Franchising in Guatemala: agree terms for temporary interruptions

Before buying a franchise in Guatemala, ask what would happen if an emergency prevented your outlet from opening for several weeks. Closing permanently is not the same as suspending operations while the premises are restored or an essential service resumes. Agreeing how to handle these interruptions helps protect business continuity and avoids the assumption that all payments will automatically stop.

1. Distinguish an emergency from an ordinary business problem

The temporary interruption clause should identify the events that could trigger special measures. These might include damage caused by natural events, orders from public authorities that prevent operations, or prolonged disruption to essential services. A generic reference to ‘force majeure’ is not enough unless its contractual effects are explained.

For each scenario, define three things: which obligation is affected, how the inability to fulfil it must be demonstrated, and what reasonable steps each party must take to limit the consequences. An emergency may prevent you from serving customers on the premises without necessarily preventing administrative work or the fulfilment of certain orders.

Do not confuse a fall in sales with an inability to operate. A lack of customers, cash flow problems or a breakdown caused by neglected maintenance should not automatically be treated as events beyond the franchisee’s control. How they are handled requires a review of the facts and the contract.

Ask for a distinction between a complete suspension, partial operations and disruption to a specific service. This will prevent the same rule from being applied to situations with very different financial implications.

2. Review Guatemala’s legal framework

Guatemala has no franchise-specific legislation. A franchise agreement is treated as an atypical commercial contract: its obligations are established by the agreed terms within the framework of the Commercial Code, with the Civil Code applying where needed to supplement it. The Industrial Property Law, Decree 57-2000, regulates matters such as trade marks and their licensing, but does not establish a special regime for suspending franchise operations.

Nor is there a franchise-specific pre-contractual disclosure regime that replaces this review. You should not assume there will be a mandatory document explaining how the brand will respond to an emergency.

Civil law rules on breach of contract, fortuitous events and force majeure may be relevant. However, an inability to fulfil one obligation does not necessarily mean that all the others fall away, or that you automatically have the right to stop paying every charge. The cause, the obligation affected and the contractual allocation of risk all matter.

Ask a Guatemalan lawyer to review the clause alongside the provisions on breach and termination. The aim is to avoid a suspension permitted in one part of the contract being treated elsewhere as abandonment that attracts penalties.

3. Define the financial effects of a suspension

Draw up a list of charges that would continue even if there were no sales. Then negotiate how they will be handled and put this in writing, rather than assuming that a commercial discussion amounts to a waiver.

The review should distinguish between:

• Fixed charges: specify whether they will remain payable, be reduced, suspended or deferred, and from what point.
• Variable charges: clarify how transactions that can still take place during partial opening will be recorded.
• Operational obligations: determine whether opening hours, targets or scheduled orders will be adjusted temporarily.
• Extraordinary expenses: establish who will approve and bear the recovery costs required by the brand.

Deferral is not a waiver. If charges accumulate, ask for a repayment schedule that makes the financial burden after reopening clear. It should also be clear whether interest will accrue.

For example, if the premises cannot admit customers but can continue offering an authorised delivery service, the agreement should explain which obligations remain in place and which are adjusted. Avoid an ‘all-or-nothing’ solution that ignores how the business is actually operating.

4. Agree how to give notice and resume operations

Establish a notification procedure covering the recipient, communication channel, initial information and supporting documents. It is sensible to provide an alternative if the event itself prevents use of the usual channel, without turning that difficulty into permission to remain silent indefinitely.

Define who will assess whether reopening conditions have been met, what checks will be needed and how quickly the franchisor must respond. If you need authorisation to operate partially, ask for objective criteria and a documented response.

It is also sensible to agree periodic reviews of the suspension and a process for deciding what to do if it continues. Any extension to the franchise term must be expressly agreed; do not assume that days without trading will be added at the end.

Practical conclusion: before signing, settle four questions: what triggers a suspension, what you will continue to pay, how you will give notice and what you will need to reopen. A useful clause turns those answers into clear obligations for both parties.