Buying a Franchise in Venezuela: Who Can Sign?

A brand may have a persuasive sales team, but the person negotiating is not always authorised to bind the company. Before buying a franchise in Venezuela, check who your contractual counterparty will be and who can sign on its behalf. In franchising, these checks help avoid disputed contracts, misdirected payments and commitments that the company later refuses to honour.

1. Identify the company that will take on the obligations

The name on the shopfront may differ from the legal name of the company granting the franchise. Nor should you assume that the company arranging the meetings will be responsible under the contract.

Ask for the company's incorporation document and articles of association, any relevant amendments, and its tax registration document, known as the Registro de Información Fiscal (RIF). Cross-check these details against the opening section of the contract, the identification details in the signature blocks and the payment instructions.

Prepare a summary covering:

• The full legal name of the contracting company.
• Its registration details in the Commercial Registry (Registro Mercantil).
• Its registered office and RIF.
• The name and identification details of the person signing.
• The capacity in which they will act: director, representative authorised under the articles of association, or attorney acting under a power of attorney.

The RIF identifies the taxpayer, but does not, on its own, establish who can represent them. A business card, a corporate email address or the title of expansion director is no substitute for documents establishing that authority.

If several companies are involved, ask for the contract to specify which one grants the rights and which is responsible for each obligation. An affiliated company is not automatically bound simply because it belongs to the same group.

2. Trace the signatory's authority

Finding the representative's name in an old document is not enough. The review must establish the link between the articles of association, their appointment and the powers needed to enter into the particular contract.

Ask a Venezuelan lawyer to check the following, according to the company's structure:

• Appointment: which corporate body appointed the representative and how that appointment is recorded.
• Current validity: whether any replacements, revocations or subsequent decisions affect their authority to act.
• Signing requirements: whether they can act alone or need another person to sign jointly.
• Scope: whether their powers allow them to undertake the obligations set out in the franchise agreement.
• Internal approvals: whether the articles of association require a board or shareholders' resolution for the transaction.

If someone is signing under a power of attorney, request the complete document, not just the page showing their name. Its wording, formal requirements, scope and any possible revocation need to be reviewed. Not every power of attorney permits the holder to enter into any transaction or delegate powers to someone else.

For example, if the articles of association require two directors to act jointly, a single director's signature needs clarification before completion. Do not accept a verbal promise that the second signature will be added later.

3. Understand Venezuela's legal framework

Venezuela has neither a comprehensive franchise-specific law nor a general system of standardised pre-contractual disclosure equivalent to a mandatory franchise offering circular. This does not mean that the relationship falls outside the law.

The Commercial Code (Código de Comercio) provides the relevant commercial and company law rules. The Civil Code (Código Civil) governs contractual obligations and includes provisions on mandates and representation that may apply. Depending on the nature of the transaction, other general laws also come into play, including those relating to industrial property, tax and employment.

For these checks, it is particularly important to distinguish between the obligations the parties wish to agree and the person's authority to undertake them on the company's behalf. A clause stating that the signatory has sufficient authority is useful, but does not replace a review of the supporting documents.

Equally, do not automatically assume that any defect makes the entire contract void: the consequences depend on the documents, the parties' conduct and the applicable rules. The prudent approach is to resolve any uncertainty before handing over money, rather than relying on later ratification or a legal claim.

4. Make verification a condition of signing

Put together a completion file containing the reviewed versions of the contract, the company documents, any relevant power of attorney and the necessary approvals. Ask your adviser to identify any outstanding documents or discrepancies in writing.

Check again who will sign when you receive the final version. If the representative changes, their authority will need to be reviewed; clearance of the previous signatory does not automatically extend to their replacement.

The payment instructions must also be consistent with the identity of your counterparty. If you are asked to transfer money to another company or individual, require an explanation and documented authorisation establishing why that payment fulfils your contractual obligation.

Practical conclusion: before signing, you should be able to answer three questions: which company is bound, who represents it and which documents establish their authority. If any answer rests solely on a sales conversation, the review is not yet complete.