I. Economic data

A. Macro-economic data
 
- General data[1]
Population 2021: 126,705,138 inhabitants
Area: 1,958,201 km2
Density: 64 inhabitants/km2
GDP (nominal) 2022: $1,465.854 billion[2]
GDP/capita 2022: $11,496.5[3]
GDP (PPP) 2022: $2,843.114 billion[4]
GDP (PPP)/capita 2022: $22,298.2[5]
Growth rate 2022: 3.1%[6]
GNI/capita (PPP) 2021: $19,740
HDI 2021: 0.758 (5th)
Literacy rate: 95%[7]
Life expectancy 2022: 70.5 years
 
- Policy[8]

Mexico is a presidential republic made up of 31 states and a federal district (Mexico City)[9].
 
The President of the Mexican Republic is elected for a non-renewable six-year term by direct universal suffrage in a single round, by relative majority. At the time of writing, the President of the Mexican Republic is Andrés Manuel Lopez Obrador, of the Morena party (left).
 
Legislative power is embodied by Congress, made up of the Chamber of Deputies (500 representatives elected by direct universal suffrage every three years) and the Senate (4 senators per federal entity (128 members)).
 
The President's program focuses on battling corruption, insecurity and inequality.
 
The next presidential elections will be held on June 2, 2024, and former Mexico City mayor Claudia Sheinbaum will represent the presidential party.
 
In terms of foreign policy, Mexico was elected as a non-permanent member of the United Nations Security Council for the years 2021-2022. This was the 5th time the country had been elected as a non-permanent member of the UN Security Council.
 
Mexico is also seeking to broaden its oversees partners, in order to become more independent from the United States of America.
 
- Economic development[10]
 
Mexico is the 15th largest global economy and is a member of the G20.
 
Mexico experienced a deep recession in 2009, caused by the subprime crisis. After recovering, Mexico experienced another period of recession, due to the Covid-19 health crisis, with a contraction of -8.5% in 2020. From 2021, Mexico returned to growth, with an increase of 5%.
 
In 2022, Mexico returned to its pre-Covid 19 health crisis level[11].
 
Unemployment is fairly low in Mexico, with only 2.8% of the working population unemployed[12]. On the other hand, the Mexican inflation rate is 7.99%.
 
Foreign trade makes a significant economic contribution, accounting for 80% of GDP. Most of this trade is with NAFTA countries and the United States[13].
 
- Resources[14]
 
Mexico's resources are mainly hydrocarbon (gas, oil), mining (gold, silver, copper, lead, zinc) and agricultural (coffee, sugar, corn, orange).
 
By 2020, tourism had generated $11.4 billion in revenue in Mexico.
 
Agriculture accounts for 3.9% of GDP and employs 12.4% of the working population. Mining and industry contribute 30.8% of GDP and employ 26.2% of the workforce. Finally, the service sector accounts for 65.3% of GDP and employs 61.4% of the working population.
 
- Population[15]
 
Mexico is the most populous Spanish-speaking country in Latin America, and the 2nd most populous country in Latin America, after Brazil. The vast majority of the Mexican population lives in cities. In fact, 81% of the population is urban.
 
Mexico has the largest Amerindian population in Latin America (14%).
 
Mexico's ten most populous cities are Mexico City (9,209,944 inhabitants), Tijuana (1,922,523), León (1,721,215), Puebla (1,692,181), Ecatepec de Morelos (1,645,352), Juárez (1,512,450), Zapopan (1,476,491), Guadalajara (1,385,629), Monterrey (1,142,994) and Netzahualcoyotl (1,077,208)[16].
 
- Foreign investment
 
The Economic Partnership, Political Coordination and Cooperation Agreement signed in 1997 between the European Union and Mexico, which came into force in 2000, facilitates trade between Mexico and the bloc.
 
Mexico welcomed $35.2 billion in foreign direct investment in 2022, making it one of the world's top recipients of foreign direct investment, according to UNCTAD[17].
 
Mexico's main trading partner is the United States of America.[18]
 
B. Economic data specific to franchising
 
- Historical background
 
Franchises were first established in Mexico in the 1970s. The first international franchise to open in Mexico was McDonald's, in 1985. Since then, the growth of franchises has been meteoric, with an increase of +845% between 1985 and 1994[19].
 
