Franchising in Venezuela: agreeing the owner’s level of involvement

Buying a franchise does not necessarily mean acquiring a business that can run without you. Some models require the owner to manage operations; others allow you to hire a manager. Before entering the Venezuelan franchise market, clarify how much involvement the brand actually requires and turn that expectation into a clearly defined obligation that fits your availability and budget.

1. Distinguish between investment, management and physical presence

The phrase ‘active participation’ may sound reasonable, but it leaves too many questions unanswered. Does it mean working at the premises every day, monitoring performance or being available for important decisions? Each interpretation involves a different commitment.

Ask for a written description of the franchisee’s role and check it against the contract. It helps to separate three functions:

• Ownership and investment: providing funds and bearing the business risks.
• Management: approving budgets, organising the team and taking responsibility for compliance with standards.
• On-site operations: running the outlet, opening or closing, supervising shifts and handling day-to-day issues.

One person may perform all three roles, but this should not be taken for granted. Ask which responsibilities cannot be delegated and which can be assigned to employees or service providers.

If you buy through a company, also identify who is expected to provide this commitment: a particular shareholder, the company’s representative or a designated operations manager. An obligation imposed on the company should not be confused with an unlimited personal commitment by one of its shareholders.

2. Place the requirement within Venezuela’s legal framework

Venezuela has neither a comprehensive franchise-specific law nor a general statutory pre-contractual disclosure regime equivalent to those in countries that expressly regulate this area. That does not mean the relationship falls outside the law.

The Civil Code sets out the general rules on obligations and contracts, while the Commercial Code governs the relevant commercial aspects. Depending on the activity and the terms of the agreement, rules on intellectual property, competition, taxation and administrative permits may also apply.

The owner’s required involvement must be assessed within that framework and the contract, rather than treated as a uniform obligation across all franchises. Do not assume that buying automatically gives you the right to delegate all management, or that a brand’s commercial requirement is the same as a legal obligation.

The Code of Ethics for Franchising in Venezuela, associated with Profranquicias, is a self-regulatory instrument, not national legislation. It provides for pre-contractual information through the Circular Uniforme de Oferta de Franquicia (Uniform Franchise Offering Circular). Check whether it applies through membership or incorporation into the contract; it should not be confused with a government register.

If you hire a manager, the employment relationship should be reviewed under the Organic Law on Labour and Workers (LOTTT). The brand’s approval of the candidate does not replace the employer’s responsibilities under employment law.

3. Agree how you can delegate and replace the person in charge

If the model allows you to operate through a manager, avoid relying solely on informal permission. The contract should set out the approval procedure and criteria.

Propose documenting the following points:

• The experience, training and availability required of the person in charge.
• The documents needed to put forward a candidate.
• The franchisor’s response deadline and how its decision will be communicated.
• Objective grounds for rejecting a candidate and the option to propose another.
• Training required before taking up the role and who pays for it.
• The manager’s authority and decisions reserved for the franchisee.

Also distinguish between a permanent replacement and a temporary absence. Illness, holidays or a family emergency may require someone to take charge temporarily, without this amounting to a transfer of the franchise.

For example, you could propose a notification and temporary appointment procedure for short absences, with a fuller approval process for a permanent change of manager. These are options to negotiate, not automatic rights granted by a special law.

Delegating tasks should not leave any doubt about who remains accountable to the franchisor. Define which obligations the franchisee company retains and avoid ambiguous personal commitments by the manager or shareholders.

4. Check whether the required involvement fits your budget

Before deciding, prepare two scenarios: one in which you run the outlet yourself and another in which you need to hire an operations manager. Include pay, employment-related obligations, training, cover for absences and supervision time.

Put a value on your own work too. If the business only looks viable because you assign no cost to the owner’s long working hours, you need to revisit the financial proposal. Apparent profitability may conceal a demanding job rather than an investment compatible with other activities.

Compare these scenarios with your existing commitments. Having another business or job is not necessarily incompatible, but it may conflict with the specific obligations you are about to sign up to.

Practical conclusion: before buying, put in writing who will run the business, how involved you must be and how absences will be covered. If the required commitment does not fit your life or resources, resolve that mismatch before committing.