Who Can Sign a Franchise Agreement in Venezuela?

A business may be ready to expand without having settled who will grant the franchise. The founder, the company operating the premises and the trade mark owner are not always the same person or entity. Before bringing members into your franchise network in Venezuela, check that each obligation will be assumed by the right party and that whoever signs has sufficient authority.

1. Identify the party that will grant the franchise

Start with a specific question: who will be legally obliged to provide the business system and the promised support? Simply giving the trading name displayed above the door is not enough.

If a company will enter into the agreement, identify its full legal name, registered office, commercial registration details and Tax Information Registry (Registro de Información Fiscal, or RIF) details. Check these against its current corporate documents, not just an invoice or a sales presentation.

Then draw up a simple outline of responsibilities:

• Who currently operates the business to be replicated.
• Who owns the trade mark or is authorised to license it.
• Who has the legal right to use and provide the manuals and other materials to be supplied.
• Who will receive payments and invoice for the relevant services.
• Who will be contractually responsible for training and assistance.

These roles may be spread across different people or entities. What matters is having a documented legal basis for delivering what has been promised. If one company grants the franchise but another controls essential rights, review the agreements between them before contracting with third parties.

You do not automatically need to set up a new company. First, seek legal and accounting advice to establish whether the existing structure can take on these obligations.

2. Check authority, not just job titles

Venezuela has no comprehensive law specifically governing franchising. Franchise agreements rely primarily on the Civil Code and the Commercial Code, alongside applicable rules on industrial property, competition, taxation and commercial activity. The absence of a dedicated law does not remove the general requirements governing representation and contracting.

The Commercial Code is particularly relevant when reviewing the incorporation, operation and representation of commercial companies. The Civil Code provides the general rules on obligations, contracts and mandates.

Being a founder, shareholder or manager therefore does not, in itself, prove that someone can bind the company in every transaction. Arrange for a review of:

• The incorporation document and articles of association, including relevant amendments.
• Appointments of directors and representatives.
• Rules on sole or joint signatures.
• Powers of attorney, where an authorised agent is involved.
• Internal approvals required for the particular transaction.

Your lawyer should check whether the company's objects and the representative's powers allow the proposed agreement to be entered into. They should also determine which formalities apply to each document.

Do not confuse identifying the signatory with establishing their authority. A copy of their identity card identifies the individual, but does not replace the documents proving their authority to act on another party's behalf.

3. Establish who will enter into the agreement on the franchisee's side

A prospective franchisee may negotiate personally but intend to operate through a company that has not yet been incorporated. Resolve this distinction before issuing final documents or accepting payments where there could be uncertainty over which party they relate to.

Make clear whether the contracting party will be an individual or a company. If it will be a company, verify its existence, details and the authority of the person signing, with the same rigour applied to the franchisor.

Avoid identifying the counterparty solely as a company ‘in formation’ without advice on who assumes the obligations while it is being incorporated and how any subsequent substitution of the contracting party would be formalised. The future company must not be treated as though it has already signed.

Also distinguish between the roles of shareholder, representative, operator and guarantor. These are different positions: signing on behalf of a company does not automatically mean personally guaranteeing its debts. If a guarantee is intended, it must be expressly assessed and documented.

These checks do not replace the candidate selection process. Their purpose is to ensure that the documents properly link the person assessed with the entity taking on the obligations.

4. Prepare a consistent set of signing documents

Before completing the transaction, assemble a file containing the relevant corporate documents, identification documents, verified evidence of authority and necessary approvals. Include the final version of the agreement and its annexes, with no essential details left blank.

Check that each party's legal name is consistent across the agreement, billing documents and payment instructions. If a third party is involved in collecting payments or providing services, document the reason for, and scope of, that involvement; do not leave it as a verbal explanation.

Finally, review the signature block: the signatory's name, the capacity in which they act and the person or entity they represent. Retain the duly executed copies and the documents supporting your checks.

Practical conclusion: before setting a signing date, confirm three things: who is taking on the obligations, who can represent them and which documents prove that authority. These checks help build a franchise network with clear responsibilities from the outset.