- Institution
 
Mexico’s Mexican Franchise Association, created in 1989, aims to promote and develop the franchise sector in the country. The Mexican Franchise Association set up a National Franchise Award 2023 and has therefore launched a call for entries, which closed on February 13, 2024. The results were announced on March 6, 2024 in Mexico City[20].
 
- Trade shows
 
From March 7 to 9, 2024, the 47th International Franchise Exhibition was held[21]. The show featured over 150 national and international exhibitors and welcomed over 12,000 visitors[22].
 
- Statistics[23]
 
Mexico boasts over 90,000 sales outlets and more than 1,300 franchise networks.
 
The sectors most represented in franchising are food (32% market share in franchising), retail (10.2% market share), services (7.8%), health (7.5%) and education (7.3%).
 
The fuel sector, particularly via service stations, has been expanding since 2014.[24]
 
Sales outlets are mainly located in major cities such as Mexico City, Monterrey and Guadalajara, which are home to 70% of all franchised businesses.
 
On average, only 25% of SMEs survive more than two years. 80% of companies (of all sizes) fail before reaching their 5th year[25].
 
- Contract content
 
On average, investments to join a franchise network range from $50,000 to $250,000[26].
 
- Economic impact
 
Franchising accounts for around 6.5% of Mexican GDP[27]. The franchise sector creates over 900,000 jobs in Mexico[28].
 
- International[29]
 
The franchise sector is largely national, with 85% of brands from Mexico. 10% of brands come from the United States. The remaining 5% are European and Latin American brands.
 
Some twenty Mexican franchise brands have expanded internationally.
 
II. Legal information
 
A.Legal information directly related to franchising
 
- Applicable legislation
 
There is no specific legislation governing franchising. However, franchising is defined by Section 245 of the Industrial Property Act[30]. Under this section, a franchise exists when the franchisor grants, in writing, a license to use a trademark, and transmits technical knowledge and assistance enabling the franchisee to produce or sell goods or provide services in a uniform manner, according to the operational, commercial and administrative methods established by the trademark owner, in order to maintain the quality, prestige and image of the brand.
 
Under this section, a franchise agreement must be in writing.
 
The same section requires the franchisor to disclose pre-contractual information to the franchisee.
 
- Pre-contractual information
 
Section 245 of the Industrial Property Act specifies that the franchisor must provide the franchisee with information on the state of their business at least 30 days before signing the franchise agreement.
 
The Implementing Regulations of the Industrial Property Act[31] list precisely the information that must be provided to the franchisee.
 
Section 65 of the Implementing Regulations of the Industrial Property Act specifies that the franchisor must provide prospective franchisees with the following information:
 
- the name, corporate name, address and nationality of the franchisor;
 
- franchise description;
 
- the length of service of the initial master franchisor and, where applicable, the master franchisee of the business being franchised;
 
- intellectual property rights involved in the franchise;
 
- the amount of the franchise fees;
 
- the type of technical assistance and services that the franchisor must provide to the franchisee;
 
- the geographical operating limits;
 
- the franchisee's right to grant or refuse to grant sub-franchises to third parties and, if applicable, the conditions under which it can do so;
 
- the franchisee's obligations with regard to confidential information provided by the franchisor.
 
- Contract performance
 
Rights and obligations derive from the franchise agreement, in accordance with Section 65 of the Implementing Regulations of the Industrial Property Act.
 
However, Section 246 of the Industrial Property Act specifies that the franchise contract must contain the following provisions:
 
- the geographical area in which the franchisee will carry out the business activities covered by the
contract;
 
- location, minimum size and characteristics of infrastructure investments;
 
- inventory, marketing and advertising policies, as well as provisions relating to the supply of goods and the conclusion of contracts with suppliers;
 
- policies, procedures and conditions relating to reimbursements, financing and other consideration to be paid by the parties under the conditions agreed in the contract;
 
- criteria and methods for determining franchisee profit margins or commissions;
 
- the characteristics of the technical and operational training of the franchisee's personnel, as well as the method or form in which the franchisor will provide technical assistance;
 
- criteria, methods and procedures for monitoring, informing, assessing and qualifying performance, as well as the quality of services provided by the franchisor and franchisee;
 
- sub-franchising provisions, if any;
 
- grounds for terminating the franchise agreement;
 
- the circumstances in which the terms and conditions of the franchise agreement may be reviewed and, where appropriate, modified by mutual agreement.
 
