How to approve premises when franchising your business in Mexico

A successful business can lose its edge if it moves into unsuitable premises. Before franchising in Mexico, turn your experience of choosing a location into an evidence-based premises approval process. In franchising, this process helps protect investment and distinguish between three separate decisions: accepting a commercial location, checking its technical viability and confirming that it can operate legally.

1. Turn your existing premises into verifiable criteria

Do not look for exact copies of your current outlet: identify the features that make it work. An eye-catching frontage may attract visitors, but it will not compensate for an inadequate electricity supply or the inability to receive deliveries.

Prepare a requirements sheet organised into three groups:

• Essential: conditions without which the business model cannot work, such as electrical capacity, ventilation, accessibility, storage or the ability to install an extraction system.
• Desirable: features that support operations, such as visibility, proximity to target customers or convenient parking.
• Adaptable: elements that can be addressed through building work, equipment or a different layout, always backed by a documented budget.

For each requirement, specify how it will be checked and who will review it. Floor area is verified through measurements; the capacity of building services requires a technical assessment; footfall needs to be observed on different days and at different times, rather than judged from a single visit.

Also distinguish between features specific to your property and the business’s actual needs. If you own your current premises, do not assume that another outlet will be able to afford any level of rent. Assess the full cost of occupation, including maintenance and other contractual charges.

2. Establish approval stages, not an informal go-ahead

Design the procedure before receiving proposals from your first franchisee. This will help prevent a recommendation sent in a message from being interpreted as final authorisation to sign a lease.

A practical sequence has four steps:

1. Initial document review. Request the location, any available plans, photographs, proposed financial terms and details of the party offering the property.
2. Commercial assessment. Examine target customers, access, visibility, nearby competition and whether permitted opening hours suit the business model.
3. Technical and regulatory assessment. Work with local specialists to review building services, property restrictions and the feasibility of obtaining the relevant permits.
4. Written decision. Issue an approval, conditional approval or rejection, setting out the reasons and any outstanding matters.

Conditional approval should explain what remains outstanding, who will resolve it and which document will confirm that each matter has been addressed. It is also sensible to set an expiry date: a change in rent, floor area or restrictions may warrant a fresh assessment.

Approving premises does not guarantee sales or profitability. Make this distinction clear without using it to avoid carrying out the review you have committed to. Keep the assessment file and give the prospective franchisee any findings that affect their investment decision.

3. Align the procedure with the contract and Mexican law

Mexico has specific franchise regulations. Article 246 of the Federal Law for the Protection of Industrial Property (Ley Federal de Protección a la Propiedad Industrial) requires the franchise agreement to be in writing. Section II includes, among its minimum required contents, the location, minimum size and characteristics of investment in the outlet’s infrastructure.

For this reason, do not leave premises approval solely to a sales presentation. The agreement and its annexes should specify the applicable requirements, who proposes the premises, who assesses them, which costs each party bears and how approval is documented. If a final location has not yet been identified, seek legal advice on how to structure its selection and the associated conditions properly.

Article 245 also requires information about the state of the business to be provided to the prospective franchisee at least thirty days before the agreement is entered into. The premises criteria and investment requirements communicated during negotiations should be consistent with the pre-contractual and contractual documentation.

The franchisor’s approval does not replace permits or authorisations from public authorities. Depending on the business activity and location, requirements relating to land use, operating permits, civil protection, signage or health authorisations will need to be checked. There is no single municipal checklist that applies to every business across the country.

4. Coordinate approval with the lease and building work

Before taking on obligations that are difficult to unwind, check that the proposed lease is compatible with the operation: permitted activities, lease term, opening hours, signage, alterations, maintenance and the landlord’s consents.

Where feasible, negotiate conditions that allow for premises approval and the granting of essential permits. With legal advice, establish what will happen to advance payments, deposits and expenses if any condition is not met; do not assume these will be recoverable.

Finally, before opening, check the fitted-out premises against the approved plans. Record any deviations and outstanding remedial work, without confusing this internal review with an official inspection.

Putting it into practice: prepare a requirements sheet, an approval workflow and a decision template. No commitment concerning premises should rest on a simple ‘looks good’.