Opening a Franchise in Mexico: Timelines and Delays

Buying a franchise does not mean you can open straight away. Between signing the contract and making your first sale, you may need to complete building work, obtain permits, install equipment and secure the franchisor’s approval. A well-coordinated opening helps protect the relationship between the parties. Before buying, check how the timetable will be set and who will bear the consequences if anything is delayed.

1. Turn the promised opening date into a timetable you can verify

A sales promise such as ‘you’ll be open in a few weeks’ is not enough to plan an investment. Ask for a schedule identifying tasks, dependencies, responsible parties and documents confirming completion.

Distinguish between three key dates: the estimated opening date, the agreed deadline for meeting each obligation and the final deadline for resolving a delay. These do not have the same effect. The contract should clarify which dates are indicative and which carry consequences if missed.

Include the following, where applicable:

• Delivery of the design plans and approval of fit-out works.
• Completion of building work and connection of utilities.
• Delivery, installation and testing of equipment.
• Obtaining the permits needed to trade.
• Staff training and availability.
• Pre-opening inspection and the franchisor’s authorisation to open.

For each task, ask what must happen before its allotted time starts to run. If equipment delivery depends on approval of the plans, an early delay could push back the entire schedule. Avoid dates that appear firm but depend on conditions that have yet to be defined.

2. Separate legal requirements from terms you need to negotiate

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

Article 65 of the Regulations under the Industrial Property Law sets out the content of this information, commonly known as the Circular de Oferta de Franquicia, or COF — the franchise disclosure document. Among other matters, it covers payments and technical assistance. Use it to compare what was offered during the sales process with the obligations that will appear in the contract.

Article 246 of the LFPPI also requires a written contract containing certain minimum provisions, including matters relating to infrastructure, training, technical assistance, payments and grounds for termination.

These provisions do not set a universal deadline for opening a franchise or provide automatic compensation for every delay. The timetable and the consequences of delays must be defined through clear agreements. Ask a lawyer to check that these terms are consistent with the contract as a whole and with the applicable commercial and civil law provisions.

3. Allocate responsibilities and calculate the cost of waiting

Not all delays have the same cause. Distinguish between those attributable to the franchisor, the franchisee, suppliers and public authorities. Where a third party is involved, identify who engages them, who must monitor their progress and who can require them to fulfil their obligations.

For example, if the franchisor must approve a floor plan, it is worth specifying how long they have to respond and how they will communicate any comments. If you must submit documents for a permit, record which documents are needed and when you must submit them. The franchisor’s approval does not replace permits required by the relevant authorities.

Next, prepare a separate budget for the waiting period. Include rent, pre-opening payroll, storage, insurance, interest and contracted services. Do not confuse these outgoings with the operating expenses of an outlet that is already trading.

Pay particular attention to when each contractual charge starts to apply: on signing, handover of the premises, installation of the system or the first sale. Also confirm when the franchise term begins. If it runs from the date of signing, a delay could reduce your actual trading period without changing the expiry date.

4. Agree on a procedure for getting the opening back on track

Before signing, negotiate what will happen if a milestone is missed. It is not enough to state that the parties will ‘seek a solution’. The procedure should include written notice, evidence of the cause, corrective measures and an updated timetable.

It is also worth agreeing on:

• A deadline for remedying failures attributable to each party.
• How charges will be handled while the outlet is unable to trade.
• Conditions for any extension of the franchise term.
• A final deadline and the options available if opening remains unfeasible.
• What happens to payments, equipment and completed work if the relationship ends.

These arrangements are not automatic rights: they must be reviewed and agreed on a case-by-case basis. For final approval, ask for objective criteria, a list of outstanding items and a response deadline. Do not treat silence as approval unless a valid, applicable agreement allows this.

In practice: before buying, obtain a signed timetable, a responsibility matrix and an estimate of the cost of waiting. If you cannot identify who must act, by when and what happens if they fail to do so, the opening arrangements are not yet sufficiently clear.