Confidentiality when buying a franchise in Spain

Before sharing internal information, a franchisor may ask you to sign a confidentiality agreement. This is an understandable precaution in franchising, but it should not prevent you from assessing the investment with independent advisers. The key is to distinguish between protecting sensitive information and accepting obligations that restrict your freedom to decide. These checks will help you negotiate the document before receiving confidential information.

1. Understand what Spanish law allows

Spain has specific franchise legislation: Article 62 of Law 7/1996 on the Regulation of Retail Trade and Royal Decree 201/2010. Article 4 of that Royal Decree allows franchisors to require prospective franchisees to keep confidential any pre-contractual information they receive or are due to receive.

This sits alongside a separate obligation: under Article 3, the franchisor must provide written, truthful and non-misleading pre-contractual information at least twenty working days before the franchise agreement or preliminary franchise agreement is signed, or before the prospective franchisee makes any payment to the franchisor.

An agreement dealing solely with confidentiality does not necessarily amount to a preliminary franchise agreement. However, its content matters more than its title. If it includes a reservation arrangement, a commitment to join the network or a payment, ask a lawyer to assess its effects and whether the statutory notice period has been observed.

Law 1/2019 on Trade Secrets is also relevant. Not every internal document automatically qualifies as a trade secret: it must meet the legal requirements, including being secret, having commercial value because it is secret, and being subject to reasonable measures to keep it confidential. The agreement may protect additional information, but it is worth specifying exactly what that covers.

2. Define the information covered and its permitted uses

Avoid a definition that treats every conversation, document or piece of knowledge acquired during the process as confidential, without distinction. Ask for specific categories: proprietary procedures, non-public commercial terms, technical documentation or internal financial data.

Propose that the agreement expressly exclude information that:

• Was already public, without any breach on your part.
• You can demonstrate you lawfully knew before receiving it.
• You lawfully obtained from a third party without a duty of confidentiality.
• You developed independently, without using the protected material.

Also define the permitted purpose: assessing the potential purchase and operation of a franchise. This purpose should allow you to prepare calculations, compare alternatives and seek professional advice, without authorising wider disclosure of documents or their use to copy the business model.

If sensitive information will be shared verbally, agree how it will be identified or confirmed in writing. Keeping a record of the documents received and their dates helps avoid disputes over what was protected.

3. Preserve access to advisers and finance

Do not accept a restriction allowing only you to review the documents if you need help to assess them. Negotiate express permission to share them, to the extent necessary, with lawyers, tax and financial advisers and, where appropriate, potential finance providers.

The agreement may require these people to be bound by confidentiality obligations. Clarify who may access the information, for what purpose and under which conditions, without needing fresh permission for every routine consultation.

Pay particular attention to whether you are accepting responsibility for any conduct by third parties, even where it is beyond your control. Ask for proportionate wording that is consistent with the commitments you can realistically obtain from them.

The agreement should also allow disclosures required by an authority or by law, with advance notice to the franchisor where legally possible. Contractual confidentiality must not become an obstacle to complying with the law.

4. Check the duration, penalties and hidden obligations

Distinguish between the length of the negotiations and how long confidentiality obligations continue afterwards. There is no single period suitable for all information: commercial information may lose its sensitivity, while a trade secret may need protection for as long as it retains that status.

Examine the consequences of a breach. If there is a contractual penalty, check what conduct triggers it, how it is calculated and whether the agreement also allows claims for additional damages. Do not assume that a disproportionate sum will automatically be unenforceable.

Look out for commitments unrelated to confidentiality, such as exclusive negotiations, non-compete restrictions, payments or waivers of the right to bring claims. These should be assessed separately, rather than slipping through unnoticed in a document presented as a mere formality.

Finally, agree how files will be returned or deleted if you decide not to proceed, while allowing you to retain any copies needed to meet legal obligations or defend legal claims, subject to confidentiality.

Practical takeaway: before signing, check what information you are protecting, who you can share it with and which obligations continue if you do not buy. Confidentiality should enable a secure assessment, not replace it.