Mexican Franchise Network warns over questionable return promises

Promises of returns without a clear explanation of how they will be generated should raise red flags for anyone looking to buy a franchise. Speaking in Puebla, Mexico, Francisco Lobato Galindo, vice-president of the Mexican Franchise Network (Red Mexicana de Franquicias), questioned offers combining an initial investment with promised profits and management on the investor’s behalf, according to information published by El Economista on 22 October 2026.

The warning over promised profits

Lobato Galindo said some companies sell franchises under arrangements he considers questionable. As an example, he cited offers promising a 10% return on an investment of 100,000 Mexican pesos, while also proposing to run the business on the owner’s behalf.

His concern centres on the lack of clarity about where those profits would come from. He did not name any brands in his remarks, so the warning concerns the features of the offers described rather than any particular company.

This distinction matters to the franchise community: a business proposition cannot be assessed solely on its advertised return. In the example cited by Lobato Galindo, the concern arises precisely because there is no explanation of how the business would generate the funds needed to pay the investor.

The percentage quoted should not be treated as a profitability benchmark for other franchises either. It was presented as part of an offer being questioned, not as a verified result or a general expectation for those buying a franchise outlet.

Support does not remove the buyer’s risk

The vice-president of the Mexican Franchise Network maintained that no established chain offers such returns and stressed that buyers bear the operating risk because their own money is at stake.

He explained that a chain’s backing consists of supporting the franchisee and supplying the raw materials needed to run the outlet. That support does not amount to a guarantee of profits.

For prospective investors, the warning highlights the need to separate two questions: what assistance will the brand provide, and who will be responsible for running the business? A proposal for a third party to handle everything warrants specific questions when it comes with promised profits but no detailed explanation of how they will be generated.

The point is not to dismiss franchising as a business model. Lobato Galindo endorsed it as a route into business ownership, but made his recommendation conditional on checking the brand’s track record and recognising that results depend on factors specific to each outlet.

Check the track record and outlet network before investing

Among his suggested criteria, Lobato Galindo recommended making sure the franchise has more than five outlets, whether in the same city or elsewhere. He also considered it important to verify its success before committing to a deal.

Lobato Galindo stated that only 5% of franchises in Mexico have reached maturity, with more than ten years’ experience, compared with over 50% in the United States. This comparison reflects his statement and is not an assessment of individual brands open to investment.

His recommendation to review a brand’s outlet network is no substitute for assessing each opportunity. He also noted that success depends on the location and type of franchise. In this context, he said food and drink franchises had seen the highest demand over the past five years.

Look at how the business will actually operate

The warning came during his remarks on operating conditions for franchises in Puebla. As well as researching the brand, Lobato Galindo recommended that entrepreneurs allocate funds to protecting their businesses.

This broadens the discussion beyond the purchase price: when assessing an offer, it is also worth asking how the outlet will operate, what support the chain will provide and which responsibilities will remain with the buyer. These questions are particularly relevant when the sales pitch focuses on a promised return.

Practical takeaway: before handing over any money, check the brand’s track record and outlet network, ask how the promised profits will be generated, and distinguish support from a guarantee of profitability.