Franchising in Colombia: who is responsible for staff?

Buying a franchise does not mean the brand becomes the employer of the people working at your premises. In franchising, sharing methods and standards does not remove the independence of each business. Before signing, check how recruitment, staff management and employment costs are allocated: any ambiguity could turn into an ongoing expense or a claim.

1. Start from business independence, not automatic protection

Colombia’s Ministry of Justice explains that franchisees retain their independence and autonomy from the franchisor and operate the business using their own human, financial and material resources. You should therefore not interpret the provision of an HR manual as a promise that the brand will manage or fund your workforce.

In Colombia, a franchise agreement is an ‘atypical’ contract: there is no specific, comprehensive legal framework governing it. The agreed terms apply, alongside the general provisions of the Commercial Code and, where relevant, the Civil Code. Employment relationships are governed by Colombia’s Substantive Labour Code and the applicable social security and occupational health and safety rules.

The absence of a specific franchise law does not mean there are no employment obligations. Nor does it allow a commercial agreement to override workers’ rights.

It is important to distinguish current rules from proposals: the document on franchising published by the Ministry of Trade, Industry and Tourism in 2021 is a draft, and its provisions should not be presented as obligations currently in force.

2. Identify who hires and who gives instructions

Before buying, request the staffing structure required for your premises and compare it with the agreement and manuals. Knowing how many roles you need is not enough: you must understand who makes each decision.

Draw up a responsibility matrix covering these activities:

• Recruitment and hiring: who advertises vacancies, conducts interviews, approves candidates and signs employment contracts.
• Day-to-day management: who assigns shifts, approves leave and allocates tasks.
• Pay: who sets and pays salaries, commissions and other payments.
• Disciplinary action and termination: who hears employees’ responses to allegations, makes decisions and communicates the termination of employment.
• Risk prevention: who organises occupational risk management and deals with incidents.

Distinguish a brand standards audit from a direct instruction to an employee. For example, identifying a failure to meet appearance standards and reporting it to the person in charge of the premises is not the same as personally changing an employee’s shift.

If the franchisor insists on choosing the manager, controls leave or gives direct employment-related instructions, seek a legal review of how the arrangement works in practice. The label given to the contract does not, by itself, settle who may bear responsibility. Nor does an independence clause automatically rule out any liability on the franchisor’s part: that assessment depends on the facts and the applicable rules.

3. Calculate the cost of staffing standards

A brand may require particular staff profiles, cover throughout opening hours or team attendance at training sessions. These conditions have financial implications even if they do not appear under the heading of payments to the franchisor.

Ask for an indicative staffing plan by role and working hours, and check its viability with a Colombian accountant or employment adviser. Include salaries, statutory employment benefits, contributions, holiday entitlement, applicable additional pay, required work clothing and footwear where relevant, and risk prevention costs. Also allow for absence cover and time spent in training.

Do not confuse the premises’ opening hours with the hours a single person can work. A business with long opening hours may need additional shifts and relief staff.

Ask what happens when the brand requires off-site training: who pays for travel, how the time is scheduled and who keeps the business running. Budget for the cost of meeting the standard, not just the advertised salary for each role.

4. Put a procedure for handling issues in writing

The agreement and its annexes should make it possible to distinguish commercial obligations from employment obligations. Propose that any observations the franchisor makes about the team are channelled through an authorised representative of the franchisee, rather than turning the brand auditor into the staff’s day-to-day manager.

It is also worth documenting who keeps training records, how an accident during an activity organised by the brand is reported, and how the parties will cooperate if a claim arises. If employee files or information must be shared, also review the personal data protection obligations.

Avoid accepting a broad clause requiring reimbursement for any employment claim without examining its scope. That allocation of costs between businesses does not, by itself, determine an employee’s rights or any liability that an authority may establish.

Practical conclusion: before signing, insist on a responsibility matrix and an employment cost budget that is consistent with the brand’s standards. If it is unclear who hires, manages and pays staff, an essential part of the purchase still needs to be resolved.