Buying a franchise: contracts in a foreign language

When entering the franchise market in Portugal, you may receive a contract in English or another language used by the brand. This does not make the proposal improper, but it does call for extra care: understanding the sales presentation is not the same as understanding your legal obligations. Before making any commitments, check what the text means and which version takes precedence if there are differences between languages.

1. Understand what Portuguese law requires

Portugal has no specific franchise law, dedicated register of franchisors or pre-contractual disclosure document with legally standardised content. Nor is there a specific requirement for franchise agreements to be written in Portuguese. In principle, the parties can agree on the language.

This freedom does not remove the general duties to provide information and act in good faith. Where applicable, the Portuguese Civil Code governs the negotiation and performance of the contract, notably through Articles 227 and 762. Article 405 establishes freedom of contract within legal limits.

If standard contract terms are used, Decree-Law No. 446/85, as amended, is also relevant. It sets out duties to communicate those terms and provide information about them. Simply supplying a file for signature does not necessarily address every issue concerning whether the proposed terms have been properly understood.

Do not assume that a clause is invalid simply because it is in another language, or that signing rules out any dispute over how it was communicated. The assessment depends on the circumstances. If the contract specifies a foreign governing law, ask a lawyer to establish which legal rules apply; the language of the document and the law governing it are separate matters.

2. Identify which text will be contractually binding

Before paying for a translation, ask whether a Portuguese version exists and what its status is. There may be a bilingual contract, two equally binding documents, or a translation provided solely to make the text easier to read.

Ask for written answers to these questions:

• Which version or versions will the parties sign?
• Is there a clause stating that one language takes precedence?
• Does the translation supplied by the brand form part of the agreement, or is it for information only?
• How will any discrepancies between the texts be corrected?
• Which language will be used for notices and communications with contractual effect?

A Portuguese translation may be useful without protecting a prospective franchisee against discrepancies. If the contract states that the English version takes precedence, it will be particularly important to review that version, not just the translation.

Negotiate a clear procedure for dealing with discrepancies. One option is to correct both versions before signing and expressly identify which text takes precedence. There is no universal solution: the key is to avoid a situation in which the parties unknowingly accept different obligations.

3. Review the language with practical consequences in mind

The review should combine competent translation with legal analysis. A translator can identify linguistic ambiguities; a legal adviser should explain their effect on the obligations you are taking on. Machine translation may help with an initial reading, but it should not be the sole basis for your decision.

Start with passages where a single word can change the risk: mandatory obligations, the franchisor’s discretionary powers, exceptions, deadlines and payment terms. Apparently similar expressions may not have the same legal effect.

For example, compare a promise that support will be provided with a statement that the brand may provide support. Also check whether approval must be in writing, whether a failure to respond has any effect, and which event triggers the start of a time limit.

Create a table with four columns: original wording, proposed translation, practical consequence and clarification needed. Rather than simply asking ‘What does this mean?’, put forward a specific scenario: ‘If I submit this request and receive no reply, can I go ahead?’.

Make sure relevant answers are incorporated into the contract. A reassuring explanation from the sales team should not contradict the obligation you are about to sign up to.

4. Manage versions, time and costs before signing

Ask for an editable version for negotiations and a final version identified by date. Whenever changes are made, check that they are reflected in both languages. An accurate translation of an earlier draft is no longer a reliable reference once the original changes.

Allow time and budget for translation, legal review and, if necessary, a final cross-check. Ask the professionals involved in advance about the scope of their work and how subsequent changes will be handled. Do not assume that the brand will cover these costs: clarify who is responsible during negotiations.

Keep the documents you receive, the questions you raise and the answers provided. If you are pressured to sign before the review is complete, propose a new date rather than accepting obligations you cannot yet explain in your own words.

Practical conclusion: before signing, confirm three things: you understand the obligations, you know which language takes precedence, and you have checked that the final version incorporates the agreed clarifications.