that is consistent with the rest of the agreement.

Prepare a table with the following columns:

• Document: full name and annex number.
• Version: a date or code that distinguishes it from other drafts.
• Content: the obligation or matter it sets out in detail.
• Status: received, reviewed, pending or approved.
• Incorporation: the clause establishing its relationship with the agreement.

Include only documents relevant to the transaction: for example, a list of the assets included, fit-out specifications, a description of the franchise format being purchased or an allocation of responsibilities for setting up the premises.

If a file is hosted on a platform, request a copy of the accepted version that you can retain. A web address whose content can be replaced does not, on its own, make it easy to establish what the document said when you signed.

Where confidential information will only be provided later, distinguish that future delivery from an acknowledgement that you have already received it. Do not sign a statement saying that you have received and reviewed a document you have not yet seen.

3. Resolve inconsistencies before setting priorities

Compare the documents obligation by obligation, rather than simply by title. For example, the proposal may include display furniture, while the cost estimate treats it as an additional purchase. Keeping both files does not resolve the issue: you need to clarify who supplies the items and who pays for them.

Ask for any discrepancies to be corrected in the final version. Then negotiate an order-of-precedence clause: a ranking that determines which document takes priority if inconsistencies arise.

There is no universal order that suits every transaction. If an annex contains a specifically negotiated term, a clause that always gives the main agreement priority could deprive that term of practical effect. Ask for any exceptions to be expressly identified.

Also review any ‘entire agreement’ clause. This usually states that the agreement supersedes earlier discussions or proposals. Before accepting it, make sure any important commitments you wish to retain are included in the contractual documents. Its legal effect must be assessed in each case; do not assume it automatically excludes all pre-contractual liability.

4. Finalise and retain a complete contract file

Before signing, check that the list of annexes matches the final files, that no blanks remain and that internal references are correct. Agree on a verifiable way to record acceptance of the annexes, taking legal advice on the method used.

Keep a complete copy of the agreement and its annexes, together with evidence of acceptance. Avoid relying solely on access to a platform managed by the other party.

Practical takeaway: do not sign an agreement that refers to documents you have not seen or that contradict one another. Identify each annex, resolve discrepancies and make clear which version forms part of the agreement.