Quality audits when franchising a business in Colombia

When franchising an existing business, explaining how it should operate is not enough: you need to check that every outlet continues to deliver the promised customer experience. A well-designed quality audit helps identify deviations and correct them against agreed criteria. For a franchise network in Colombia, the challenge is to protect the brand without turning oversight into arbitrary interference in an independent business.

1. Define what you will check and what evidence you need

Before offering a franchise, identify the aspects of the business where non-compliance could affect customers, safety or the brand’s reputation. Do not try to scrutinise everything equally: distinguish critical controls from presentation details.

Organise the review into three groups:

• Legal requirements for operating the business: applicable permits, consumer information and sanitary requirements where relevant.
• Brand commitments: product or service specifications, cleanliness, presentation and customer service.
• Traceability: records that allow you to verify what happened, when it happened and who handled an incident.

For each item, define the compliance criteria and acceptable evidence. ‘Service must be excellent’ does not allow for consistent assessment. By contrast, checking whether a complaint was recorded, answered and followed up produces a verifiable result.

Avoid requesting unnecessary documents. If confirming that a permit is valid is sufficient, keeping copies of entire files may add risk and work without improving oversight. An internal audit also does not replace inspections by the authorities or override their powers.

2. Set out audit powers in the contract

In Colombia, a franchise agreement is an ‘atypical’ contract, meaning that it is not governed by a comprehensive, franchise-specific regulatory framework. As LegalApp, a service provided by Colombia’s Ministry of Justice, explains, it is governed by the parties’ agreement and the general rules applicable to commercial contracts. The Commercial Code, the Civil Code and duties of good faith are relevant.

The draft decree on franchising published by Colombia’s Ministry of Trade, Industry and Tourism (MinCIT) in 2021 should not be presented as legislation currently in force. In particular, its proposal for a Franchise Offering Circular to be provided twenty working days in advance does not, in itself, create an enforceable legal obligation.

For audits, the key is not to leave review powers implicit. With legal advice, agree:

• Which premises, processes and records may be reviewed.
• Which visits require notice and under what circumstances unannounced checks are permitted.
• Who may conduct audits and what confidentiality duties apply to them.
• How routine audit costs and the costs of an additional review will be allocated.
• How findings will be communicated and how franchisees can submit comments.
• What procedure will be used to introduce new assessment criteria.

Contractual authorisation does not remove other legal obligations. If customer or employee data is accessed, Colombia’s Law 1581 of 2012 and its implementing regulations on personal data protection must be respected. Law 1480 of 2011 is also relevant when reviewing customer service. Limit access to the information needed and specify who may retain it.

3. Apply a consistent and proportionate review process

Design a standard assessment form before bringing franchised outlets into the network. Each finding should include the requirement reviewed, the evidence, the risk identified and the explanation given by the person responsible for the outlet.

Distinguish between a minor deviation, repeated non-compliance and a critical issue. A difference in décor should not be treated in the same way as a condition that compromises consumer safety. Nor should a good overall score be allowed to conceal a critical failure.

The frequency of reviews can reflect the level of risk, the complexity of the operation and the outlet’s track record. Avoid imposing frequent visits without a clear purpose or applying different criteria to equivalent situations.

Also preserve the franchisee’s independence. The auditor checks standards and reports results to the designated person; they should not informally take over recruitment, staff scheduling or disciplinary matters. Business independence also depends on how the relationship works in practice.

4. Close each finding with a verifiable action

An audit loses its value if it ends with a report that nobody revisits. For each deviation, agree an action, a person responsible, a proportionate deadline and the evidence needed to confirm resolution. Where risks are urgent, implement measures that are legally permissible and provided for in the contract.

Give the franchisee a way to submit evidence or challenge errors. If there is a disagreement, a second review can help distinguish a genuine failure from an inconsistent interpretation of the standard. Financial consequences should not be improvised after the visit: they require a contractual basis and legal review.

Also analyse patterns across the network. If several outlets fail on the same point, check whether the requirement is clear, feasible and measurable before attributing the problem solely to the operators.

Practical application: before signing your first franchise agreement, prepare an audit form, an oversight clause and a corrective action template. Check that all three documents set consistent requirements and allow you to demonstrate when a finding has been resolved.