Franchise disputes in Colombia: what to agree in advance

Before franchising a business in Colombia, it is worth deciding how disagreements will be resolved, not just how the business will operate. A difference over payments, a promotion or a support obligation can strain the relationship if nobody knows who should respond or within what timeframe. A clear contractual procedure protects business continuity and trust across the franchise network.

1. Understand the legal framework before choosing a clause

In Colombia, a franchise agreement is an ‘atypical’ contract: there is no specific law comprehensively governing this type of arrangement. It is governed by the terms validly agreed by the parties, the general rules of 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 franchise-specific regime requiring an offering circular to be provided within a standard timeframe, or every franchise agreement to be registered with the Superintendence of Industry and Commerce. Legislative proposals should not be presented as current legal obligations. This does not remove general duties of disclosure and good faith, or any applicable commercial or industrial property formalities.

There are, however, specific laws governing dispute resolution: Law 1563 of 2012, the National and International Arbitration Statute, and Law 2220 of 2022, the Conciliation Statute. Depending on the issue, competition, data protection, industrial property or consumer protection rules may also apply.

The practical implication is important: simply copying a clause from another franchise agreement is not enough. A lawyer should check that the chosen mechanism is suitable for foreseeable disputes and respects the jurisdiction of the relevant authorities.

2. Design a complaints process that produces useful responses

The first stage should allow operational disagreements to be resolved without turning every email into a legal dispute. Before offering the franchise, prepare a straightforward procedure consistent with the agreement.

Define, at a minimum:

• Submission channel: an email address or platform that retains a record of sending and receipt.
• Complaint contents: the facts, the obligation in dispute, supporting documents and the remedy requested.
• Responsibility: who receives the case and who has authority to agree a solution.
• Timeframes: deadlines for acknowledging receipt, responding and holding a meeting, with a clear explanation of how they are calculated.
• Closure: a record of the agreement reached, any outstanding commitments or the failure to reach a solution.

For example, if a franchisee queries a calculation of amounts due, the response should identify the period, the basis used and the supporting records. A generic reply such as ‘the system calculated it’ does not allow the charge to be checked.

Distinguish between an enquiry, a formal complaint and an urgent issue. An incident involving personal data or customer safety requires immediate attention, even if no contractual dispute has yet arisen. Make sure the internal procedure does not delay compliance with legal obligations.

3. Use a staged resolution process without blocking urgent action

After the operational review, the parties may agree to a meeting between representatives with decision-making authority. Its purpose should be to define the disagreement, review evidence and explore alternatives: correcting an account, rescheduling an obligation or agreeing a compliance plan.

If no agreement is reached, conciliation provides a forum with a neutral third party who helps the parties find a solution but does not impose a decision. Subject to the legal requirements, the written record of a conciliation settlement can be directly enforceable and have the effect of a final judgment, preventing the same matter from being litigated again. Commitments must therefore be set out precisely, rather than as mere statements of intent.

The contract should state when each stage is considered complete. Avoid wording such as ‘the parties will negotiate until their differences are resolved’, which can prolong uncertainty indefinitely.

It is also sensible to expressly preserve the right to seek interim measures or approach the competent authorities where appropriate. Internal negotiations should not become a barrier to urgent action. Contractual deadlines do not replace statutory limitation periods or other legal time limits for bringing claims; their effects should be reviewed by a legal professional.

4. Choose between courts and arbitration on practical grounds

Arbitration is not compulsory simply because the arrangement is a franchise. It requires an arbitration agreement and is available only for matters that may legally be referred to arbitration. Arbitrators resolve disputes by issuing an award; they do not merely act as facilitators.

Before including arbitration, compare the complexity of foreseeable disputes, the potential amounts at stake and both parties’ financial resources. Consider arbitrators’ fees, administrative costs, legal representation and evidence-related expenses. Do not promise that arbitration will always be quicker or cheaper than going to court.

If you choose institutional arbitration, identify the arbitration centre correctly and review its rules. With legal advice, specify the relevant elements of the arbitration agreement, such as the seat, the number of arbitrators and the basis on which they will decide the dispute. If you choose the ordinary courts, check the statutory jurisdiction rules: an address written into the contract does not automatically override them.

Practical conclusion: before signing the first franchise agreement, run through a complaint from start to finish. If you cannot identify who responds, what documents they need and how the disagreement can be moved towards resolution, the procedure still needs work.