Territory and exclusivity
The disclosure must state whether there is exclusivity and within what radius. A new unit or online sales in the territory is one of the most common disputes.
Franchising and retail · agreements
Franchise agreements: what the law requires, what to negotiate and how to exit without litigation
A franchise begins with the disclosure document and often ends in a dispute over termination, territory or non-compete. Each stage has a legal rule and a negotiable point.
Straight answer: what Brazil's Franchise Act requires from the franchisor
The franchisor must deliver the franchise disclosure document in writing at least 10 days before the signing of any agreement or payment, with the information listed in article 2 of Law 13,966/2019: history and financial statements, relevant lawsuits, description of the business, franchisee profile, total investment, fees and royalties, territory and exclusivity, mandatory supplier purchases, transfer and succession rules, and the status of the trademark at the INPI. If the disclosure is not delivered on time or contains false information, the franchisee may seek annulment of the agreement and a refund of amounts paid.
This page is for franchisors structuring or reviewing networks, and for franchisees evaluating whether to join, renew or leave a franchise in Brazil. We serve companies throughout the State of São Paulo, Brazil, with meetings at our Paulista or Tatuapé offices or by video call, and act before the São Paulo courts (TJSP), the labor courts (TRT-2, TRT-15), the federal court (TRF-3) and administrative bodies.
Clauses that define the relationship
Royalties, fees and marketing fund
Calculation base, frequency and accounting of the fund. Charges outside the disclosure can be challenged.
Approved suppliers
Requiring purchases from designated suppliers is lawful, but the franchisor's margin on those purchases must appear in the disclosure.
Term, renewal and transfer
Conditions for renewal and for selling the unit to a third party. Unjustified refusal to renew or to approve a transfer creates disputes.
Termination and penalties
Grounds for termination by each party, penalties proportional to the remaining term and post-contractual duties such as returning materials.
Non-compete
Valid when limited in time, territory and activity. Overly broad restrictions may be reduced by the courts.
Where disputes arise
Incomplete or same-day disclosure
It is the most common ground for annulment. The franchisor must prove delivery and date; the franchisee should keep the receipt.
Revenue expectations
Projections presented as promises give rise to claims of vitiated consent. Estimates must come with assumptions and caveats.
Exit without procedure
Closing the unit without notice or continuing to operate under the brand after termination generates penalties and injunctions against use.
How the advisory works
1. Analysis of formation
Checking the disclosure, the deadlines and the consistency between disclosure and agreement.
2. Negotiating clauses
Adjusting territory, fees, renewal and termination according to the client's position in the relationship.
3. Disputes
Negotiation, mediation, arbitration or litigation over annulment, termination, non-compete and charges.
Franchisees should keep the disclosure with the date of receipt and all projections presented during the sale of the franchise. Those documents are the center of any later dispute.
Frequently asked questions about franchise agreements
Is a franchise a consumer relationship?
No. The law expressly states that a franchise is neither a consumer relationship nor an employment relationship, which removes consumer-law protection and requires careful negotiation of clauses.
Can the franchisee open a similar business after leaving?
It depends on the non-compete clause. Periods of up to two years and a defined territory are usually accepted; broad, unlimited restrictions may be reduced by a judge.
Is an arbitration clause valid in a franchise?
Yes, the law expressly allows it. Arbitration is faster but more expensive; the choice should consider the typical value of the network's disputes.
Official references and related pages
Brazilian rules of reference for franchising. The validity of each clause depends on the agreement, the disclosure and how it is performed.
About to sign, renew or end a franchise?
Send the disclosure and the agreement through the secure channel. The screening identifies critical clauses and the possible paths.