Pre-contractual disclosure when franchising a business in Spain

Turning your business into a franchise network takes more than drawing up a contract. Before bringing your first franchisee on board, you need a process for providing accurate, sufficient and verifiable information. This pre-contractual disclosure pack allows candidates to assess the commitment and helps prevent discrepancies between what you promise during recruitment and what you can actually deliver.

1. Understand the obligation and the disclosure deadline

Spain has specific rules governing franchising and pre-contractual disclosure. The main references are Article 62 of Law 7/1996 on the Regulation of Retail Trade and Royal Decree 201/2010 of 26 February, in their currently applicable provisions.

The franchisor must provide the information in writing at least 20 working days before any franchise agreement or preliminary franchise agreement is signed, or before the prospective franchisee makes any payment to the franchisor. Simply sending it before the outlet opens is not enough.

This affects your sales process: a paid territory reservation or a preliminary agreement must not be used to secure an early commitment while the documentation is still outstanding. Schedule disclosure ahead of the first event that triggers this obligation, and seek legal advice to confirm how the deadline should be calculated.

One common misconception needs correcting: Royal Decree-Law 20/2018 abolished the national obligation to notify the Franchisors Register and repealed the rules governing that register. Do not present registration as a current national requirement or as a mark of quality. Its abolition did not remove the duty to provide pre-contractual information.

2. Prepare a disclosure pack that reflects your actual business

There is no single mandatory template. You can organise the information into a main document with appendices, provided the pack as a whole is clear, consistent and complete. It must cover the information required by the rules, including:

• Franchisor identification: company or individual name, address, company registration details where applicable, and share capital as required.
• Trade mark rights: evidence of ownership or a licence to use the trade mark in Spain, its validity and, where relevant, the licence term. Include details of legal challenges that could affect ownership or use.
• Business activity and experience: a general description of the business activity, the company's history, the development of the franchise network and relevant experience.
• Business system: how the business operates, the substance of its know-how and the commercial or technical support you will provide, together with an estimate of the investment and expenditure needed to launch a typical outlet.
• Network structure in Spain: company-owned and franchised outlets, their locations, and the required information on franchisees who have left the network in the past two years, including the reasons for their departure.
• Essential terms of the agreement: rights and obligations, term, termination, renewal, financial obligations, exclusivity arrangements and restrictions on the franchisee's freedom to sell or transfer the franchised business.

If you are setting up your first franchise network, say so explicitly. Distinguish company-owned outlets from franchised ones, and do not present discussions with candidates as confirmed additions to the network. Experience running the original business is not the same as experience supporting franchisees.

3. Check the pack against the contract and your operations

Before providing the documentation, ask those responsible for operations, finance and legal advice to review the same version. Every commitment must be operationally deliverable and consistent with the proposed contract.

For example, if you advertise support during opening, specify its scope: how it will be delivered, its duration, any travel involved and possible additional costs. If you offer territorial exclusivity, explain its limits and how digital channels will be treated.

Set out the initial franchise fee, ongoing payments, advertising contributions and other mandatory costs separately. Clarify how they are calculated, when they fall due, the applicable taxes and the services included. Avoid introducing a financial obligation for the first time in a late contractual appendix.

You may require confidentiality in relation to pre-contractual information under Royal Decree 201/2010. However, do not use a confidentiality agreement as a substitute for mandatory disclosure or to introduce a disguised binding reservation. Nor do you need to hand over the entire operations manual indiscriminately to explain the know-how in sufficient detail.

4. Keep records and manage changes

Establish a simple, repeatable process:

1. Give the disclosure pack and its appendices a date and version number.
2. Deliver it through a system that provides evidence of the content, recipient and date of receipt.
3. Request an acknowledgement of receipt identifying the documents, without turning it into a waiver of rights.
4. Record the candidate's questions and respond to material queries in writing.
5. Check that the required period has elapsed before authorising signatures or accepting payments.

If you make substantial changes to the terms, provide updated information and discuss with your legal advisers how this affects the timetable. A signed acknowledgement does not remedy incomplete or misleading information.

Practical takeaway: before recruiting your first franchisee, prepare a thoroughly checked disclosure pack, appoint someone to keep it up to date, and prevent agreements from being signed or payments accepted until you have verified delivery and compliance with the statutory disclosure period.