Signing a franchise agreement in Mexico: what to check

Turning your business into a franchise involves more than negotiating terms: you need to document properly who is bound by the agreement and what they are accepting. Rushing to sign can leave schedules missing, representatives without sufficient authority or conflicting versions of documents. To build clear relationships in Mexico’s franchise sector, treat completion of the agreement as a process that can be checked, not simply a signing ceremony.

1. Distinguish signing from formalities involving public authorities

In Mexico, franchising is specifically regulated by the Federal Law on the Protection of Industrial Property (LFPPI). Article 246 requires the agreement to be in writing and sets out its minimum content. Among other things, it must cover the territory, premises specifications, payments, training, technical assistance, supervision and grounds for termination.

The agreement must be signed by the parties, either personally or through duly authorised representatives. As a general rule, signatures do not need to be notarised or witnessed for the agreement to be valid. This does not remove the need to check the signatories’ authority or the formalities required for other related transactions.

Nor is prior government authorisation required to offer a franchise. Recording the agreement with the Mexican Institute of Industrial Property (IMPI) does not constitute permission to franchise, nor is it a condition of the agreement’s validity between the parties. Its potential effects and whether it is advisable should be assessed separately with specialist advice.

Do not confuse recording the agreement with registering the trade mark. These are separate matters, and neither replaces pre-contractual disclosure obligations or the agreement’s legally required content.

2. Check who is signing and whom they can bind

Before arranging the signing, prepare an identification sheet for each party. If a party operates through a company, use its exact legal name, not just the trading name displayed at the premises.

Request and review the following, as applicable:

• The company’s incorporation document and relevant amendments.
• Identification for the person who will sign.
• The document establishing their authority to act on the company’s behalf.
• The address specified for contractual purposes and contact details for notices.
• Any corporate approvals required under the company’s constitutional documents or powers of attorney.

It is not enough for someone to be a director, shareholder or head of expansion. Their position alone does not establish that they can commit to the agreed obligations. Ask your lawyer to confirm the scope of their authority and check for restrictions, joint-signature requirements or other conditions.

For example, if two directors must act jointly, one signature alone may be insufficient. You should also check your own authority to sign as franchisor: these checks are not limited to the prospective franchisee.

If a jointly and severally liable party or guarantor will be involved, expressly identify their role and check the formalities applicable to the chosen guarantee. Do not add them at the last minute as merely another signature line.

3. Agree a single final version with all its schedules

One avoidable source of disputes is signing an agreement that refers to documents which do not exist, are still outstanding or differ from those supplied. Before completion, create an index of schedules and check every reference in the main text against it.

For each document, record its title, date or version, and method of delivery. Identify which documents form part of the agreement and which are for information only. If you incorporate operational documentation by reference, make clear which version is being supplied initially and avoid vague references such as ‘the usual document’.

Carry out these checks:

• No blank spaces or details remain to be confirmed.
• The parties’ names match across the agreement and schedules.
• Amounts and dates are consistent across the documents.
• Both parties have access to all the schedules mentioned.
• The final version includes only changes that have been accepted.

Initialling pages or clearly identifying signed schedules can help provide evidence of what was accepted, but should not be presented as a universal legal requirement. What matters is being able to demonstrate the agreement’s content and the parties’ consent to it.

4. Organise completion and retain the evidence

Appoint one person to control the final version and another to check the complete set of records. Before signing, also confirm that pre-contractual obligations have been met: obtaining signatures correctly does not remedy a failure to comply with those obligations.

Agree how each party will receive its complete copy. Keep the agreement, schedules, documents establishing authority and evidence of delivery in a backed-up filing system with controlled access. Avoid leaving the only copy in a salesperson’s personal email account.

Afterwards, tell those responsible for opening the franchise which commitments were actually agreed, without unnecessarily sharing documents containing personal information.

Practical conclusion: before signing your first franchise agreement, check three things: duly authorised representatives, a complete final version and records that can be retrieved. If any are missing, resolve the issue before completion.