Commercial registration when franchising a business in Colombia

A business may have customers, established processes and a recognised brand, yet still have outstanding registration and compliance matters that could complicate its expansion. Before franchising in Colombia, clarify who carries out the commercial activity, which business establishments are registered and which obligations each business owner will assume. This review helps build a franchise network with clearly assigned responsibilities, without confusing commercial registration with authorisation to sell franchises.

1. Distinguish commercial registration and compliance from franchising

In Colombia, a franchise agreement is an atypical contract: there is no comprehensive, franchise-specific legislation prescribing its mandatory content, as there is for certain other contracts. It is governed by the agreed terms and the applicable general rules, principally the Commercial Code and, where relevant, the Civil Code. Freedom of contract does not allow parties to disregard mandatory rules or the duty of good faith.

Nor is there a general compulsory register of franchise offers or agreements equivalent to those found in some other countries. A draft decree published by the Ministry of Commerce, Industry and Tourism in 2021 proposed a Franchise Offering Circular and a period of twenty working days. A draft does not, in itself, create a binding obligation: that text should not be presented as an applicable disclosure law.

This does not remove the ordinary obligations of those carrying on a commercial business. Article 19 of the Commercial Code requires them, among other duties, to enrol in the commercial register, register acts and documents subject to that requirement, keep accounts in accordance with the law and retain business records.

The first question is not ‘Where do I register my franchise?’ but ‘Have the parties that will enter into and perform the agreement properly completed their business registration and compliance requirements?’.

2. Check who will act as the franchisor

In an existing business, the name displayed at the premises often differs from the name of the person or entity operating it. A company may also operate the business while someone else owns the trade mark. These situations require clarity, but not necessarily a corporate restructuring.

Prepare a simple overview covering four points:

• Current operator: the individual or legal entity that makes sales, enters into contracts and issues invoices.
• Proposed franchisor: the party that will undertake to transfer know-how and provide support.
• Operator-owned establishments: which establishments belong to the operator and how they appear in the commercial register.
• Rights holder: who can lawfully authorise the use of the trade mark and other assets included in the arrangement.

Consult the relevant Chamber of Commerce records. If a company will enter into the agreement, check its legal existence, legal representation and the powers or restrictions applying to the person acting on its behalf. Also establish whether internal approvals are needed to assume particular obligations.

Commercial registration must be renewed annually within the statutory deadline, during the first three months of the year. Check whether any changes still need to be registered. Renewal does not replace the need to update information or automatically resolve discrepancies relating to legal representation or establishments.

3. Separate what each registration establishes

The commercial register, the Single Tax Register and trade mark registration serve different purposes. None replaces the others.

Commercial registration (matrícula mercantil) formally records the business operator and its establishments under the applicable rules. The Single Tax Register (RUT), administered by Colombia’s tax and customs authority, DIAN, identifies and classifies those with tax obligations. Trade mark registration, handled by the Superintendency of Industry and Commerce, protects the distinctive sign under industrial property law.

Registering a company or establishment under a particular name therefore does not confer exclusive rights to a trade mark. Nor does it demonstrate that the business model is profitable, replicable or suitable for franchising.

For trade marks, Decision 486 of the Andean Community provides that a licence to use a mark must be registered with the competent national office to have effect against third parties. This registration is separate from any supposed general registration of the franchise agreement.

Finally, commercial registration and compliance do not replace operating requirements specific to the activity and municipality. Identify which requirements apply to each establishment, without suggesting that commercial registration authorises every type of operation.

4. Allocate responsibilities without taking over the franchisee’s role

The franchisee remains independent and operates the business using its own resources. You should therefore not assume that the franchisor’s commercial registration, RUT or permits automatically cover the franchisee’s activities.

Before bringing new business owners into the network, draw up a short matrix setting out each obligation, the responsible party, supporting evidence and the review stage. Distinguish each operator’s legal duties from any additional requirements your network agrees contractually.

The franchisor’s head office can provide guidance and request supporting documents, but should avoid presenting its review as official certification of compliance. Each business owner needs accounting and legal advice suited to their circumstances.

Practical conclusion: first establish who operates the business, who enters into the agreement and what each registration confirms. Answering these three questions helps avoid passing an improperly formalised business structure or poorly understood responsibilities on to the franchisee.