Insights on new regulations and market potential for franchisors
In the latest episode of the KGR Franchise Law Podcast, we dive into some nuances and updates regarding franchise law in Mexico with Zarina Beltran, a seasoned franchise lawyer based in Mexico City. Zarina sheds light on the vibrant franchise sector in Mexico and the recent legal updates that every franchisor should be aware of.
Zarina opens by emphasizing Mexico’s unique position in the franchising landscape, noting that the country has specific franchise laws due to its proximity to the U.S. She highlights the significance of the franchise sector, stating that it represents approximately 6-9% of Mexico’s GDP and generated over 700,000 jobs last year.
Key Requirements for Franchising in Mexico
One of the fundamental requirements for franchising in Mexico is the Franchise Disclosure Document (FDD). Zarina points out that this must be provided at least 30 business days before executing an agreement, which often surprises international franchisors accustomed to shorter timelines.
“A lot of people assume that since this is Mexico, we won’t have a specific law. But due to our proximity to the U.S., Mexico is a very interesting market for franchisors to enter,” Zarina explains.
Recent Changes in Franchise Regulations
The podcast also covers recent updates in franchise regulations that came into effect this July. Zarina discusses the new provisions that require franchisors to disclose detailed information about the number of operating units and their performance.
Additionally, franchisors must now clarify all payments that franchisees will make as well as return on investment estimates. Zarina notes,
“If the FDD was provided but the information was not truthful, then the franchisee will have the first year to demand damages and subsequently, the nullity of the agreement.”
The Future of Franchising in Mexico
As the legal landscape evolves, both franchisors and legal practitioners are navigating these changes together. Zarina expresses that while the new regulations present challenges, they also offer opportunities for growth and clarity in the franchising process.
In conclusion, understanding these complexities is crucial for any franchisor looking to enter the Mexican market. Zarina’s insights provide a valuable perspective on how to approach franchising law in a way that aligns with current legal expectations.
For a deeper dive into this discussion and more insights from Zarina, listen to or view the full episode.
If you have questions about international expansion of your franchise network, contact us to see if we can assist you. Call David B. Ramsey, Esq. at (212) 705-0816 or email [email protected].
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