Employment responsibilities when franchising in Mexico

Turning your business into a franchise involves more than passing on recipes, processes or a brand identity. You also need to separate staff management at your company-owned outlets from the responsibilities of your franchisees. A franchise network needs shared standards, but that does not mean everyone works for the same employer. Establishing this separation before adding new outlets helps prevent disputes and misunderstandings about liability.

1. Distinguish brand standards from staff management

In Mexico, franchises are specifically regulated by the Federal Law for the Protection of Industrial Property (Ley Federal de Protección a la Propiedad Industrial, or LFPPI). Article 246 requires a written contract and covers, among other things, technical and operational training, technical assistance, and supervision and evaluation procedures.

These provisions allow you to protect consistency across the business. However, they do not override the Federal Labour Law, or any applicable social security and tax obligations. A clause declaring the parties independent does not, on its own, determine how an employment relationship will be classified: what actually happens in day-to-day operations also matters.

The practical distinction is this: you can require a drink to be prepared according to a recipe, but individual instructions, shifts, leave and disciplinary measures should be managed by the relevant employer.

Before franchising, identify where your current processes combine these two functions. If your supervisor routinely sets staff schedules directly at any branch, they will need a different procedure when visiting franchised outlets.

2. Allocate responsibilities before the outlet opens

Prepare a simple matrix showing who makes decisions, who carries them out and who receives information. It should not merely state that the franchisee ‘handles staffing’; it should describe the specific activities involved.

Include, as a minimum:

• Recruitment: who selects candidates, makes offers and signs employment contracts.
• Pay: who determines and pays wages, benefits and any other applicable payments.
• Employment administration: who manages working hours, rest periods, holidays, leave and staff records.
• Social security: who registers employees and fulfils obligations to the relevant institutions.
• Day-to-day management: who assigns tasks, addresses misconduct and handles disagreements.
• Termination of employment: who decides on and documents the end of an employment relationship, with appropriate advice.

Where the franchisee hires their own team, these decisions should remain their responsibility, both on paper and in practice. The franchisor can define the skills needed to operate the business concept without automatically presenting itself as the employer of that team.

For example, you can stipulate that someone trained to operate a particular piece of equipment must be present during service. It is then for the franchisee to organise staffing to meet that requirement while complying with employment law.

3. Align the contract, manuals and communications

Arrange for the franchise agreement and operational documents to be reviewed together. It is common for a contract to declare independence while the manual gives the franchisor powers to approve holidays or dismiss another company's employees.

The contract should specify that the franchisee will meet the employment, social security and tax obligations that apply to its staff. It is also advisable to clarify that the franchise does not, in itself, create a relationship of representation, agency or partnership between the franchisor and those employees. These statements must be consistent with both parties' conduct.

Designate an operational contact within the franchisee's business. Feedback on service or quality should be channelled through that person so they can organise corrective action, rather than turning the brand adviser into the team's day-to-day manager.

Review digital channels too. A messaging group in which the franchisor approves absences, allocates shifts and imposes disciplinary sanctions can undermine the intended separation. Establish which matters may be discussed and who is responsible for employment decisions.

4. Check that the separation works

Before opening, run through common scenarios: an unexpected absence, a service error, a holiday request and a complaint about the manager. For each case, ask who receives the report or request, who makes the decision and how it is documented.

If your employees will temporarily attend the outlet to support its opening, set out their roles and who manages them in writing. Where this support involves making staff available to another company, seek specialist advice to determine which rules apply; do not assume that the franchise agreement is sufficient.

Practical action: before taking on your first franchisee, review and confirm a matrix of employment responsibilities, then compare it with your manuals and communications. The separation must work both in the documents and during an actual shift.