Franchise premises in Colombia: checks before signing a lease

A profitable business will not perform equally well at every address. Before franchising in Colombia, you need a method for deciding which premises can accommodate your concept and who takes on each commitment. Within a franchise network, approving a property should not come down to an enthusiastic site visit: it requires checks on its commercial, technical and legal suitability before anyone commits money.

1. Define what your format needs, not just the floor area

Turn the needs of your existing business into a property requirements checklist. Do not simply copy every feature of your current premises: distinguish between essential conditions, preferences and elements that can be adapted without changing the customer offering.

Depending on the activity, the checklist should cover:

• Usable floor area, layout, storage and accessible circulation routes.
• Electrical capacity, water supply, drainage and ventilation.
• Scope to install extraction systems, equipment, signage and utility connections.
• Access for customers, staff, deliveries and waste collection.
• Restrictions on opening hours, noise, loading and unloading.

Add commercial criteria that can be assessed on site: visibility along customers’ routes, ease of access and compatibility with neighbouring businesses. A busy street does not automatically mean demand for your concept.

The result should be a premises approval checklist, not a promise of sales. For example, if you need extraction ducting to roof level, require evidence that it is technically feasible and that the necessary permissions are in place. The landlord saying “we can sort that out later” is not enough.

2. Check the legal suitability of the address

Colombia has no comprehensive franchise-specific law or compulsory general register of franchisors. A franchise agreement is an unclassified contract under Colombian law, governed by its agreed terms, the Commercial Code and applicable civil law provisions. Nor is there a mandatory franchise-specific pre-contractual disclosure document; this does not remove the general duties of good faith.

The absence of specific franchise regulation does not exempt an outlet from complying with the rules for opening and operating a business. Article 87 of Law 1801 of 2016 sets out requirements for carrying on economic activities, including those relating to land use, commercial registration and notification of opening to the police authority, alongside any other applicable requirements.

For each address, check with the relevant municipal or district authority that the activity is compatible with the permitted land use. The previous presence of a similar business does not, on its own, prove that your operation is permitted. Also check the applicable health, environmental and safety requirements, without treating these separate checks as a single, universal operating licence.

If the property is subject to Colombia’s horizontal property regime, which governs individually owned units and shared areas, review its rules and any permissions needed for building work, signage or alterations to common areas. Additional requirements may apply depending on the activity: food preparation, alcohol sales and healthcare services are not subject to the same rules.

Compile a file containing enquiries, official responses, plans and permissions. Each document should identify the address, the activity assessed and the date; a general enquiry is no substitute for checking the specific property.

3. Coordinate the lease with the franchise agreement

Risk arises when a prospective franchisee signs the lease before the checks are complete. To avoid this, set out a written sequence: submission of the property for consideration, preliminary review, technical and legal checks, approval and contract signing.

Decide who will be the tenant. If the franchisee signs, make clear that approval by the brand does not make the franchisor a guarantor or replace the operator’s obligations. If the franchisor takes the lease and then sublets, obtain legal advice to review that arrangement expressly and assess its implications.

Negotiate provisions that account for the project’s viability rather than relying on verbal agreements. These may include conditions that must be met before binding commitments are made, permissions for building work and rules on advance payments if the operation proves unviable. Their scope must be drafted precisely.

Also review:

• How the lease term, fit-out schedule and franchise term align.
• Responsibility for repairs, improvements and returning the premises at the end of the lease.
• How delays in handover or permissions will be handled.
• Whether assignment or subletting is permitted, where relevant.

Do not assume that the written lease term defines all the tenant’s rights: the Commercial Code includes rules on the renewal of commercial leases where the relevant conditions are met.

4. Separate premises approval from authorisation to open

A property may be suitable without yet being ready to welcome the public. Create two separate decisions: approval of the premises and internal authorisation to open. The latter does not replace any statutory or regulatory requirement.

Before opening, confirm that the authorised fit-out work is complete, utilities are working and applicable obligations have been met. Specify who checks each item and what evidence they must retain.

Record outstanding items, assigning a responsible person and a deadline to each. If an issue affects the legality or safety of the operation, do not treat it as a minor detail that can be resolved later.

Practical conclusion: before offering your next franchise, prepare a property requirements checklist, a due diligence file and an approval sequence. It is wiser to reject premises in good time than to try to resolve their problems after signing a lease.