Amending franchise agreements in Colombia: how to agree the rules

When turning a Colombian business into a franchise, drafting an agreement and attaching supporting documents is not enough. You also need to decide how those commitments can change during the relationship. A new IT tool, procedure or additional obligation can lead to disputes if it is unclear who has authority to approve it. To grow your franchise network, establish a clear, verifiable and proportionate process for changes from the outset.

1. Understand what Colombia’s legal framework allows

In Colombia, franchise agreements are classed as atypical contracts: there is no specific, comprehensive legislation governing their content and amendment. They are governed by valid agreements between the parties, the general rules on obligations and contracts in the Commercial Code and, where applicable, the Civil Code.

Freedom of contract does not remove legal limits. Article 871 of the Commercial Code requires contracts to be performed in good faith. Article 863 requires good faith free from fault during the pre-contractual stage. An update provision should therefore not be presented as purely technical if it allows significant financial commitments to be changed.

Relevant competition and industrial property rules, among others, also continue to apply. Andean Community Decision 486 governs trade mark rights and licensing; a contractual amendment cannot override that framework.

Do not confuse a legislative proposal with a current legal obligation. The draft published by the Ministry of Commerce, Industry and Tourism in 2021 envisaged a Franchise Offering Circular and a period of twenty working days. That text should not be treated as legislation in force. Nor does a private code of ethics replace legislation: its scope depends on whether the parties have signed up to it and the commitments they have made.

2. Organise your documents before offering the franchise

The first risk arises when the agreement, schedules and marketing communications say different things. Before bringing in your first franchisee, draw up an inventory of the documents you intend to make binding.

For each document, record:

• Its name, date and version number.
• The subject it covers and who is responsible for managing it.
• How it will be delivered and how receipt will be recorded.
• The procedure required to amend it.

Then agree an order of precedence for the documents. For example, you could specify that later amendments agreed by both parties take precedence over the original wording on the points expressly amended, and that operational documents cannot alter the agreed financial terms. This is a matter of contractual design, not a hierarchy specifically imposed by franchise legislation.

Also identify which documents are for information only and which contain obligations. Avoid incorporating “all current and future policies” through a blanket clause. Franchisees should be able to identify what they are accepting and where to find it. This does not remove any liability that may arise from pre-contractual promises or information.

3. Distinguish routine updates from material amendments

Not every change needs the same treatment. It is sensible to agree a classification before the need for a change arises.

Anticipated operational updates. These may include adjustments to forms, presentation guidelines or procedures that do not substantially alter the agreed obligations. The agreement should define the scope of the power to make updates, the notice required and the implementation period.

Material changes. A new payment obligation, an extension of responsibilities or a change to the scope of the rights granted should not be introduced as a simple document update. Specify that these changes must be made through an express amendment accepted by both parties.

Changes required by law. Set out how the applicable rule will be identified, its effect communicated and compliance coordinated. The need to comply with legislation does not mean that every associated expense or commercial decision is automatically authorised.

For example, replacing a reporting template may be an operational adjustment. Requiring the use of a paid platform, with a new supplier and a new minimum contract term, calls for a review of the original obligations and the financial impact before deciding how to formalise the change.

4. Create a process with an audit trail

Appoint one person to coordinate changes, even if legal, commercial and operational teams are involved. Each proposal should explain what is changing, why, who is affected and when it is intended to take effect.

Before communicating it, check that it is compatible with the signed agreements. Different generations of agreements may grant different powers; do not assume that one circular will work across the entire network.

Where agreement by both parties is required, document acceptance by representatives with sufficient authority. Distinguish between receiving a notice and consenting to an amendment: a read receipt should not automatically be treated as contractual acceptance.

Keep the previous text, the new version, communications and approvals. This will allow you to establish which obligations applied at any given time.

Practical conclusion: before franchising, prepare a matrix showing what can be updated, who must approve it and how approval will be evidenced. Review it with a legal adviser and turn it into a contractual procedure rather than an improvised decision.