MEXICO Law and Practice Contributed by: Gustavo A. Alcocer, Luis Astorga, Isabella Montero Torres and Fernanda Martínez Zolezzi, OLIVARES
established in the franchise agreement, as well as the parties’ right to seek damages and losses before a court in the event of a breach of contract. 8.4 Prohibited Provisions in Local Law There is no specific list of prohibited provisions that may not be included in a franchise agreement. How - ever, this does not mean that the parties have unre - stricted freedom to agree to any provision. Certain legal limitations apply, and provisions that exceed such limits may be deemed invalid. First, the provisions of a franchise agreements may not contravene public policy, including matters that are unlawful or contrary to good morals. Second, fran - chise agreements may also be subject to the LFCE, which is particularly relevant because provisions con - cerning pricing, exclusivity, territorial restrictions, sup - pliers, customers or distribution may be permissible or impermissible depending on their structure and effects on the relevant market. 9. Dispute Resolution 9.1 Enforcement of Foreign Judgments Foreign judgments are not automatically enforceable in Mexico. To be enforced, they must first go through a recognition and enforcement proceeding before a Mexican court, in accordance with the National Code of Civil and Family Procedure and the Commercial Code. The Mexican court will not review the sub - stance of the case or reconsider the decision made by the foreign court. Instead, it will verify that: • certain formal requirements have been met, includ - ing that the foreign court had jurisdiction under rules compatible with Mexican law; • the defendant was properly notified of the pro - ceeding and had an opportunity to defend them - selves; • the judgment is final and binding; • there are no other proceedings involving the same matter pending before a court; • enforcement would not violate Mexican public policy; and • there is reciprocity with the country where the for - eign judgment was issued.
Foreign arbitral awards are generally subject to a more straightforward and arbitration-friendly process for recognition and enforcement in Mexico. A foreign arbitral award may be recognised and enforced by a Mexican court upon submission of the duly authenti - cated original award or a certifies copy, together with the original arbitration agreement. Where required, these documents must also be accompanied by a translation prepared by an officially authorised expert. Mexico has been a party to the New York Convention since 14 April 1971. Under this framework, recogni - tion and enforcement of foreign arbitral awards may be refused in certain circumstances, including where: • the arbitration agreement was invalid or a party lacked legal capacity to enter into it; • a party was not given a proper opportunity to pre - sent its case; • the award goes beyond what the parties agreed to submit to arbitration; • there were irregularities in the appointment of the arbitrators or in the arbitration proceedings; • the award is not yet binding or has been annulled or set aside in the country where it was issued; • Mexican law does not allow the particular matter to be resolved through arbitration; or • enforcement could be contrary to Mexican public policy. 10. Payment and Taxes 10.1 Restrictions or Limits on Franchisee Fees and Royalties Mexican law does not establish a maximum statu - tory cap on royalties, initial franchise fees or service fees, nor does it impose an annual maximum on pay - ments denominated in foreign currency. The parties are generally free to agree on the amount, currency and payment frequency pursuant to the principle of contractual freedom. However, the LFPPI and its regulations require the franchisor, at the pre-contractual stage, to disclose in the franchise disclosure document the “amounts and concepts of the payments that the franchisee must pay to the franchisor” and the “general amounts of
38 FRANCHISING 2026
C HAMBERS.COM
Powered by FlippingBook