Franchising in Guatemala: check the language of the contract

Buying an international franchise may mean negotiating in Spanish but receiving the contract in English. That difference is not merely an administrative detail: an inaccurate translation can change a payment obligation, a default provision or the scope of an authorisation. In franchising, sharing a brand does not mean sharing the same legal language. Before signing in Guatemala, clarify how the commitments will be understood and documented.

1. Distinguish legal requirements from commercial convenience

Guatemala has no specific franchise law or special regime requiring franchisors to provide a franchise disclosure document. The relationship is governed primarily by the Commercial Code, Decree 2-70; the Civil Code, Decree-Law 106, as supplementary legislation; and the Industrial Property Law, Decree 57-2000, for matters such as trademark licensing.

Article 671 of the Commercial Code states that contracts entered into in Guatemalan territory and intended to take effect there must be drawn up in Spanish. This matters even if commercial discussions, the financial proposal or the original manuals are in another language.

Do not confuse a translation that helps you understand the offer with the documentation needed to enter into the contract. A Spanish summary may help you assess the brand, but it does not replace the full text that will bind you.

If the contract is executed outside Guatemala, ask a local lawyer to determine the applicable requirements based on the document and its intended use in the country. Do not assume that all foreign contracts require exactly the same formalities, or that an electronic signature removes language or authenticity requirements.

2. Check the words that change your obligations

A bilingual review should focus on consequences, not just grammar. Request a comparison of the versions that identifies material differences and submits them for approval by both parties.

Start with these points:

• Obligation or discretion: distinguish between what the franchisor must do and what it merely may do. A commitment to provide support is not the same as a discretionary option.
• Time limits: check whether periods are measured in calendar or working days, when they start running and which calendar applies.
• Default: verify that delay, breach and termination have not been translated as though they were interchangeable.
• Amounts: check the currency, decimal separators and wording indicating whether a payment includes taxes or expenses.
• Authorisations: confirm whether notification is sufficient or whether you need prior written consent.

For example, a clause allowing you to request authorisation does not guarantee that it must be granted. If the translation turns that possibility into an automatic entitlement, the parties will be signing with different expectations.

Avoid leaving foreign-language expressions undefined where they determine an obligation. If a technical term must be retained, add a clear definition that is consistent across both texts.

3. Agree how differences between versions will be resolved

When signing two language versions, negotiate a clause defining their relationship: which prevails if there is a discrepancy, and how errors discovered later will be corrected. That clause must be reviewed against Guatemalan requirements; it cannot be used to sidestep them.

Article 669 of the Commercial Code provides for interpretation in accordance with the truth as understood by the parties and the observance of good faith. However, good faith is no substitute for clear drafting, nor will it alone prevent a dispute over two different texts.

Ask for any substantive correction to be approved by both parties. An explanation emailed by the salesperson may clarify the negotiations, but you should not rely on it if it contradicts the signed document.

Extend this review to communications that have contractual effect. Agree on the language for notices of default, requests for authorisation and mandatory instructions. Also specify who will be responsible for translating future updates and how much time you will have to review them before they become binding.

4. Budget for and verify the translation before signing

Set aside funds for a bilingual legal review as well as translation. These are different tasks: translation reproduces the content, while legal review helps identify obligations that are ambiguous or inconsistent with what was negotiated.

A trademark licence must be in writing. Where foreign documents or procedures before the Intellectual Property Registry are involved, confirm with the professional handling the matter whether a sworn translation is required and which authentication formalities apply.

Before approving the cost, request a clearly defined scope of work: the documents covered, review of subsequent changes, responsibility for validating terminology and delivery of the final versions. Do not sign one version while the other is still in draft.

Practical conclusion: insist on a complete Spanish text, verify that both versions create the same obligations and record in writing how discrepancies will be resolved. Understand the contract before accepting it.