Changes to franchise agreements in Mexico: what to agree upfront

Before buying a franchise, understanding your current obligations is not enough: you also need to know how they might change. A clause allowing manuals to be updated can have significant financial consequences. Franchise networks need to adapt their business models, but it is worth agreeing limits, procedures and responsibilities before committing your investment.

1. Understand Mexico’s rules on amendments

In Mexico, franchises are specifically regulated by the Federal Law on the Protection of Industrial Property (LFPPI). Article 246 requires franchise agreements to be in writing and to specify, among other things, the circumstances in which their terms or conditions may be reviewed and, where appropriate, amended by mutual agreement.

This makes the amendment process a central part of the legal review. It should not be reduced to a generic statement about the franchisor’s power to update the business model.

Article 245 also requires the franchisor to provide information about the state of its business at least thirty days before the agreement is signed. This advance disclosure gives you an opportunity to review the proposal, but does not replace contractual agreement on future changes.

For matters not covered by the franchise-specific legislation, the contractual rules in Mexico’s Commercial Code and Federal Civil Code are also relevant. Ask a lawyer to assess how these provisions interact with the powers to make updates included in the document you are about to sign.

2. Separate operational updates from contractual changes

A franchise needs to evolve: it may adjust customer service processes, introduce tools or change operating instructions. However, not all changes have the same implications.

Before signing, ask for the documentation to distinguish between:

• Operational updates: instructions that build on obligations already agreed, within defined limits.
• Contractual amendments: changes to rights, payments, timeframes or responsibilities that require the relevant agreement.
• Changes required by law: adjustments needed to comply with applicable rules, with arrangements also needed for implementation and costs.

Imagine that a manual introduces a new business administration platform. If it only changes how information is submitted, this could be an operational update. If it also imposes a mandatory subscription, new equipment and a long-term commitment, it introduces financial obligations that need to be assessed against the agreement.

Calling something a ‘manual update’ does not, in itself, resolve that distinction. Ask which provision authorises the change, how far that authority extends and which procedure applies. Equally, do not assume that every update requires a fresh signature: this will depend on its substance and on what has been validly agreed.

3. Check where powers to make changes may be hidden

Do not look for these powers only in the clause headed ‘amendments’. Review schedules, manuals, digital policies and references to external documents as well.

Pay particular attention to phrases such as ‘at any time’, ‘at its sole discretion’ or ‘in accordance with the policies in force’. These do not automatically make a clause invalid, but they warrant a closer review of its scope.

Prepare a table with four columns: document, power to make updates, potential impact and approval required. Include specific questions:

• Which version of each schedule forms part of the initial agreement?
• How will you receive updates, and how will receipt be evidenced?
• Is there a clear effective date?
• What happens if a manual conflicts with the agreement?
• Is your silence intended to count as acceptance?

Request sufficient access to the relevant documentation to understand your obligations, while respecting any agreed confidentiality commitments. A sales explanation is no substitute for a written rule.

4. Agree a procedure before you need it

Propose a mechanism that allows the business to adapt without leaving your commitments undefined. The aim is not to prevent the brand from evolving, but to establish an orderly decision-making process.

For significant changes, negotiate a requirement for written notice explaining the reason, the franchise units affected, the proposed date and any new obligations. Where there is a financial impact, request a breakdown of the investment required and recurring costs, together with clarity on who will bear them.

Agree reasonable implementation periods based on the complexity of the adjustment. If an urgent regulatory requirement arises, the procedure should allow it to be addressed without becoming a blanket authorisation for unrelated changes.

Where the franchise agreement needs to be amended, record consent in a written amendment identifying the clauses being replaced, when the amendment takes effect and the signatures of authorised representatives. Keep previous versions and avoid relying solely on conversations or informal messages.

In practice: before buying, make sure you can answer three questions: what can change, who must approve it and who pays? If any answer remains unclear, resolve it in writing before signing.