Franchising in Colombia: what legal protection is available?

Before buying a franchise in Colombia, it is worth checking what each claim about legal protection actually means. A brand may describe a document as ‘required by law’ or present a registration as a guarantee of security, even when neither has that effect. Distinguishing between current legislation, regulatory proposals and voluntary commitments helps prospective franchisees negotiate on a sounder basis and avoid a false sense of security.

1. Understand what an atypical contract means

In Colombia, a franchise agreement is an atypical contract: it has no specific, comprehensive statutory framework. The Ministry of Justice explains that it is governed by the terms agreed between the parties and the rules applicable to commercial contracts. This does not mean that it operates outside the law or that every clause is valid.

The Commercial Code sets out general rules on obligations, contracts and good faith, both before a contract is signed and during its performance. The Civil Code also applies where the relevant legal provisions refer to it. For industrial property rights, including trade marks, Andean Community Decision 486 is relevant.

Depending on the business, employment, tax, competition, data protection and consumer protection laws may also apply. However, you should not assume that buying a franchise automatically gives you consumer status: the purchase is normally linked to running a business and requires a case-specific legal assessment.

The practical implication is twofold: the agreement needs careful review, but it is not your only source of protection. Mandatory legal rules and general duties of conduct remain relevant even if they are not reproduced in the document.

2. Do not confuse a proposal with a current legal obligation

A document published on an official website may be a draft open for consultation rather than an enforceable rule. In 2021, the Ministry of Commerce, Industry and Tourism published a draft proposal on franchising that envisaged a Franchise Offering Circular to be provided twenty working days before the agreement was signed or the first payment made.

As a draft, that text does not establish that any such obligation is currently in force. It should not be used to claim that a general statutory twenty-day period applies to every franchise purchase in Colombia.

Nor should Law 1429 of 2010 be presented as franchise-specific legislation: its purpose is to bring businesses into the formal economy and create jobs.

Whenever someone claims that a legal protection applies, ask for three details:

• The number and date of the legislation said to establish it.
• The specific article and its scope of application.
• Confirmation that it is in force, distinguishing it from drafts, consultation comments and proposals.

Ask your lawyer to check these references. A persuasive sales explanation is no substitute for identifying the applicable law.

3. Distinguish business registrations from investment guarantees

Commercial registration allows you to verify certain details about a business’s existence and activities. It does not certify a franchise’s profitability or amount to state approval of its business model.

There is no general requirement to register franchise agreements with chambers of commerce in a way that makes all such agreements publicly available to prospective buyers. Nor should a business’s commercial registration be confused with a supposed special registration as a franchisor.

This does not remove other formalities that may apply. For example, Decision 486 provides for the registration of trade mark licences so that they have legal effect against third parties. This is separate from registering the franchise as a business and should be reviewed in light of the contractual structure.

If you encounter phrases such as ‘registered franchise’ or ‘certified business model’, ask what was registered, with which body and with what legal effect. A private certification mark may confirm compliance with certain criteria, but it does not replace a legal assessment or guarantee that you will recoup your investment.

4. Turn voluntary protections into clear commitments

Colombia has no general franchise-specific pre-contractual disclosure regime equivalent to a mandatory circular with standardised content and deadlines. This does not remove duties of good faith during negotiations or permit buyers to be misled.

If a brand voluntarily offers a review period, a disclosure statement or adherence to a code of conduct, establish its scope. Ask who is bound by it, what process is available to enforce it and whether the commitment will be incorporated into the agreement.

You can negotiate a provision stating that you will not be required to sign or pay until an agreed review period has ended. It is also sensible to keep the versions of documents you receive and any sales correspondence: documenting the negotiations helps establish what was offered, although it does not, by itself, guarantee the outcome of any subsequent claim.

Practical conclusion: before relying on a supposed protection, identify whether it is a rule currently in force, a contractual commitment or a voluntary practice. If nobody can explain its basis and how it can be enforced, do not treat it as a guarantee for your investment.