Mexico - FranchisingMexico - Franchising
The Mexican market is mature and competitive but also very receptive to the franchise model, which has continued to see sustained growth in recent years. U.S. franchise concepts are well regarded in the Mexican market due to brand familiarity as well as the strong relationship between the two countries. The franchise sector in Mexico grew 9.8 percent in 2018 and experts predict that, despite economic challenges, this sector will grow by at least 10 percent by 2020. According to the Mexican Franchise Association, the franchise industry is responsible for around 6 percent of Mexico’s GDP with more than 100,000 points of sale throughout the country from over 1,500 franchise concepts, including international brands that are predominately from the United States. About 85 percent of the franchises operating in the country are Mexican brands, 10 percent are from the United States, and the remaining percentage is shared by brands from Europe and Latin America.
The food and beverage sector represents about 30 percent of the Mexican franchise market, followed by retail, and then services in the personal care, health, education and business consulting sectors. The franchise model has been particularly successful for concepts that do not require high investment fees. Concepts with investment fees ranging from USD 50,000 to USD 250,000 have more opportunities to grow in the market than high-fee models.
Traditionally, large cities such as Mexico City, Monterrey, and Guadalajara have been the first options for positioning a new franchise concept, comprising about 70 percent of the total number of franchises in country. Nevertheless, the creation or development of franchise business opportunities has also been successful in smaller cities as these regions are experiencing important economic growth and the local populations are looking for new products and brands, including international concepts.
Franchising in Mexico, as in any other country, requires a long-term commitment. U.S. franchisors must commit human and financial resources to develop a business plan (including market research) to identify the best strategy to grow in the Mexican market, as well as flexibility to adapt to the local culture. Given that Mexico is so large and diverse, it is challenging to grant just one master franchisee contract to develop the entire country. It is highly recommended to grant at least three regional rights covering Northern, Western, and Central Mexico. U.S. franchisors must support the master/regional franchisees throughout the business relationship if they want to be successful in country. One of the main complaints from franchisees is the lack of support from franchisors once the agreement is signed. Close communications with the partners, constant training, and regular visits to the country will provide good results for the franchisor/franchisee relationship.
It is important to register trademarks in Mexico to protect brands with the Mexican Institute of Industrial Property (Instituto Mexicano de la Propiedad Industrial or IMPI). According to the applicable law, a trademark must be used by either its owner, the licensee, or the franchisee of record, or it may be subject to cancellation due to non-use. Franchising and licensing agreements involving Mexican trademark applications or registrations must be recorded with IMPI. The time frame for registering a trademark in Mexico is approximately four to six months.
For more information on franchising opportunities in Mexico, please contact Commercial Specialist Martha Sanchez at Martha.Sanchez@trade.gov.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
The food and beverage sector represents about 30 percent of the Mexican franchise market, followed by retail, and then services in the personal care, health, education and business consulting sectors. The franchise model has been particularly successful for concepts that do not require high investment fees. Concepts with investment fees ranging from USD 50,000 to USD 250,000 have more opportunities to grow in the market than high-fee models.
Traditionally, large cities such as Mexico City, Monterrey, and Guadalajara have been the first options for positioning a new franchise concept, comprising about 70 percent of the total number of franchises in country. Nevertheless, the creation or development of franchise business opportunities has also been successful in smaller cities as these regions are experiencing important economic growth and the local populations are looking for new products and brands, including international concepts.
Franchising in Mexico, as in any other country, requires a long-term commitment. U.S. franchisors must commit human and financial resources to develop a business plan (including market research) to identify the best strategy to grow in the Mexican market, as well as flexibility to adapt to the local culture. Given that Mexico is so large and diverse, it is challenging to grant just one master franchisee contract to develop the entire country. It is highly recommended to grant at least three regional rights covering Northern, Western, and Central Mexico. U.S. franchisors must support the master/regional franchisees throughout the business relationship if they want to be successful in country. One of the main complaints from franchisees is the lack of support from franchisors once the agreement is signed. Close communications with the partners, constant training, and regular visits to the country will provide good results for the franchisor/franchisee relationship.
Legal Framework
Franchises in Mexico are regulated by Article 142 of the Industrial Property Law (Ley de la Propriedad Industrial or LPI) and Article 65 of its Regulations. Under Article 142 of the LPI, a franchise exists when, in conjunction with a written license to use a trademark, technical knowledge is transmitted to enable the franchisee to sell goods or render services using the operating, commercial, and administrative methods established by the holder of the trade mark, with the aim of maintaining the quality, prestige and image of the products or services distinguished by the trademark. A 2006 amendment to the Industrial Property Law provided a clearer definition of a franchise and mandated requirements for franchise agreements and standards for pre-sale franchise disclosures.It is important to register trademarks in Mexico to protect brands with the Mexican Institute of Industrial Property (Instituto Mexicano de la Propiedad Industrial or IMPI). According to the applicable law, a trademark must be used by either its owner, the licensee, or the franchisee of record, or it may be subject to cancellation due to non-use. Franchising and licensing agreements involving Mexican trademark applications or registrations must be recorded with IMPI. The time frame for registering a trademark in Mexico is approximately four to six months.
Local Association
The Mexican Franchise Association (Asociación Mexicana de Franquicias or AMF) is a private entity with over 25 years in the market. The AMF’s main purpose is to promote and develop franchising in Mexico, as well as to establish regulations to promote professionalism in the industry, and work with public and private sectors to develop, implement and promote programs to benefit the industry. It is mostly comprised of Mexican franchisors and franchisees as well as franchise consulting firms. More information about the AMF’s activities can be found at: www.franquiciasdemexico.org.For more information on franchising opportunities in Mexico, please contact Commercial Specialist Martha Sanchez at Martha.Sanchez@trade.gov.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.