Buying a franchise: check the trade mark rights in Mexico

A well-known brand does not, in itself, prove that the person offering a franchise can authorise its use. Before paying to join a franchise network in Mexico, review the rights underpinning the offer. These checks can reveal expired registrations, pending applications or intermediaries without sufficient authority before you commit your investment.

1. Identify exactly which trade marks you are buying the right to use

You are not buying ownership of the trade mark: you will normally receive a licence to use it under the terms of the contract. Start by identifying exactly which names, logos and other marks will distinguish your premises, products and advertising.

Ask the franchisor for a list that includes:

• The name of each trade mark and, where applicable, its visual representation.
• The registration number, or application reference if registration is still pending.
• The owner's name and the relevant validity dates.
• The goods or services covered.
• Any additional trade marks needed to operate the franchise concept.

Then compare that list with the signage, menus, packaging and marketing materials you are shown. Registration of an earlier logo does not automatically establish that the current branding has the same protection.

Do not confuse different types of documents, either: incorporation documents establish details about the company, while a domain name identifies an internet address. Neither replaces a review of the trade mark rights. If the seller provides only these documents, ask for the trade mark file before proceeding.

2. Cross-check the documents against IMPI records

The Mexican Institute of Industrial Property (IMPI) is the authority responsible for trade mark registration. Use its public search tools and review the relevant file, seeking specialist advice where necessary. Do not rely solely on a copy of the registration certificate supplied by the seller: changes may have occurred since it was issued.

Your review should answer four questions:

Who is listed as the owner? Check that the name matches the documents provided. If ownership has been transferred, ask for supporting documents and check the status of the transfer with IMPI.

What is the status of the right? Distinguish between a pending application and a granted registration. An application does not guarantee that the trade mark will be registered. Also check renewals, any required declarations of use and any proceedings that could affect the registration.

Which activities does it cover? Trade marks are registered for specific goods or services, grouped into classes. Read the actual description, not just the class number. Assess the coverage against what your franchise outlet will actually do.

Does the protection apply in Mexico? A foreign registration does not, on its own, establish protection in Mexico. If the seller relies on an international registration, ask for evidence of its effect and status in Mexico.

Keep dated records of your searches. If a significant period passes before signing, update your checks.

3. Check that the seller can grant you a licence

The person or company signing as franchisor will not necessarily own the trade mark. They may operate under a licence or a master franchise agreement. This does not automatically indicate a problem, but it does mean you need to verify the chain of authorisations.

Ask for evidence that the owner has authorised the intermediary and that the intermediary can grant the rights being offered. Review the scope, duration and conditions of that authority, including the power to sublicense or sub-franchise. Also check the authority of the representative who will sign your agreement.

Suppose you are offered a contract that runs beyond the franchisor's own authorisation. Without a clear, documented solution, you could be relying on a renewal outside your control. A sales assurance that it is ‘always renewed’ does not remove that risk.

Mexico has specific franchise regulation: Article 245 of the Federal Law for the Protection of Industrial Property (LFPPI) links a franchise to a written trade mark licence and the transfer of technical knowledge or provision of technical assistance to ensure uniform operations. Article 246 requires a written contract containing specified minimum provisions. The law also requires information about the state of the business to be provided at least thirty days before the contract is entered into; this disclosure does not replace your own independent checks.

4. Turn your findings into conditions for investing

Ask for the contract to identify the authorised trade marks and specify who will keep the rights in force. Negotiate obligations to notify you of claims, proceedings or ownership changes that could affect your operation.

Make clear who will manage and pay for the defence against third-party claims. It is also worth agreeing what will happen if a rights issue forces you to replace signage, uniforms or packaging: do not assume those costs will be covered.

If applications are pending, documents are missing or discrepancies remain, ask your lawyer to set verifiable conditions for proceeding and, where appropriate, arrangements for refunding advance payments. These protections must be negotiated; they are not automatic guarantees that come with joining a franchise network.

Practical takeaway: before investing, establish three things: which trade marks you will use, what protection they have in Mexico and why the party signing the agreement can authorise you to use them. If any of these remains unclear, resolve it before committing your money.