Franchising in Colombia: what to ask for before signing

Before buying a franchise, you need enough information to make an informed decision, not just a sales presentation. When exploring Colombia’s franchise market, it is worth agreeing in writing which documents you will receive, when they will be available and how your questions will be answered. This guide explains how to organise that pre-contractual request without assuming that a mandatory disclosure document exists to protect you automatically.

1. Distinguish voluntary disclosure from legal obligations

In Colombia, a franchise agreement is an ‘atypical’ contract: it is not governed by a specific, comprehensive legal framework. The general rules on contracts in the Commercial Code and, where applicable, the Civil Code apply, alongside relevant provisions on intellectual property, competition and other matters.

There is no specific general regime requiring franchisors to provide a Franchise Offering Circular with standardised content and a uniform disclosure deadline. This does not mean that anything goes during negotiations. Article 863 of the Commercial Code requires parties to act in good faith and without fault during the pre-contractual period, and provides for liability for losses caused by a breach of that duty.

It is important to distinguish current law from proposals. A draft published by the Ministry of Commerce, Industry and Tourism in 2021 proposed a disclosure circular to be provided twenty working days in advance. That text was published as a proposal and should not be presented as the basis for a current legal obligation.

Nor is Law 1429 of 2010, concerning business formalisation and job creation, a franchise-specific law. If a brand offers a disclosure document, ask whether it reflects its own business practice, a contractual commitment or foreign legislation. Do not assume that the document’s name demonstrates legal compliance in Colombia.

2. Send a specific, verifiable request

Asking for ‘all the information’ often produces incomplete answers. It is more useful to send a clearly defined list tailored to the franchise format you intend to buy and the stage of negotiations.

At a minimum, request:

• Details of the offer: the company offering the franchise, the proposed format, the intended location and the date the information was prepared.
• Business description: authorised activities, the model’s track record and each party’s responsibilities.
• Breakdown of payments: initial and ongoing payments, who receives them, what they cover and what is excluded.
• Contractual documents: the draft agreement and any documents that would impose obligations on the buyer.
• Network overview: a list of company-owned and franchised outlets, with dates showing when the information was current and an explanation of significant changes.
• Outstanding conditions: approvals, decisions or checks required before committing to the investment.

For each item, ask who is responsible for the response and what supporting evidence they can provide. A sales estimate, a company statement and a document issued by a public authority carry different weight.

Not all internal documents must be shared without restrictions. Where they contain confidential information or personal data, you can agree on summaries, redacted documents or supervised access. What matters is that the alternative allows you to assess the relevant issue, rather than confidentiality simply being used as a reason to withhold information.

3. Agree on time for review and updates

As there is no specific general disclosure deadline, it is sensible to negotiate a review period before signing or making payments that commit you to the deal. This should give your advisers enough time to examine the documents and the brand enough time to answer important questions.

Propose that this period begin when you receive the agreed set of documents, not when the first brochure arrives. Also establish what will happen if a material change emerges, such as a new charge or an obligation that was not included in the initial draft.

Ask for written confirmation that the information is up to date before making your decision. The company should state whether the information provided remains valid or identify any changes. This confirmation is a negotiated due diligence measure, not a legally mandatory certification specific to franchising.

Avoid signing statements confirming receipt of documents that are still outstanding. An acknowledgement of receipt should identify the files and dates without inadvertently becoming an acceptance of their accuracy or completeness.

4. Turn the answers into a documented decision

Prepare a simple table with four columns: question, answer, supporting evidence and outstanding issue. Share it with your advisers and send the franchisor any inconsistencies that need clarification.

Do not confuse an outstanding answer with a proven breach of an obligation. However, if it concerns an essential obligation or prevents you from assessing the scale of the investment, postponing your decision is reasonable. Promises that are decisive in your decision to buy should be reflected in clear contractual commitments, rather than remaining solely part of sales discussions.

Keep the versions you receive and any emails providing clarification. This record helps establish what information was available when you made your decision, although it does not, by itself, guarantee the outcome of any subsequent claim.

Practical takeaway: before committing money, agree on an information checklist, a meaningful review period and confirmation of any changes. Buying with due care starts with knowing what you have received and what remains unclear.