Choosing Which Business Format to Franchise in Guatemala

An existing business may sell from premises, cater for events and take online orders, but that does not mean it should franchise all those activities together. Before offering a franchise in Guatemala, define the format: what each unit will be allowed to sell, how it will serve customers and what resources it will need. This helps build a franchise network with clear expectations and comparable operations.

1. Separate your existing business from the format you will offer

The original business often accumulates activities as opportunities arise: a café starts taking bespoke cake orders; a training centre adds corporate classes; a shop begins fulfilling wholesale orders. Each activity may require different staff, space and processes.

List these activities and divide them into three groups:

• Core activities: products or services that define the customer experience and that every unit must offer.
• Options subject to approval: additional activities that may only be introduced once predefined conditions have been met.
• Excluded activities: services that are not part of the franchise being offered, even if the original business provides them.

This classification should not depend solely on which activities generate the most sales. Consider their complexity, the facilities they require and the obligations they create towards customers.

For example, selling cakes from a display cabinet is not the same as accepting bespoke orders for celebrations. The latter requires managing deposits, specifications, delivery dates and possible changes. Including it without making that distinction expands the unit’s obligations.

2. Describe the format in a clear specification sheet

Prepare a specification sheet that allows someone to understand the unit without visiting your original premises. This does not replace the contract or operations manual: it defines what you are offering before you develop those documents.

The specification sheet should cover:

• Range: the product or service categories included and any relevant exclusions.
• Service model: self-service, counter service, table service, appointments or another arrangement.
• Channels: in-person sales, direct orders, third-party platforms or services delivered away from the premises.
• Facilities: functional areas, storage capacity and necessary equipment.
• Staffing: the roles that must be covered during operations.
• Limits: activities that require additional approval or remain reserved for the franchisor.

Avoid phrases such as ‘full format’ or ‘all the brand’s services’ unless they are accompanied by a description that can be checked. They could be interpreted as granting broader rights than you intend.

If you offer both a counter-only unit and premises with table service, prepare separate specification sheets. Sharing a brand does not make the two formats operationally identical.

3. Clarify how shared channels will work

Online orders deserve particular attention because they can extend beyond the boundaries of the premises. A website managed by the franchisor may take an order that a franchised unit will ultimately prepare, deliver or handle.

For each channel included, define who receives the order, who takes payment, who fulfils delivery and who handles cancellations or complaints. It should also be clear how customers are told who is responsible for the sale.

Imagine a retailer whose head office sells gift hampers and uses its shops as collection points. Simply saying that units will ‘participate in e-commerce’ is not enough. You need to specify whether they store products, prepare orders or merely hand them over, and how that work will be compensated.

These arrangements must align with the agreed commercial and territorial terms. The aim here is not to set royalties or exclusivity rights, but to prevent a seemingly secondary channel from imposing tasks that the format did not originally cover.

4. Reflect the defined scope in your Guatemalan agreement

Guatemala has no specific franchise law. A franchise agreement is treated as an atypical commercial contract and is governed by the Commercial Code, Decree 2-70, with the Civil Code, Decree-Law 106, applying on a supplementary basis. Freedom of contract operates within the law and under principles of good faith; it does not allow the parties to disregard applicable legal obligations.

The Industrial Property Law, Decree 57-2000, is also relevant to the trade mark licence and protected know-how that form part of the model. Permission to use a trade mark does not, by itself, define all the commercial activities that are permitted.

With advice from local legal counsel, incorporate the format specification sheet into the contract as a clearly identified annex consistent with its clauses. Distinguish mandatory products and services from optional ones, and establish how any approval to expand activities will be documented. The commercial proposal, contract and operating instructions must all describe the same scope.

Practical takeaway: before offering your franchise, write a one-page summary stating what it includes, what it excludes and what requires approval. If an activity cannot be clearly classified, resolve that before presenting it to prospective franchisees.