MEXICO Trends and Developments Contributed by: Gustavo A. Alcocer, Luis Astorga, Isabella Montero Torres and Fernanda Martínez Zolezzi, OLIVARES
warranties, consumer contracts and electronic trans - actions. These requirements become particularly rel - evant where a franchise operates through websites, applications or online marketplaces. Franchisors should consider establishing standard - ised procedures for advertising, promotional claims, price displays, refunds, warranties, customer com - plaints and online terms. Franchisees should, in turn, understand which obligations they are responsible for implementing locally and which are managed centrally by the franchisor. A December 2025 consumer-protection amendment introduced specific requirements for online services involving recurring charges. Providers must clearly disclose the frequency, amount and date of col - lection, obtain express and informed consent, give consumers at least five calendar days’ notice of an automatic renewal so they may cancel without penalty and provide a mechanism for immediate cancellation. Franchise systems using memberships or subscrip - tion models should ensure that their digital platforms, customer-service processes and contract terms com - ply with these requirements. International franchising and market entry Mexico can be an attractive jurisdiction for foreign franchisors, but international franchise systems should not assume that an agreement developed for another jurisdiction can simply be translated into Spanish and used in Mexico. The Mexican structure should be reviewed at the out - set to determine: • which entity will own the Mexican franchise rights; • which entity owns the trade marks and other intel - lectual property; • whether the arrangement is a direct franchise, master franchise, area-development arrangement or another structure; • how disclosure requirements will be satisfied; • how royalties and other payments will be struc - tured; • what Mexican tax and withholding rules apply; • whether imported products or equipment will be required;
• which local permits and regulatory approvals are necessary; • how employment and operational responsibilities will be allocated; and • how disputes, termination and post-termination rights will be handled. Tax considerations are also relevant to international structures, particularly where royalties, technical assistance fees or other payments are made from Mexico to a foreign franchisor or affiliate. The parties should evaluate Mexican withholding tax, value added tax, transfer-pricing and treaty considerations based on the specific structure. Foreign exchange issues should also be considered when the franchise agreement requires payments in US dollars or another foreign currency. Mexico does not generally impose foreign-exchange controls pre - venting ordinary cross-border royalty payments, but the parties should nevertheless address currency, payment mechanics, applicable taxes and evidence required for accounting and tax purposes. Multi-unit franchising and development structures Another relevant trend is the use of more flexible development structures. Rather than granting only individual single-unit franchises, franchisors may use area-development agreements, multi-unit develop - ment arrangements or master franchise structures to accelerate expansion. These models can be particularly useful in Mexico because of the geographic size and diversity of the market. A franchisee capable of developing several locations may provide the franchisor with a more effi - cient expansion strategy, while the franchisee may benefit from greater territorial or development rights. The principal risk is that development obligations may become disconnected from the franchisee’s actual financial and managerial capacity. Development agreements should therefore establish realistic open - ing schedules, minimum investment requirements, milestones, approval procedures and consequences for failure to develop the agreed number of locations.
46 FRANCHISING 2026
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