{"id":44709,"date":"2026-03-24T11:11:58","date_gmt":"2026-03-24T17:11:58","guid":{"rendered":"https:\/\/garciabodan.com\/?p=44709"},"modified":"2026-03-25T10:12:11","modified_gmt":"2026-03-25T16:12:11","slug":"costa-ricas-new-franchise-law","status":"publish","type":"post","link":"https:\/\/garciabodan.com\/en\/costa-ricas-new-franchise-law\/","title":{"rendered":"Costa Rica\u2019s new franchise law"},"content":{"rendered":"<p>Costa Rica now has a specific regulatory framework governing franchise agreements following the approval of Law No. 23,448, the Law for the Regulation and Promotion of Franchises, enacted by the Legislative Assembly.<\/p>\r\n<p>This marks the first comprehensive regulation of the franchise business model in Costa Rica, incorporating mandatory principles, pre-contractual disclosure obligations, and express rules governing the content and limits of franchise agreement provisions.<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<h2><span style=\"color: #2263aa;\">What changes going forward?<\/span><\/h2>\r\n<p>Until now, franchises operated under scattered legal provisions (intellectual property, competition, civil, and commercial law). Under the new law:<\/p>\r\n<ul>\r\n\t<li>The franchise agreement is now legally defined.<\/li>\r\n\t<li>Mandatory governing principles are established (good faith, collaboration, standardization, territorial delimitation, and bilateral exclusivity).<\/li>\r\n\t<li>The Franchise Disclosure Document (FDD) is formally regulated.<\/li>\r\n\t<li>Certain clauses deemed abusive are expressly prohibited.<\/li>\r\n\t<li>A Registry of Franchising Companies is created.<\/li>\r\n\t<li>Strict consequences are established for inaccurate or incomplete information.<\/li>\r\n<\/ul>\r\n<p>While the law enhances legal certainty, it also significantly raises compliance standards.<\/p>\r\n<p>&nbsp;<\/p>\r\n<h2><span style=\"color: #2263aa;\">Mandatory Franchise Disclosure Document (FDD)<\/span><\/h2>\r\n<p>Upon entry into force of the law, franchisors must provide detailed pre-contractual disclosure at least 30 calendar days prior to executing the franchise agreement. The FDD must include, among other items:<\/p>\r\n<ul>\r\n\t<li>The network\u2019s experience and development history.<\/li>\r\n\t<li>The number of active and terminated franchisees in recent years.<\/li>\r\n\t<li>The structure and territorial scope of the network.<\/li>\r\n\t<li>Relevant litigation history.<\/li>\r\n\t<li>Estimated initial investment.<\/li>\r\n\t<li>Essential economic terms (initial fee, royalties, contributions).<\/li>\r\n\t<li>Properly substantiated financial projections.<\/li>\r\n\t<li>Information regarding technical assistance, training, and suppliers.<\/li>\r\n<\/ul>\r\n<p>Financial projections must be based on sufficiently supported experience or studies. The provision of inaccurate information may result in contractual nullity, repayment of amounts paid, and liability for damages.<\/p>\r\n<p>&nbsp;<\/p>\r\n<h2><span style=\"color: #2263aa;\">Mandatory review of existing agreements<\/span><\/h2>\r\n<p>The law establishes mandatory minimum content for franchise agreements, including:<\/p>\r\n<ul>\r\n\t<li>Territorial scope and exclusivity conditions.<\/li>\r\n\t<li>Confidentiality and know-how protection policies.<\/li>\r\n\t<li>Technical assistance and training obligations.<\/li>\r\n\t<li>Supply, supervision, and control policies.<\/li>\r\n\t<li>Grounds for termination.<\/li>\r\n\t<li>Dispute resolution mechanisms.<\/li>\r\n\t<li>Governing law.<\/li>\r\n<\/ul>\r\n<p>It also introduces specific limitations:<\/p>\r\n<ul>\r\n\t<li>Non-compete clauses may not exceed five years.<\/li>\r\n\t<li>Post-term restrictions may not exceed one year, except for protection of non-public know-how.<\/li>\r\n\t<li>Clauses prohibiting passive sales within an exclusive territory are prohibited.<\/li>\r\n<\/ul>\r\n<p>This requires franchisors to review and adjust their current contractual models.<\/p>\r\n<p>&nbsp;<\/p>\r\n<h2><span style=\"color: #2263aa;\">A new standard of liability<\/span><\/h2>\r\n<p>The new law significantly raises the franchisor\u2019s standard of responsibility. Granting trademark rights or executing a formally structured agreement will no longer be sufficient. Franchisors must:<\/p>\r\n<ul>\r\n\t<li>Demonstrate effective transfer of know-how.<\/li>\r\n\t<li>Provide ongoing technical assistance.<\/li>\r\n\t<li>Ensure adequate training of franchisees and their personnel.<\/li>\r\n\t<li>Maintain technological and operational updates to the system.<\/li>\r\n\t<li>Deliver clear, objective, and verifiable pre-contractual disclosure.<\/li>\r\n<\/ul>\r\n<p>Failure to comply with these duties may result in direct civil liability.<\/p>\r\n<p>&nbsp;<\/p>\r\n<h2><span style=\"color: #2263aa;\">Benefits for franchisees and SMEs<\/span><\/h2>\r\n<p>From the franchisee\u2019s perspective, the law seeks to rebalance the contractual relationship and reduce the historical information asymmetry inherent in this model.<\/p>\r\n<p>It strengthens transparency at the pre-investment stage, establishes protection mechanisms against inaccurate disclosure, and provides greater certainty regarding territorial rights and exclusivity.<\/p>\r\n<p>Additionally, the law promotes the participation of small and medium-sized enterprises (SMEs) within the franchise system, facilitating their formalization and expansion under clear regulatory standards.<\/p>\r\n<p>&nbsp;<\/p>\r\n<h2><span style=\"color: #2263aa;\">What should companies do now?<\/span><\/h2>\r\n<p>We recommend an immediate assessment in three key areas:<\/p>\r\n<ol>\r\n\t<li><span style=\"color: #2263aa;\"><strong>Compliance audit review:<\/strong><\/span> existing agreements, operating manuals, training policies, territorial structure, and financial documentation.<\/li>\r\n\t<li><span style=\"color: #2263aa;\"><strong>FDD restructuring:<\/strong><\/span> Ensure that all projections are properly substantiated and supported by documentary evidence.<\/li>\r\n\t<li><span style=\"color: #2263aa;\"><strong>Preventive risk strategy:<\/strong> <\/span>Evaluate exposure to current and prospective franchisees and adjust clauses that may be incompatible with the new regulatory framework.<\/li>\r\n<\/ol>\r\n<p>In summary, Law No. 23,448 not only regulates the franchise model but redefines its legal standards in Costa Rica, moving the system toward a framework of greater transparency, formalization, and corporate accountability.<\/p>","protected":false},"excerpt":{"rendered":"<p>Costa Rica now has a specific regulatory framework governing franchise&#8230;<\/p>\n","protected":false},"author":3,"featured_media":44714,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[229,228],"tags":[288,330],"class_list":["post-44709","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","category-tender","tag-costa-rica","tag-franchise"],"acf":[],"_links":{"self":[{"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/posts\/44709","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/comments?post=44709"}],"version-history":[{"count":6,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/posts\/44709\/revisions"}],"predecessor-version":[{"id":44725,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/posts\/44709\/revisions\/44725"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/media\/44714"}],"wp:attachment":[{"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/media?parent=44709"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/categories?post=44709"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/tags?post=44709"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}