Opening a Franchise in Colombia: Conditions for Approval

When franchising an existing business, setting an opening date is not enough. You need to establish which conditions each new outlet must meet before serving the public, and who will check compliance. An opening approval procedure supports orderly growth across the franchise network, without turning commercial approval into a supposed guarantee of legal compliance.

1. Separate brand approval from legal permits

In Colombia, franchise agreements are classed as atypical contracts: they are not subject to a dedicated, comprehensive contractual framework. They are governed by the agreed terms and the applicable general rules of civil and commercial law. These include the duties of good faith under Articles 863 and 871 of the Commercial Code, which are relevant during both contract negotiations and performance.

The draft decree on franchising published by Colombia’s Ministry of Trade, Industry and Tourism (MinCIT) in 2021 should not be treated as legislation in force. In particular, its proposal to provide an offering circular twenty working days in advance does not, in itself, create an enforceable legal obligation.

Opening an outlet involves two distinct aspects:

• Contractual approval: the franchisor checks that the agreed opening conditions for using its brand and system have been met.
• Legal compliance: the operator demonstrates compliance with the requirements applicable to its activity and premises to the relevant authorities.

The franchisor’s approval does not replace any applicable commercial, tax, public health, planning or safety obligations. Nor does every business need the same permits. The requirements matrix must reflect the business activity and municipality, with local advice where necessary.

2. Turn the conditions into a verifiable matrix

Before offering the franchise, prepare a pre-opening matrix that specifies each requirement, the responsible party, the evidence needed, the deadline and the person responsible for verification. Avoid vague conditions such as ‘being fully ready’ or ‘meeting the brand’s expectations’.

You can organise it into four sections:

• Operator eligibility and compliance: relevant business and tax documentation, together with the legal compliance checks applicable to the premises.
• Technical readiness: equipment installed and tested, utilities available and payment systems working.
• Operational readiness: opening stock in place, shifts scheduled and staff having completed the agreed preparatory activities.
• Brand identity: branding installed in line with the approved specifications.

Each piece of evidence must demonstrate something specific. A purchase invoice does not prove that a machine works; a photograph does not establish compliance with a public health requirement. Where a specialist assessment is needed, identify who must carry it out and what supporting documentation will be acceptable.

Classify outstanding issues as well. A minor decorative issue that can be rectified may allow a conditional opening; a missing essential legal requirement or a fault that compromises safety must not be treated in the same way. Put this distinction in writing before assessing the first outlet.

3. Incorporate the procedure into the contract and its appendices

The contract should state how to request a review, which documents must be submitted, how long the franchisor has to respond and how required corrections will be communicated. The technical checklist can be included as an appendix identified by date and version.

Include a rule for changes: who can propose them, how they are notified and how their impact on the budget and timetable will be handled. Avoid introducing new requirements once the franchisee has already bought equipment in accordance with the agreed instructions.

Distinguish between the estimated opening date and formal approval to open. If an opening is announced before the checks are complete, both parties may take on commitments that are difficult to fulfil.

The agreement should also address delays attributable to either party or to third parties. For example, a late delivery by the franchisor calls for different treatment from an incomplete application by the franchisee. Specify how delays affect the date on which fees become payable and other obligations linked to opening, rather than leaving these matters to ad hoc decisions.

4. Conclude the review with a documented decision

Use a pre-opening report to record the evidence reviewed, outstanding issues and the decision: approval, conditional approval or postponement with reasons. Identify who is authorised to sign it on behalf of each party.

If acceptable outstanding issues remain, assign responsibility and a completion deadline. Avoid informal approvals sent by message that contradict the formal record. Retain the evidence and give the franchisee a copy of the report.

Signing the report should not be presented as a blanket release from liability. Each party retains its obligations under the law and the contract; the franchisor also remains accountable for its own commitments.

In practice: before committing to an opening, agree on a requirements matrix, a review procedure and a written approval record. Opening should be a verifiable decision, not an automatic consequence of the calendar.