MEXICO Trends and Developments Contributed by: Gustavo A. Alcocer, Luis Astorga, Isabella Montero Torres and Fernanda Martínez Zolezzi, OLIVARES
Conclusion Mexico continues to offer significant opportunities for franchise businesses, but the nature of those oppor - tunities is changing and relevant market players such as multi-unit and multi-brand institutional master fran- chisees are seizing them. The traditional franchise model based on a trade mark, physical premises and a standardised operating manual is increasingly being replaced by an integrated model involving physical locations, digital sales, centralised technology, cus - tomer databases, delivery platforms and sophisticat - ed marketing channels. The principal legal challenge is therefore not sim - ply compliance with the franchise provisions of the LFPPI. It is ensuring that the franchise structure oper - ates coherently across several areas of Mexican law, including intellectual property, competition, consum - er protection, data privacy, taxation and commercial contracting. For international franchisors, the most important prac - tical lesson is that the Mexican franchise structure should be designed locally rather than treated as a translated version of an existing foreign model. Dis - closure, intellectual property, territorial rights, digital channels, competition restrictions, data governance and termination should be considered together from the beginning. As the Mexican market continues to become more digital and interconnected, franchise agreements will need to provide sufficient protection for the fran - chisor’s brand while also giving franchisees meaningful clarity regarding the economic and operational scope of their rights. Businesses that address these issues at the market-entry stage will be better positioned to manage the legal and commercial risks associated with long-term franchise expansion in Mexico.
Where a master franchise structure is contemplated, the parties should also clearly allocate responsibil - ity for local franchise agreements, disclosure, train - ing, intellectual property protection, compliance and enforcement. Supply chains, sustainability and operational resilience Supply-chain considerations are becoming increas - ingly important to franchise networks. A franchise may depend on imported products, proprietary ingredi - ents, specialised equipment or centralised suppliers. Disruptions affecting logistics, customs, availability or costs can therefore have an immediate impact across the network. Sustainability is another increasingly relevant consid - eration. Depending on the sector, franchisees may be subject to requirements concerning waste manage - ment, packaging, energy consumption, environmental permits and sourcing. International franchisors should assess whether global sustainability standards can be implemented in Mexico as drafted or whether they require adaptation to Mexican federal, state or munici - pal requirements. These issues are particularly important because the franchisor’s brand reputation can be affected by con - duct occurring at an individual franchise location. Operational standards should therefore be incorpo - rated into training, manuals, audits and contractual compliance mechanisms.
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