Franchise refurbishments: what to agree before buying in Mexico

Buying a franchise does not mean investing in premises and equipment just once. During the contract, you may face rebranding work, equipment replacements or new technology requirements. A consistent identity is valuable across a franchise network, but maintaining it also comes at a cost. Before choosing a brand in Mexico, check how it can require you to make these investments and how much scope you will have to plan for them.

1. Identify which changes could become compulsory

Do not confuse maintenance with refurbishment. Repairing a damaged fixture keeps the premises in good condition; replacing working furniture to adopt a new brand image serves a different purpose. If the contract combines the two, you could accept a spending obligation whose scale is difficult to assess.

Ask for a list of the updates the brand can require during the contract term. It is worth distinguishing between:

• Routine maintenance: painting, repairs and upkeep of the premises.
• Replacement due to wear and tear: replacing furniture or equipment at the end of its useful life.
• Brand image changes: new finishes, shopfronts, layouts or decorative features.
• Technology upgrades: terminals, screens, cabling or equipment needed for new processes.

Ask what changes other franchisees have recently been required to make, how long they were given to carry them out and whether they had to suspend trading. Request documented examples, rather than relying solely on a verbal estimate from the sales team.

Speak to operators of long-established outlets too. Their experience may reveal requirements that those who have only recently opened have yet to face. The brand’s track record can help you assess it, but it is no substitute for contractual commitments.

2. Review the power to change standards

Mexico has specific franchise legislation. Article 245 of the Federal Law on the Protection of Industrial Property (Ley Federal de Protección a la Propiedad Industrial, or LFPPI) requires the franchisor to provide information about the state of its business at least thirty days before the contract is signed.

Article 246 also requires a written contract containing certain minimum provisions. These include the details of infrastructure investments and the circumstances in which the contract’s terms may be reviewed and, where appropriate, amended by mutual agreement. This matters when an update creates new financial obligations.

The law does not set a general cap on refurbishment spending or guarantee that the franchisor will pay. These points must be negotiated. Nor should an obligation to maintain standards be confused with unlimited permission to impose any investment.

Ask a Mexican lawyer to review the contract alongside its schedules and manuals. They should identify whether there is a power to update standards, how far it extends and how it relates to the clauses governing contractual amendments.

Warning sign: a clause requiring you to comply with any future change immediately and at your own expense, without criteria governing necessity, notice or procedure. This does not automatically mean the clause is invalid, but it does call for careful assessment before signing.

3. Negotiate a procedure and spending limits

The most useful protection is not a promise that ‘changes will be reasonable’, but a procedure whose compliance can be checked. Propose that every compulsory update be communicated in writing, with its justification, technical scope, estimated budget and deadline for completion.

Seek agreement on the following points:

• Advance notice: time to obtain quotes, arrange funding and schedule the work.
• Frequency: conditions preventing successive major refurbishments without an agreed interval between them.
• Spending limit: a reference amount or formula, with rules for approving expenditure above it.
• Exceptions: separate treatment for urgent repairs or alterations required by a public authority.
• Alternatives: the option to carry out work in stages or retain working equipment that meets the specifications.

Clarify whether the budget includes taxes, installation, dismantling, transport and disposal of materials. Also establish who bears any additional costs if the specifications change after the work has been commissioned.

These conditions are negotiating proposals, not automatic rights under the LFPPI. They should be incorporated into documents signed by duly authorised representatives. A favourable email from the sales team does not offer the same clarity as a well-defined contractual obligation.

4. Calculate the impact before agreeing

Assess each potential refurbishment as an additional investment. Beyond the cost of the work, consider days without sales, payroll costs during closure, stock that could be lost and reopening expenses. These are separate from the initial outlay to buy the franchise.

Build scenarios using quotes and clearly stated assumptions. Ask whether the update would increase capacity, reduce breakdowns or improve the customer experience; do not assume it will boost sales.

Pay particular attention to investments that could be required close to the end of the contract. Negotiate how these will be assessed when little time remains to benefit from them, without assuming that refurbishment guarantees renewal.

Practical takeaway: before buying, insist on clarity about what can change, who approves it, how much you could have to pay and how much notice you will receive. If the brand does not let you assess the scale of these obligations, you still lack essential information for making a decision.