How to Agree Changes to Your Franchise in Mexico

When franchising your business in Mexico, documenting how it operates today is not enough: you also need to agree how it can evolve tomorrow. A new payment system, a brand refresh or different equipment may improve operations, but can also require unexpected investment. Setting rules for change in the initial contract helps build a franchise network with clear expectations and sustainable relationships.

1. Distinguish an operational update from a contractual change

Before offering your franchise, classify the changes you might need to make. They should not all follow the same procedure, nor can they all be imposed through a simple notice.

A practical classification includes:

• Routine operational adjustments: clarifications to procedures, working templates or cleaning sequences that do not alter the agreed financial obligations.
• Changes requiring investment: equipment replacement, refurbishments, technology migrations or new mandatory tools.
• Contractual changes: amendments to payments, rights, time periods or other terms agreed between the parties.

This classification is a management tool, not a set of categories established by law. Its value lies in identifying what can be updated under the existing agreement and what requires a further agreement.

For example, reorganising a checklist is not the same as requiring the purchase of an oven. Even a seemingly minor update can have financial consequences if it requires more staff or an additional subscription. Assess its actual impact, not just the label you give it.

2. Establish a mechanism that complies with Mexican law

Mexico has specific franchise legislation. Article 246 of the Federal Law for the Protection of Industrial Property (Ley Federal de Protección a la Propiedad Industrial) requires franchise contracts to be in writing. Paragraph X states that the contract must include the circumstances in which its terms or conditions may be reviewed and, where appropriate, amended by mutual agreement.

A blanket authorisation to ‘change any rule at any time’ is therefore no substitute for a carefully defined contractual mechanism. Nor should updates to manuals be used to introduce obligations that contradict the signed agreement.

Ask your legal adviser to ensure the contract specifies:

• The circumstances in which a review may be proposed.
• Who may submit a proposal and through which channel.
• What information must accompany it.
• How acceptance will be documented, where required.
• When the change will take effect and what transitional arrangements will apply.
• What procedure will be followed if no agreement is reached.

Article 245 also requires prospective franchisees to receive information about the state of the business at least thirty days before the contract is signed. Without turning this exercise into a disclosure guide, check that planned investments and updates are consistent with the pre-contractual information: do not promote a stable business format if you already plan to replace its essential equipment.

3. Define who pays and how the investment is justified

Before making an improvement mandatory, prepare an impact assessment. It should explain the problem being addressed, the outlets affected, the resources needed and the alternatives considered.

Include the estimated total cost, not just the purchase price. A technology migration may involve installation, training, licences, a temporary drop in productivity and cancellation of previous services. A refurbishment may require permits or days of closure.

Make an explicit distinction between:

• Costs to be covered by the franchisor.
• Costs to be borne by the franchisee under the agreement.
• Support or financing subject to specific conditions.
• Amounts that remain estimates and items for which quotations are still pending.

If you present potential savings or sales improvements, explain the assumptions and avoid treating them as guaranteed results. Keep the evidence supporting the proposal.

It is also worth taking recently purchased equipment into account. You could propose periods during which different versions can be used alongside one another, phased replacements or allowances for previous investment. These options must be assessed and agreed on a case-by-case basis; they are not automatic statutory rights.

4. Document approval and manage the transition

Create a file for each significant change. Bring together the proposal, its justification, the budget, feedback received, the decision and the timetable. Where contractual terms are amended, formalise the relevant agreement through authorised representatives; do not rely solely on informal messages.

Then circulate a single final version, clearly identifying:

• What is changing and what remains the same.
• Which outlets are affected.
• Who will coordinate implementation.
• Which documents are being replaced.
• How justified delays or difficulties will be handled.

Keep acknowledgement of receipt separate from acceptance: confirming receipt of a document does not necessarily mean consenting to new obligations. Retain both records where necessary.

If a disagreement arises, follow the agreed procedure and seek legal review before imposing consequences. A proposal that has not been accepted should not automatically be treated as an unfulfilled obligation.

Practical conclusion: before bringing franchisees on board, prepare a change matrix and a review clause that are consistent with one another. For each change, answer four questions: what is changing, who pays, who must approve it and when does it take effect?