Pre-contractual franchise information: how to provide it

Before bringing someone into your franchise network, you must give them enough information to make an informed decision. An attractive commercial proposal is not enough: when franchising a business in Spain, you need a pre-contractual disclosure process that enables you to demonstrate what you provided, to whom and when. Putting this in place from your first prospective franchisee helps avoid last-minute pressure and reduces disputes.

1. Provide the information before any commitment

Spain has specific franchise legislation. Article 62 of Law 7/1996 on the Regulation of Retail Trade establishes the pre-contractual disclosure obligation. Article 3 of Royal Decree 201/2010 of 26 February sets out the required content and stipulates that the information must be written, truthful and not misleading.

It must be provided at least twenty working days before any of the following: signing the franchise agreement, signing a preliminary franchise agreement or making any payment from the prospective franchisee to the franchisor. You should therefore not plan your timetable solely around the final agreement.

The removal of the national requirement to notify the Register of Franchisors under Royal Decree-Law 20/2018 did not abolish this disclosure obligation. These are separate matters.

In practice, establish an internal rule: no one may request a signature or payment without first checking that the information has been received and the required period has elapsed. Ask your legal advisers to confirm how working days should be counted, and allow a buffer rather than cutting it fine.

2. Prepare a complete information pack

The information is commonly brought together in a pre-contractual disclosure document, known in Spain as a DIP. What matters is not its name or design, but whether it covers the required content clearly.

Organise the pack into these sections:

• Franchisor identity: name or registered company name, address, and the applicable company registration and capital details.
• Trade mark rights: evidence of ownership or a licence to use the trade mark in Spain, its period of validity and any relevant circumstances that must be disclosed.
• Business activity: a general description of the market in which the business operates and the activity being franchised.
• Franchisor experience: the company’s history and the evolution and development of the franchise network.
• Operating model: the business’s characteristics, a general explanation of its know-how, commercial or technical support, and an estimate of the investment and expenditure needed to launch a typical outlet.
• Network composition: company-owned and franchised outlets, their locations, and the required details of those who have left the network during the previous two years, including the reasons for their departure.
• Essential terms of the agreement: rights and obligations, duration, termination, renewal, fees and other payments, exclusivity arrangements, and restrictions on the franchisee’s freedom to sell or transfer the business.

If you do not yet have any franchisees, say so clearly. Distinguish between your experience of running company-owned outlets and your experience of managing a network of outlets operated by third parties. A first franchise must not be presented as an established network.

If you include financial forecasts for an individual outlet, remember that the royal decree requires them to be adequately supported by experience or studies. Do not turn an estimate into a guarantee.

3. Document the content and receipt

The legislation requires written information, but does not prescribe a particular layout for the DIP. You can provide it electronically, as long as the process allows you to retain useful evidence of its content and receipt.

Assign a date and version number to each information pack. Provide files that the prospective franchisee can save and consult; avoid relying exclusively on a folder whose contents you can replace without leaving a record.

Keep, at a minimum:

• The recipient’s identity and contact details.
• An exact copy of the documents and annexes provided.
• Evidence of the date of receipt.
• Proof of delivery and subsequent correspondence.

An acknowledgement of receipt should identify the documents received. It does not amount to acceptance of the agreement, nor does it remedy incomplete or misleading information. It must not be used to introduce a waiver of the statutory waiting period either.

4. Handle questions and changes before signing

Appoint someone to answer questions and record any clarifications. If a question reveals a significant omission, supplement the documentation in writing: a telephone conversation is no substitute for the required disclosure.

If essential terms change after you have sent the pack, provide an updated version and ask your legal advisers to review the timetable. Do not assume that every amendment automatically restarts the waiting period, or that none will affect it. What matters is that the prospective franchisee receives the required information within the statutory timeframe.

Before authorising a signature or accepting payment, check the content, receipt, waiting period and any outstanding questions. Carry out this check even if you know and trust the prospective franchisee personally, or they want to speed things up.

Practical takeaway: prepare a complete information pack, retain an exact copy of what the recipient received, and do not allow signatures or payments until you have confirmed that the required period has elapsed. Transparency starts before the first franchise opens.