Franchise Disclosure in Mexico: How to Review the COF Before You Buy

Before joining a franchise network, you need information that allows you to assess what you are actually buying. Mexico’s franchise disclosure document, known as the circular de oferta de franquicia or COF, serves that purpose: it is not simply a sales brochure. Reviewing it systematically helps you identify omissions, check promises and decide whether to proceed before taking on any obligations.

1. Understand what Mexican law requires

Mexico has specific franchise regulations. Article 245 of the Federal Law on the Protection of Industrial Property (LFPPI) requires anyone granting a franchise to provide information about the state of their business at least thirty days before entering into the agreement. Ask your lawyer to confirm how this statutory period is calculated and set a signing date that complies with it.

The required information is set out in Article 65 of the Regulations under the Industrial Property Law, which apply insofar as they do not conflict with the LFPPI. In practice, this information is usually compiled in the COF. What matters is not whether the document carries that title, but whether it contains the required information and is delivered on time.

This obligation also applies to anyone acting as a franchisor under a master franchise arrangement. It does not disappear because the brand is foreign or because an intermediary handles the discussions.

The COF does not need to be registered with the Mexican Institute of Industrial Property (IMPI) before the franchise is offered. You should therefore not mistake its delivery for government approval of the investment or a guarantee of profitability.

2. Check that the information is complete

Draw up a checklist and identify where each item appears. The regulations require technical, economic and financial information covering:

• The franchisor’s name or registered business name, address and nationality.
• A description of the franchise and how long the original franchisor and, where applicable, the master franchisor have been in business.
• The intellectual property rights involved.
• The amounts and purposes of payments you must make to the franchisor.
• The types of technical assistance and services the franchisor will provide.
• The geographical territory in which you will operate.
• Whether sub-franchises may be granted and the applicable requirements.
• Obligations relating to confidential information.
• More generally, the rights and obligations arising from the franchise.

Do not assume an item has been addressed simply because its heading appears. Phrases such as ‘the brand’s usual fees’ or ‘comprehensive support’ do not explain what they cover. Ask for the relevant charges, conditions and services to be specified.

Also distinguish between the minimum legally required content and additional documents for your assessment. You can request financial statements, explanations of business assumptions or information about outlets that have closed. However, do not treat all these documents as expressly required by the regulatory list. If they are withheld, consider how far that refusal limits your ability to make an informed decision.

3. Check the claims, not just the pages

Create a table with four columns: the claim in the COF, available evidence, outstanding question and response received. The aim is to turn a general reading into specific checks.

For example, if the business claims to have a long track record, ask whether this refers to the age of the company, the brand or the length of time it has operated as a franchise. These are not equivalent measures.

If services are described as included, check that they do not later appear as optional extras at an additional cost. If financial projections are provided, ask for the underlying assumptions and distinguish historical results from estimates. A figure presented during the sales process does not, in itself, become a contractual guarantee.

Compare the COF with the commercial proposal and draft agreement as well. A significant inconsistency calls for written clarification before you proceed, not a verbal explanation such as ‘that’s how we always do it’.

Keep the versions you receive and record their dates. If a substantial correction is made, seek advice on its implications for the information supplied and the signing timetable. Do not assume that every amendment automatically restarts the statutory period, or that it has no consequences.

4. Keep proof of delivery and understand your rights

Save the delivery email, its attachments and the corresponding acknowledgement of receipt. If you sign an acknowledgement, check that it describes the documents you actually received and bears the correct date. Do not agree to backdate it to accommodate an early signing.

Receiving information does not mean approving it. Review any wording that seeks to turn an acknowledgement of receipt into confirmation that the information is accurate or sufficient, or into a waiver of claims.

Article 245 of the LFPPI provides that false information may give grounds to seek a declaration that the agreement is void and claim damages. It sets a period of one year from the date the agreement is entered into for exercising that right; after that, it provides only for an action to have the agreement declared void. Its application requires legal assessment and evidence: it does not mean an automatic refund.

Practical conclusion: do not treat the COF as a mere receipt-signing formality. Use it as a checklist of verifiable claims and resolve important questions before committing your investment.