Franchises in Colombia: how to verify promised sales figures

A sales presentation may show attractive sales figures without explaining where they come from. Before joining a franchise network in Colombia, check whether those figures reflect actual results, reasonable estimates or simply targets. This review is not intended to guarantee success: it is about making a decision based on verifiable information and keeping a record of what you were offered.

1. Understand what information Colombian law requires

In Colombia, a franchise agreement is an atypical contract: there is no specific law comprehensively governing this relationship. As Colombia’s Ministry of Justice explains on LegalApp, it is governed by the agreed terms and the general rules applicable to commercial contracts. This does not mean that every clause is valid or that statutory obligations no longer apply.

The Commercial Code and, where relevant, the Civil Code provide the general framework. In particular, Article 863 of the Commercial Code requires parties to act in good faith, free from fault, during pre-contractual negotiations and provides for liability for losses caused by a breach of that duty. Article 871 establishes the requirement of good faith when entering into and performing contracts.

There is no general, franchise-specific obligation to provide a franchise disclosure document, nor is there a uniform statutory pre-contractual disclosure period for franchises. If you receive an information document, review its contents; its title does not certify that it is complete or approved by any authority.

The absence of a mandatory disclosure format does not permit misleading conduct. However, it does not give you an automatic right to all the network’s internal records either. Ask for specific information and agree how you can check it before committing any money.

2. Separate historical results from projections

Ask for each sales figure to be labelled as a historical result, projection or target. A sales target is not proof that a comparable outlet has already achieved it.

For each relevant figure, ask for a breakdown answering the following questions:

• Source: does it come from company-owned outlets, franchised outlets or both?
• Period: does it cover full months, a favourable trading season or a year of operation?
• Sample: how many outlets does it include, and how were they selected?
• Comparability: are their format, location, opening hours and length of operation similar to those of the proposed outlet?
• Definition: do sales figures include VAT, returns, discounts or cancelled orders?
• Exclusions: were closed, newly opened or poorly performing outlets left out?

Ask for an explanation of both the average and the spread of results. One exceptional outlet can push up the average without representing the typical experience. If individual figures are not available, request ranges or anonymised information.

Also distinguish sales from profit. High turnover does not demonstrate profitability, still less establish when you will recoup your investment. Reaching operating break-even and recovering your initial investment are different things.

3. Check the figures while respecting confidential information

Request evidence appropriate to the figures presented: aggregated reports from the sales system, profit and loss statements for individual outlets, or certifications that explain exactly what they cover. None is conclusive on its own; an independent accountant can review their consistency and identify anything that cannot be verified.

It is reasonable for the franchisor to protect trade secrets and personal data. Suggest a confidentiality agreement, anonymised documents or a controlled review by your adviser. Commercial confidentiality may justify restricting access, but it does not turn an unsupported claim into evidence.

Speak to current franchisees and, where possible, former members of the network as well. Do not rely solely on the testimonials selected for the sales presentation. Ask whether their initial expectations matched their experience, what circumstances affected sales, and how much depended on the location or the owner’s involvement.

Compare answers, not rumours. A discrepancy may have a legitimate explanation. Record it and request written clarification before concluding that there is a problem.

4. Document what you have checked before signing

Prepare a simple table with four columns: claim received, supporting evidence, outstanding question and franchisor’s response. Keep presentations, emails and dated versions of projections. If a promise was made verbally, send a summary and ask for confirmation.

With your lawyer, propose including a record of the information supplied, its dates, assumptions and limitations in the agreement or an appendix. Explicitly distinguish estimates from any contractual commitments about results: they are not equivalent.

Review clauses stating that you have not relied on prior information or that supersede all previous discussions. Do not accept statements that contradict what actually happened. Their effect requires legal assessment; they do not, in themselves, remove statutory duties of good faith.

Practical conclusion: before signing, insist that the figures central to your decision can be traced to their sources. If you cannot establish where they come from, understand their limitations and reasonably check them, postpone your decision: an attractive projection is no substitute for an independent review.