Which is the legislation governing Franchise Agreements in Colombia?

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In Colombia, there is no legislation governing Franchise Agreements. Under this understanding the franchise is known as an atypical contract, since it reflects a legal business that is not regulated by any specific law and its clauses are negotiated freely by the parties.

Accordingly, as the franchise is mainly ruled under the framework of a commercial contract, the applicable law is the general system of contracts and obligations of the Civil and Commercial Codes, which deal with the principles governing acts and contracts, and the obligations of civil law (effect, interpretation, cancellation or termination).

In accordance with clause 4 of the Colombian Commerce Code, the terms of an agreements validly executed will prevail over commercial and customs law, which can also be applicable. That is, the law and customs may be applied only in those cases there the contract is silent on the matter.

However, in practice this principle may be difficult to apply and is very case-specific, as there are many regulations –such as those setting forth legal procedures that cannot be ignored or modified by the parties by means of a private agreement– that a court might categorize as of public interest and override those agreed by the parties.

Which is the legislation governing Franchise Agreements in Colombia?