Signing a franchise agreement in Colombia: what to check

Before granting your first franchise, you need to check more than the terms of the agreement: it must be signed by someone with the necessary authority, on behalf of the right company, with all the agreed documents in place. A signature cannot remedy inadequate authority or an outstanding schedule. This guide sets out a document-checking process to help you formalise your entry into Colombia’s franchise market, with clear responsibilities and evidence of what has been agreed.

1. Identify the contracting party and who has authority to bind it

The person negotiating will not always be the one who operates the business or takes on the obligations. A prospective franchisee may begin discussions as an individual and later incorporate a company to acquire the franchise. Before preparing the final version, confirm who the franchisee will be and avoid using different names across the agreement, schedules and payment instructions.

If you are contracting with a Colombian company, request a recent certificate of existence and legal representation issued by the relevant chamber of commerce. Check its registered name, identification details, legal representative and any restrictions that could affect its ability to enter into the transaction. If there are restrictions, also review its articles of association and the relevant authorisations.

It is not enough to check that someone is listed as the legal representative. They may need approval from the appropriate corporate body because of the value or nature of the commitment. If someone is acting under a power of attorney, check that it authorises them to enter into the agreement and assume the obligations it contains.

Apply the same checks to your own company. Where the existing business belongs to a company, its founder should not sign in a personal capacity simply out of habit. The named franchisor must be the party responsible for fulfilling the obligations and must hold the rights needed to do so.

2. Distinguish legal requirements from recommended practice

In Colombia, a franchise agreement is an atypical contract: it is not governed by a specific, comprehensive contractual framework. It is governed by the agreed terms, the general provisions of the Commercial Code and the applicable civil law rules, subject to mandatory legal provisions and the principle of good faith.

This does not mean that the relationship falls outside the law. Depending on its terms and how it is carried out, the Andean Community’s Decision 486 on industrial property, Law 256 of 1996 on unfair competition and other general rules may also be relevant. Law 1480 of 2011 protects consumers in the relevant consumer relationships; it is not a dedicated franchise agreement law.

It is advisable to put the agreement in writing and retain evidence of its acceptance. There is no general requirement for every Colombian franchise agreement to receive an apostille through a notary. Apostilles relate to the international use of public documents and do not replace checks on the signatory’s authority.

Nor should a regulatory proposal be confused with a current legal obligation. The draft decree published by Colombia’s Ministry of Trade, Industry and Tourism (MinCIT) in 2021 envisaged a Franchise Offering Circular and a twenty-working-day advance disclosure period. That draft does not, in itself, provide grounds for requiring that period. The absence of a specific disclosure regime does not remove the general duties of good faith during negotiations.

3. Finalise the agreement and its schedules as a single document file

Prepare a document checklist before arranging the signing. Its purpose is not to renegotiate the franchise model, but to ensure that both contracting parties accept exactly the same set of obligations.

The file should identify:

• The final version of the agreement, dated and with full details of the parties.
• The schedules incorporated into it, each identified by name, date or version.
• Any necessary corporate authorisations or powers of attorney.
• The method for evidencing acceptance of the documents.
• The person responsible for retaining and distributing the final copies.

Avoid open-ended references such as ‘as set out in the proposal sent’ where several proposals exist. If a document contains the agreed financial terms, identify it precisely or incorporate those terms into the agreement. Do not leave blanks to be filled in after signing.

Where manuals contain confidential information, arrange their delivery with access controls and an acknowledgement of receipt. That acknowledgement provides evidence of what was delivered; it should not be used to introduce obligations different from those agreed.

4. Keep signing separate from any required registrations

There is no general requirement to register a franchise agreement with Colombia’s Superintendency of Industry and Commerce (SIC) to validate the business model. Commercial registration and the Single Tax Register (RUT) serve different purposes: neither amounts to approval of the franchise.

The trade mark licence requires separate attention. Under Article 162 of Decision 486, it must be registered with the competent national office; without registration, it has no effect against third parties. In Colombia, that authority is the SIC. With legal advice, arrange the appropriate documentation and registration procedure, without confusing this with registration of the franchise as a whole.

Practical takeaway: before signing, check that three things align: the company taking on the obligations, the person authorised to sign and the documents being accepted. Then assign responsibility for retaining the file and completing any registrations that are required.