Franchisee autonomy in Colombia: what to agree

Turning your own business into a franchise requires a different approach to management: the new outlet will not simply be another branch. The franchisee operates using their own resources and remains an independent business owner. To build a sustainable franchise network, the founder must distinguish between protecting a shared business model and running someone else’s business. That boundary should be defined before offering the first franchise.

1. Understand independence and its legal framework

In Colombia, a franchise agreement is an ‘atypical’ contract: there is no specific, comprehensive legislation governing its entire content. It is governed by the valid agreements between the parties and the general contract rules in Colombia’s Commercial Code and Civil Code, including the principles of good faith and contractual liability.

Freedom of contract does not allow the parties to disregard mandatory legal rules. Depending on the activity and the decisions involved, employment, tax, consumer protection and competition rules must also be considered. For example, the Consumer Protection Statute, Law 1480 of 2011, governs relationships with consumers; it is not a specific law governing franchise agreements.

Do not confuse a regulatory proposal with a requirement currently in force. The document published by Colombia’s Ministry of Commerce, Industry and Tourism in 2021 on franchise conditions was a draft decree. Its proposed requirement to provide a franchise offering circular twenty working days in advance should not be presented as a current legal obligation merely because it appears in that document.

Nor is independence achieved simply by stating that ‘the parties are autonomous’. Day-to-day operations must be consistent with the agreement, and liability in any particular case will depend on the facts and the applicable rules.

2. Classify decisions before drafting clauses

Review the decisions you currently make as an owner and divide them into three groups. This classification is a tool for designing the contract, not a list prescribed by law.

• Shared standards: the essential characteristics of the product or service, brand presentation and customer service requirements that define the model.
• The franchisee’s own decisions: cash management, internal organisation and staff recruitment, subject to legal obligations and agreed standards.
• Decisions requiring coordination: local campaigns, the introduction of complementary services or significant changes to the customer experience.

For each decision, specify who makes the proposal, who decides, what limits apply and when the other party must respond. Avoid broad wording such as ‘all changes require approval’, which can turn routine matters into constant requests to the franchisor.

Suppose an outlet needs to adjust its staff shifts. The model may require adequate staffing during the agreed opening hours, while the franchisee organises shifts and meets their employment obligations. The standard defines the expected outcome; it does not mean the franchisor must direct individual employees.

3. Set out the division of responsibilities in the contract

The contract should identify the individual or company operating the outlet, who takes on each obligation and which actions require authorisation. It is advisable to distinguish explicitly between the right to enforce standards and the authority to represent another party or commit them financially.

Prepare a decision matrix as a working appendix with four columns: decision, responsible party, limit and procedure. Pay particular attention to:

• Who signs contracts and makes commitments to third parties.
• Who receives revenue, issues invoices and handles returns.
• Who recruits, pays and manages staff.
• How local commercial proposals are handled.
• Which decisions cannot be made on the other party’s behalf without authorisation.

Pricing policy requires a specific legal review. Do not assume that protecting commercial consistency allows you to impose any restriction: the agreed terms must be assessed against Colombian competition rules.

Avoid promising autonomy that is later undermined by informal instructions. If a decision requires consent, establish a communication channel, minimum documentation requirements and a reasonable response deadline.

4. Check that you can provide direction without taking over

Before marketing the franchise, review common situations in your business: a staff absence, a complaint, a promotional proposal and an exceptional purchase. Ask whether the planned division of responsibilities allows these situations to be resolved without constant reliance on the founder.

If every answer ends with ‘they need to call me’, responsibilities still need to be clarified. If no one can intervene when there is a fundamental departure from the model, the contract needs stronger coordination mechanisms.

Practical conclusion: prepare the decision matrix and review it with a Colombian legal adviser before signing. A franchise network needs shared standards and business owners capable of managing their own obligations, not a branch disguised under another name.