Buying a Franchise in Venezuela: How to Secure Your Premises

Attractive premises do not guarantee that a franchise can operate there. Before buying a franchise in Venezuela, you need to check that the property can be used for your intended business and that the lease fits your obligations to the brand. Aligning these arrangements helps avoid a costly problem: paying for premises you cannot yet open.

1. Check who can let the property and what business you can run

Ask for the title deed and verify the landlord’s identity. If a representative is signing, request the relevant power of attorney; if a company is involved, check its documents and the signatory’s authority. An agent showing you the premises is not necessarily authorised to bind the owner.

Next, check whether the property is suitable and authorised for your specific business activity. The fact that another business previously operated there is not enough. A café, a gym and a shop may face different requirements for permitted use, facilities and safety.

Before taking on any obligations, obtain:

• Information from the municipality on permitted use and the requirements for obtaining an economic activities licence.
• Applicable safety, fire prevention and health permit requirements, depending on the activity.
• The shopping centre’s rules or the building’s co-ownership regulations, where applicable.
• Any necessary authorisations for signage, air extraction, loading and unloading, or other essential facilities.

The franchisor’s commercial approval does not replace statutory permits or the property owner’s authorisations. Commission an independent technical inspection if the business depends on specific electrical capacity, ventilation, water supply or structural conditions.

2. Understand the rules governing the business

Venezuela does not have a comprehensive law specifically governing franchises. The relationship rests primarily on the contract, the Civil Code and the Commercial Code, alongside applicable rules on intellectual property, competition, employment and commercial activity. This does not mean the parties can agree to terms that override mandatory legal requirements.

For the premises, particular attention should be paid to the Decree with the Rank, Value and Force of Law Regulating Property Leases for Commercial Use, taking account of its scope and the circumstances of the case. This legislation governs aspects of commercial leasing that should not be treated as matters solely for agreement between landlord and tenant.

Municipal by-laws and activity-specific requirements also matter. Ask a Venezuelan lawyer to review the franchise agreement and the lease together. Among other things, they should check the legality of the rent, security arrangements, adjustments and termination terms. Do not assume a clause is valid simply because it appears in the shopping centre’s standard contract.

3. Align deadlines and opening conditions

The lease may start generating costs before you receive authorisation to operate under the brand. Equally, the franchise agreement may impose an opening date that is incompatible with the approval procedures for the premises.

Draw up a single timetable with five milestones: handover of the premises, the brand’s technical approval, permits, fit-out and opening. For each, identify who is responsible, which documents confirm completion and what happens if there is a delay.

Negotiate the following in writing, within the limits of the law:

• Which conditions must be met before each obligation becomes enforceable.
• When rent becomes payable and whether there is an agreed fit-out period.
• How delays attributable to the landlord, the franchisor or administrative procedures will be handled.
• What happens if an essential authorisation is refused.

Compare the length of the two contracts as well. If the franchise term outlasts your right to occupy the premises, you could be obliged to operate without having anywhere to do so. Do not assume renewal is automatic or confuse a commercial expectation with an enforceable right.

4. Calculate the cost of occupying the premises

Your premises budget should distinguish between upfront payments, recurring costs and funds tied up as security. A refundable deposit is not a permanent expense, but it still reduces the cash available for opening.

Include rent, any shared costs you are legally required to pay, utilities, required insurance, professional fees for technical work and essential alterations. Agree who will pay for repairs needed before you take possession, and document the condition at handover with a written record, photographs and an inventory.

Request the basis on which shared costs are allocated, along with supporting documentation. If any amounts are stated in a foreign currency, have a professional review the currency in which they are denominated, the payment arrangements and any conversion mechanism.

Finally, calculate how much cash you would need if opening were delayed. The aim is not to forecast sales, but to establish how long you could cover the premises’ costs without revenue.

Practical conclusion: do not assess the premises and the franchise separately. Proceed once you have confirmed that the intended use is permitted, documented the costs and ensured that the deadlines and responsibilities in both contracts can be met together.