Franchising in Guatemala: how to speak to existing franchisees

Before buying a franchise in Guatemala, it is worth listening to people who already work with the brand. A sales presentation explains the proposition; conversations with franchisees help you understand what the relationship is like in practice. Within the franchise community, these references are a due diligence tool: they do not guarantee results, but they can reveal questions you have not yet thought to ask.

1. Ask for references that let you compare experiences

Do not rely solely on the testimonial featured in a brochure. Ask the franchisor to arrange conversations, with the individuals’ consent, with operators at different stages: someone who has recently opened, an experienced franchisee and, if possible, someone who has left the brand.

Also request a list of outlets showing their locations, opening dates and whether they are company-owned or franchised. The manager of a company-owned outlet does not offer the same perspective as someone who has invested their own capital as a franchisee. Both can provide useful information, but their responsibilities and risks differ.

Prioritise references from businesses comparable to the one you are considering. An outlet in a shopping centre in Guatemala City may face very different conditions from street-level premises in another municipality. If the brand does not yet have franchisees in Guatemala, speak to operators in other countries and explicitly note that limitation: their experiences do not prove that the model will work in the same way in Guatemala.

A refusal to share personal details is not proof of a problem. Suggest an email introduction or a call with the person’s consent. The important thing is to distinguish privacy precautions from a persistent inability to obtain independent references.

2. Ask specific questions rather than seeking general praise

Prepare a consistent set of questions and speak to each person individually, preferably without the sales team present. Explain that you want to understand their experience, not obtain trade secrets or information they are prohibited from disclosing.

These questions will help you go beyond ‘Would you recommend the brand?’:

• Which aspect of the business differed most from what you expected when you signed?
• What information would have helped you make a better decision before investing?
• Which tasks require more of your personal involvement than you anticipated?
• When you raised a problem, how was it handled and what was documented?
• Can you describe a disagreement and how it was resolved, without revealing confidential information?
• Would you choose this franchise again, knowing what you know today about its terms and conditions? Why?

Ask for examples and approximate dates. ‘They always respond’ tells you less than a description of a specific query, the response received and the outcome. Also ask whether the current terms differ from those the person signed up to.

Avoid turning the conversation into a demand for financial statements. The franchisee is under no obligation to give you private documents. If they volunteer information, clarify its scope and ask permission before attributing comments to them or sharing them with third parties.

3. Cross-check accounts and recognise their limits

After each interview, divide your notes into three columns: reported facts, opinions and matters still to be verified. Record when each situation occurred and whether it relates to the same franchise format you are being offered.

Look for patterns, not unanimity. An isolated complaint may reflect particular circumstances; several consistent accounts warrant an explanation from the franchisor. Equally, one enthusiastic reference is not enough to dismiss problems identified by other operators.

Ask respectfully whether the person receives any incentive for referring prospective franchisees. A paid reference is not necessarily false, but that relationship should inform your assessment of its independence.

Raise discrepancies with the franchisor without disclosing confidential information. For example: ‘I have heard different accounts of the owner’s involvement in day-to-day operations. What exactly does the current offer require?’ Ask for a verifiable answer, rather than criticism of the person you interviewed.

Do not mistake someone else’s experience for an entitlement of your own. Just because another operator was granted an exception does not mean you can demand the same. If a condition is decisive in your purchase decision, ask for it to be expressly agreed in your contract.

4. Understand what Guatemalan law requires

Guatemala has no specific franchise law or special regime requiring franchisors to provide a franchise disclosure document. You should therefore not assume that there is a standardised set of legally required documents that includes franchisee references, or an automatic right to interview them.

The relationship falls within the framework of the Commercial Code, Decree 2-70, the Civil Code, Decree-Law 106, and, for the trade mark and other protected elements, the Industrial Property Law, Decree 57-2000. Article 669 of the Commercial Code provides for good faith in the interpretation and performance of commercial contracts. This does not turn every sales testimonial into a contractual guarantee.

Ask a Guatemalan lawyer to review relevant claims and advise on how to document them. The absence of a specific disclosure obligation does not remove the need for verification.

As a practical precaution, do not base your decision on a single recommendation: compare several experiences, resolve contradictions and put the conditions essential to your investment in writing.