Argentina: Franchising Disclosure In Argentina

Last Updated: 23 October 2017
Article by Mario Eduardo Castro Sammartino
Most Read Contributor in Argentina, November 2017

Under Argentine Law, franchise agreements are governed by the Civil and Commercial Code of the Nation (Código Civil y Comercial de la Nación, or CCCN by its Spanish acronym).

The franchisor´s disclosure obligations are contained in a single provision: the Article Number 1,514, Subarticle a), of the CCCN. It reads that the franchisor must:

"a) provide, prior to the signature of the agreement, economic and financial information over the evolution of two years of units similar to the one offered in franchising, which have operated enough time, either in the country or abroad."

Constructing the above-quoted legal provision, together with the other relevant applicable provision of the CCCN, and in a way coherent with the legal system as a whole, franchising disclosure in Argentina presents the following characteristics:

1. The franchisor´s disclosure obligation is precontractual (CCCN, Article Number 1,514, Subarticle a);

2. As an obligation the franchisor must comply with before entering into any franchise agreement, the CCCN´s regulations related to preliminary dealings will apply to disclosure (CCCN, Articles Number 990 through 993), being of key importance the bona fides duty. Under Article Number 991 of the CCCN, during preliminary negotiations, and even when no offer has been made, the parties must act in good faith, so as not to frustrate the deal without justifications;

3. Under Argentine contract law and as a general principle, the provisions the CCCN sets forth apply only in the absence of parties´ stipulations. Such provisions are just default rules unless its imperative nature arises out of their way of expression, content or context (CCCN, Article Number 962). Ultimately, it will be a judge, when deciding on a concrete dispute, who will determine if a certain norm is imperative or not;

4. Specifically, in relation to Article Number 1,514, Subarticle a), of the CCCN, setting out the franchisor´s disclosure obligations, it is not clear if the same is an imperative norm or just a default rule. It does not expressly state that the parties may not agree otherwise1. Nor is it possible to just derive out of its content or context that the mere violation of such provision may turn the contract void, or that such disposition is based upon public policy principles not allowing the parties to override them by contrary agreements.

Nothwithstanding the above, and as by definition the franchise system purports to be a tested business system (CCCN, Article Number 1,512, and related provisions), in order to allow the franchisee to reach an informed business decision on entering into the agreement or not, we consider that there must always be a franchisor´s disclosure on the fundamentals of the business system that is being offered, and hence the disclosure obligation may not be entirely waived, under penalty of nullity.

However, in our opinion, the parties may agree upon the scope of the information to be provided. Deepening the analysis, one thing would be that the franchisee straightforwardly waives its right to receive the disclosure information, and thereby none is given; and another completely different thing would be to represent and acknowledge that the information produced and received is the only available for similar business units, and explained the reasons for such limited information.

Moreover, it would be key not only just disclose the information, but to provide the franchisee with certifications of such information, issued by a certified public accountant and/or auditor. And also offer the franchisee the possibility to independently verify such information, acknowledging the procedures the franchisee has effectively undertaken, or its decline to act accordingly.

Provided negotiations are conducted fairly, and all the exchanged information is the only data available to evaluate the business, complete and accurate, the disclosure obligation should be deemed met, even though the information provided does not have the exact parameters the CCCN sets forth. As long as the disclosed information is thorough and accurate, the franchisee may still decide to enter into the agreement, despite the business system has not been tested to the extent described in the CCCN2. If so, the franchisee may not challenge that consent as defective and claim later on the nullity of the agreement if the business goes wrong (CCCN, Article Number 265).

Further, under Article Number 1,067 of the CCCN, parties to a contract are prevented from contradicting any prior conduct relevant to the law. This is an application of the Civil Law principle of "nonvenire contra factum propium", or the Common Law doctrine of "estoppel".

5. The disclosed information should be provided to the franchisee with sufficient anticipation for the franchisee to properly evaluate it. As the CCCN nothing says on the issue, it should be prudent and fair to follow the rules of the Unidroit´s Model Franchise Disclosure Law (2002). This soft law, in its Article Number 3, establishes that the franchisor must give every prospective franchisee a disclosure document, to which the proposed franchise agreement must be attached, at least fourteen days before the earlier of:

(A)the signing by the prospective franchisee of any agreement relating to the franchise, with the exception of agreements relating to confidentiality of information delivered or to be delivered by the franchisor; or

(B)the payment to the franchisor or an affiliate of the franchisor by the prospective franchisee of any fees relating to the acquisition of a franchise that are not refundable or the refunding of which is subject to such conditions as to render them not refundable, with the exception of a security (bond or deposit) given on the conclusion of a confidentiality agreement."

6. As a conclusion and regarding the franchisor´s disclosure obligations, following the bona fides principle, the franchisor should make available to the franchisee as much information as possible to evaluate the deal, and disclaim in the agreement all of the issues and aspects upon which the franchisor has limited knowledge, or none at all (e.g. when the franchisor does not track the expenses of the franchise units). If all the representations made in the agreement are complete, thorough and accurate, the disclosure obligation should be deemed met. The franchisee has agreed to enter into the contract upon those facts, and the consent cannot be considered flawed. Needless to say that the franchisor will be liable when the information transmitted is false, with the intent to induce the franchisee into error.

To know more about franchising in Argentina, please, read the following posts on our Legal Blog:, and


1. Among other sources, the CCCN has followed Unidroit´s instruments on franchising´s normative definitions. In this regard, Unidroit´s Model Franchise Disclosure Law (2002) contains an express prohibition of waiving disclosure rights (Article Number 10).

2. On the scope of the information, the Unidroit´s Model Franchise Disclosure Law (2002), on the one hand, states the information to be furnished the franchisee with, and the period of time that such information should cover (the franchisor´s financial statements for the previous three years); but, on the other hand, it also prescribes that "... Franchisors, the creation of which goes back less than three years, are under an obligation to disclose the same documents prepared since they began their activity;" (Article Number 6, Sub Article (N) (i) (c). Therefore, under this model law, it is allowed to enter into franchise agreements, even though the franchisee system is new and not sufficiently tested yet.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Mario Eduardo Castro Sammartino
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions