Quick summary: The contract brings together three legal components: (1) the Código de Comercio (Commercial Code) excludes commercial franchises from its agents and distributors chapter (Art. 280); (2) the Ley de Propiedad Industrial (Industrial Property Law) applies its licencia de uso de marca (trademark licence) rules (Arts. 45-47): a written licence, which is nonassignable, without sublicences and nonexclusive unless otherwise agreed; registration with RPI is optional under the 2006 amendment; (3) royalties paid to a nonresident franchisor without a permanent establishment in Guatemala carry 15% ISR (income tax), withheld by a franchisee required to keep full accounting records and remitted within the first ten days of the following month (Decreto 10-2012, Arts. 104 and 105). The template is a private document; contracts executed in Guatemala to take effect there must be in Spanish.
This is a template, not legal advice. Have a lawyer review the contract before signing, particularly its royalties, territorial exclusivity and termination clauses.
Download the Franchise Contract (Word)
The Spanish-language template covers these clauses:
- Parties and declarations: franchisor (trademark owner) and franchisee, with the trademark’s RPI registration.
- Purpose: a trademark licence (Ley de Propiedad Industrial, Art. 45), together with transfer of the operating system or know-how and technical assistance.
- Exclusivity and territory: a checkbox for an exclusive or nonexclusive licence (Art. 45 d) and the territory.
- Sublicences and assignment: expressly prohibited or permitted (Art. 45 b).
- Quality control: operating manual, inspections and standards (Art. 46).
- Entry fee and royalties: amount, calculation basis, payment frequency and currency, plus ISR withholding for a nonresident franchisor (Decreto 10-2012, Arts. 21 numeral 25, 104 and 105).
- Confidentiality of know-how.
- Term, renewal and termination, including what happens to the trademark and materials when the contract ends.
- Optional registration of the licence with RPI and responsibility for the application.
- Language, governing law and signatures, with space for notarial authentication of signatures.
Franchise Contract (Guatemala 2026)
Download Word template (.docx)Which Law Applies to a Franchise in Guatemala?
| Law | Article | What it says about franchises |
|---|---|---|
| Código de Comercio (Decreto 2-70) | Art. 280, final paragraph | The chapter on commercial agents, distributors and representatives does not apply to licences to use industrial and intellectual property or to commercial franchises |
| Código de Comercio | Art. 671 | Commercial contracts require no special formalities for validity; contracts executed in Guatemala to take effect there must be drawn up in Spanish |
| Código de Comercio | Art. 669 | Contracts are interpreted and performed according to the principles of truth and good faith |
| Código de Comercio | Art. 694 | The Código Civil (Civil Code) applies where commercial provisions are absent |
| Ley de Propiedad Industrial (Decreto 57-2000) | Art. 45 | The trademark licence must be in writing; a foreign-language licence requires legalization and sworn translation; default rules govern term, territory, assignment, sublicences and exclusivity |
| Ley de Propiedad Industrial | Art. 46 | Registration is optional; the article sets application contents if registration is chosen; the contract may include quality-control provisions; franchise contracts are also governed by this chapter within the law’s subject matter |
| Reglamento de la Ley de Propiedad Industrial (implementing regulations, Acuerdo Gubernativo 89-2002) | Art. 27 (Franquicias) | Art. 45 applies to the trademark licence within a franchise contract unless otherwise stipulated; registration requires only the licence-related part of the contract or a summary |
| Ley de Actualización Tributaria (Tax Update Law, Decreto 10-2012) | Arts. 4, 21, 104 and 105 | Payments for franchise use are royalties; 15% ISR applies to nonresident royalties without a permanent establishment, with final withholding; the franchisee’s deduction is capped at 5% of gross income, only under the Régimen Sobre las Utilidades de Actividades Lucrativas (ISR Art. 21) |
Art. 280 excludes commercial franchises from the commercial-agency chapter. The final paragraph of Art. 46 of the Ley de Propiedad Industrial brings franchise contracts within the trademark-licence chapter insofar as they concern matters regulated by that law.
What Happens if the Contract Is Silent? (Art. 45)
Art. 45 of the Ley de Propiedad Industrial establishes rules that apply unless the contract stipulates otherwise. Art. 27 of the regulations confirms their application to the trademark licence within a franchise contract. If your contract is silent, these are the defaults:
| Topic | Default rule under Art. 45 | What to agree expressly |
|---|---|---|
| Term | The licensee may use the trademark throughout its registration term, including renewals | The franchise’s own term and grounds for termination |
| Territory and products | Throughout the country and for all products or services covered by the trademark registration | The territory, premises and products or services included |
| Assignment and sublicences | The licensee cannot assign the licence or grant sublicences | Whether subfranchises or transfer of the premises are permitted, and with whose authorization |
| Exclusivity | The licence is nonexclusive: the owner may grant others | Put exclusivity in writing if you want it. An exclusive licence prevents the owner from granting other licences in the country for the same trademark and products or services, or using the trademark there itself for those products or services (Art. 45 d) |
The same article allows an exclusive licensee to bring trademark-protection proceedings in its own name as though it were the owner (Art. 45 c).
Registering the Licence with RPI Is Optional
Under Art. 46 as amended by Decreto 11-2006, registration is not required to establish the licence’s validity, assert trademark rights or for other purposes.
If you choose to register, Art. 46 requires the application to contain:
- The trademark owner’s and licensee’s names or company names and domiciles.
- The trademark or trademarks licensed and their registrations.
- The licence term, if any.
- Whether the licence is exclusive, and any agreed conditions, terms or restrictions on trademark use.
- A summary of quality-control arrangements.
Attach a copy of the licence contract or a summary signed by the parties containing that information, together with proof of payment of the corresponding fee. If the contract or summary was not executed in Guatemala, it must be duly legalized and accompanied by a sworn Spanish translation where applicable. For a franchise, Art. 27 of the regulations permits submission of only the licence-related portion of the contract.
Confirm the procedure with RPI before applying: Art. 47 of the law, amended in 2006, includes a paragraph specifically stating that, once a trademark-licence application meets the legal requirements, the Registry registers it and issues the corresponding certificate. Its preceding paragraph also describes an edict published once in the Diario Oficial at the applicant’s expense, followed by certification. Art. 26 of the regulations, which Art. 27 references for franchises, requires the relevant issue of the official gazette containing the edict before annotation. Ask RPI which procedure applies to your application. Check RPI’s tariff for the fee.
Art. 46 also provides a quality-related sanction: at an interested person’s request, and after giving the trademark owner and licensee a common hearing period of fifteen (15) days, the competent judge may prohibit the licensee’s trademark use if inadequate quality control or abuse of the licence causes or could cause confusion, deception or harm to consumers. The template includes a quality-control clause even though the law makes its inclusion optional.
Royalties: ISR When the Franchisor Is Abroad
The following withholding rules concern a nonresident franchisor without a permanent establishment in Guatemala.
| Question | Rule | Article (Decreto 10-2012, Libro I) |
|---|---|---|
| Are franchise payments royalties? | Payments for the use of trademarks, trade names, emblems, privileges or franchises, among others, are royalties | Art. 4, numeral 3, literal c) |
| What rate applies to payments to a nonresident? | 15% | Art. 104, numeral 3, literal c) |
| Who withholds? | The payer, if required to keep full accounting records; withholding is final | Art. 105 |
| When is it remitted? | Within the first ten days of the month following payment or credit, through a sworn declaration; the withholding agent issues a certificate | Art. 105 |
| Can the franchisee deduct royalties? | Yes, registered where applicable, up to 5% of gross income, only under the Régimen Sobre las Utilidades de Actividades Lucrativas (tax regime on profits from business activities, ISR Art. 21), supported by a contract establishing the amount and payment terms | Art. 21, numeral 25 |
Hypothetical example: a franchisee owing Q10,000 in monthly royalties to a franchisor without an establishment in Guatemala withholds Q1,500 (15%), transfers Q8,500 and remits Q1,500 to SAT within the first ten days of the following month. If the contract makes the royalty net of taxes, the calculation changes; have your accountant review that clause.
Entry Fees, Royalties and Termination: What the Contract Decides
Set out the entry fee, royalty amount or percentage, term and termination payments in the contract. Three general rules in the Código de Comercio matter:
- Mora (default) without a demand. Commercial obligations fall into default from the day after they become due or enforceable, without a demand. Art. 677 excepts títulos de crédito (negotiable instruments) and obligations or contracts expressly providing otherwise. Set clear payment dates.
- Standard-form contracts. If the franchisor uses a standard form, doubts are interpreted against its drafter; a waiver of rights is valid only if underlined or printed in larger or different characters (Art. 672). Additional clauses prevail over the form’s clauses even if those clauses have not been expressly set aside.
- Excesiva onerosidad (excessive hardship). Under Art. 688, only in contracts involving successive performance or deferred execution may the debtor seek termination when extraordinary, unforeseeable events make its performance excessively onerous. Termination does not affect obligations already performed or those for which the debtor was already in default. It is unavailable for aleatory contracts, or for commutative contracts where the additional burden is a normal contractual risk.
Checklist Before Signing
- Check with RPI that the trademark is registered in the franchisor’s name and covers the business’s products or services: see trademark registration.
- If the contract is in English or another language, arrange the Spanish version for Guatemala and the legalization and sworn translation required for a foreign-language licence (Art. 45 and Código de Comercio, Art. 671).
- Write territorial exclusivity into the contract if you want it: the default licence is nonexclusive.
- Define the royalty calculation basis (gross sales, net sales or a fixed amount) and whether the price includes ISR withholding.
- Attach or reference the operating manual and confidentiality agreement: see the confidentiality agreement.
- Decide whether to register the licence and who pays the fee.
For foreign parties: a licence executed in a language other than Spanish requires legalization and sworn translation. A licence contract or summary executed outside Guatemala also requires legalization and a sworn Spanish translation where applicable (Arts. 45-46). If the transaction is put into an instrumento público (notarial public instrument), the Código de Notariado provides for passport identification when the notary does not know the parties; it also provides for an interpreter appointed by a party who does not know Spanish, preferably a sworn translator. These public-instrument provisions do not impose a passport requirement on every private contract.
Related Procedures
- Trademark registration with RPI
- Confidentiality agreement (NDA)
- Professional services / independent contractor agreement
- Carta poder (letter of authorization)
Sources
- Código de Comercio, Decreto 2-70, published by the Organismo Judicial’s Archivo General de Protocolos: Arts. 280, 669, 671, 672, 677, 688 and 694.
- Ley de Propiedad Industrial, Decreto 57-2000, including amendments by Decreto 11-2006, published by RPI: Arts. 45, 46 and 47.
- Reglamento de la Ley de Propiedad Industrial, Acuerdo Gubernativo 89-2002, published by RPI: Arts. 2, 26 and 27.
- Ley de Actualización Tributaria, Decreto 10-2012, Libro I, published by SAT: Arts. 4, 21, 104 and 105.
- Código de Notariado, published by the Organismo Judicial: identification and interpreter provisions for public instruments.