Business continuity when franchising in Mexico: what to agree

A business may run smoothly under normal conditions but grind to a halt when its payment system fails, the water supply is cut off or its premises become inaccessible. Before franchising in Mexico, define how each outlet will respond to these disruptions. A business continuity plan protects customers and staff, reduces improvised decision-making and helps maintain trust across the franchise network.

1. Identify what prevents safe operation

Continuity does not mean staying open at any cost. It means knowing which activities can continue, which must stop and who makes that decision. Start with your business’s essential processes, rather than a generic list of emergencies.

For each process, identify the potential disruption, its impact and an acceptable alternative. An internet outage may allow some payments to be taken through an authorised procedure; a refrigeration failure may require you to stop selling affected products. Not every failure warrants closing the entire outlet, but some make it unsafe to continue serving customers.

Prepare a simple matrix with these fields:

• Event: what has stopped working and how it is detected.
• Affected activity: which service or product is compromised.
• Immediate response: what to stop, isolate or protect.
• Person responsible: who takes action and whom they inform.
• Recovery condition: what must be checked before operations resume.

Set clear limits: no alternative arrangement should breach health, civil protection or other requirements applicable to the premises. Operating permits and local conditions must be reviewed for each location.

2. Separate the operating procedure from the contractual agreement

Mexico specifically regulates franchises under the Federal Law for the Protection of Industrial Property (LFPPI). Article 246 requires a written contract and sets out minimum provisions, including technical assistance, supervision and evaluation procedures, grounds for termination and circumstances in which changes may be made by mutual agreement.

That article does not expressly require a document called a ‘continuity plan’. Nevertheless, it is worth agreeing how contractual obligations will apply during a disruption. The operating procedure sets out the response steps; the contract should clarify authority, responsibilities and financial consequences.

Seek a legal review of matters such as:

• When the franchisee may suspend service as a precaution.
• How they must report a closure and what information they must retain.
• What assistance the franchisor must provide during the disruption.
• How affected obligations and payments will be handled during the suspension.
• What happens if the inability to operate continues for an extended period.

Do not assume that every failure constitutes force majeure or that closing automatically removes payment obligations. How these issues are treated depends on the circumstances, the contract and the applicable law. Equally, avoid treating every precautionary closure as abandonment of the business.

3. Allocate resources, costs and communication channels

A procedure loses its value if it requires solutions that no one can put into action. Before offering the franchise, identify the minimum resources needed: emergency contacts, access to IT support, alternative means of communication and procedures for protecting information and property.

Distinguish between resources included in routine support and additional services. If an urgent repair, relocation or extra technical support incurs costs, agree who may authorise them, who pays and how they are documented. Do not promise round-the-clock support if your organisation cannot provide it.

Keep the reporting chain short. The outlet manager must know whom to report to, which alternative channel to use and how to escalate the issue if they receive no response. Include a backup contact so that the process does not depend on one person.

Also define how to inform the public. Notices should explain which services are suspended and when an update will be provided, without committing to a reopening date that remains uncertain. Coordinating messages prevents different channels from giving conflicting accounts.

4. Test the response and document reopening

Before bringing franchisees on board, run a simulation exercise in your existing business. Present a specific disruption and ask the team to explain what they would do, without help from the founder. Check whether they can find the contacts, identify the limits of their authority and record their decisions.

Assess the clarity of the response, not just its speed. If no one knows who authorises expenditure or checks that operations can resume, adjust the procedure. A simulation does not replace any required inspections, approvals or safety measures.

Reopening should depend on evidence appropriate to the incident: restoration of the service, a technical inspection or confirmation that conditions are safe. Where an authority is involved, its requirements must be met before operations resume.

Keep a record of the event, the measures taken, the costs and the cause identified. Use it to address recurring failures, not merely to file away what happened.

In practice: before franchising, settle three questions: who can stop operations, who provides the resources and support for the response, and what allows the outlet to reopen. A clear action sheet, backed by the contract, is worth more than a vague promise of support.