Section 246 states that, unless otherwise specified, the franchisee is not obliged to transfer its assets to the franchisor or its representative at the end of the contract.
 
Section 249 of the Industrial Property Act specifies that the parties may not unilaterally terminate the franchise agreement, unless the franchise agreement has been entered into for an indefinite period, or there is a valid ground for requesting termination. In the event of early termination of the contract, the parties must comply with the contractual provisions concerning the grounds for termination, failing which they will be liable to pay contractually agreed penalties, or damages if no penalties were contractually agreed.
 
- Jurisdiction and applicable law
 
Mexico has ratified the New York Convention on International Arbitration[32], facilitating the recognition and enforcement of foreign arbitral awards made in the territory of States Parties.
 
Mexico has also signed up to the 1985 UNCITRAL Model Law on International Commercial Arbitration, with its 2006 amendments. The purpose of the UNCITRAL Model Law on International Commercial Arbitration is to modernize the laws of member countries, in order to take account of the characteristics and needs of international trade in arbitration proceedings[33].
 
- Trademarks
 
Section 10 of the Implementing Regulations of the Industrial Property Act specifies that the application for registration of a franchise must state the name or company name of the franchisor and franchisee, as well as the latter's nationality and domicile. The application for registration must be accompanied by an original or certified copy of the franchise agreement. This copy must contain the signatures of the parties to the contract and may omit the contractual provisions relating to royalties and other consideration to be paid by the franchisee; those relating to confidential information, forms or means of distribution and marketing of products and services, as well as the technical information appendices included therein. Registration may be applied for by either party.
 
The application for registration must be filed with the Mexican Institute of Industrial Property. Under Section 178 of the Industrial Property Act, once registered, a trademark is protected for ten years from the date of grant, and may be renewed.
 
Mexico has ratified the Protocol Relating to the Madrid Agreement concerning the International Registration of Trademarks. The Madrid Agreement enables companies to obtain trademark protection in up to 130 countries by filing a single international application, in a single language, with the World Intellectual Property Organization (WIPO). Under Article 6 of the Madrid Agreement, trademark registration is valid for 20 years.

In Mexico, trademark applications can be domestic or derived inter alia from international registrations. The country does not allow multiclass trademark registrations. The examination process ensures compliance with legal requirements. Use is not required to achieve registration, but a mandatory declaration of use must be filed within the third year from the granting anniversary; otherwise, the registration will be automatically cancelled. To develop a franchise in this country, it is advisable to cover "Business assistance relating to franchising" that is accepted in class 35, as are retail services. Recording a franchising agreement is not compulsory, but it is highly recommended that a license of use in favor of the franchisee be recorded at the MTO. The agreement to be recorded must be translated into Spanish, with no further legalization by Apostille required.
 
B. Peripheral legal data
 
- Competition law
 
Competition law is regulated by the Federal Law on Economic Competition[34]. Chapter II of the Federal Competition Act prohibits monopolistic practices. According to Section 53 of the Federal Economic Competition Act, illegal monopolistic practices include contracts, agreements or arrangements between competitors which have as their aim or effect:
 
- fixing, increasing, coordinating or manipulating the sale or purchase price of goods or services provided or requested in the markets;
 
- establishing a ban on the production, distribution, processing or marketing of goods or services;
 
- limiting the acquisition of goods or the provision of a service;
 
- dividing, distributing, allocating or imposing segments of an actual or potential market for goods or services according to a specific or determinable group of customers or suppliers, or according to a time period;
 
- drawing up, organizing or coordinating bids or abstentions relating to calls to tender, competitions or auctions;
 
- exchanging information for the purpose of achieving one of the aforementioned effects.
 
These monopolistic practices are null and void.
 
The Federal Commission for Economic Competition is responsible for enforcing competition law in Mexico.
 
- Personal data
 
Mexico has enacted legislation regulating personal data rights. This is the Federal Law for the Protection of Personal Data in the Possession of Individuals, enacted in 2010[35].
 
Personal data is defined as any information relating to an identified or identifiable natural person (Section 3 of the Federal Law for the Protection of Personal Data in the Possession of Private Individuals).
 
Under Section 6 of the aforementioned law, those responsible for processing personal data must respect the principles of lawfulness, consent, information, quality, purpose, fairness, proportionality and responsibility.
 
The data subject will have rights of access, rectification, cancellation and objection (Sections 22 and 28).
 
The National Institute for Transparency, Access to Information and the Protection of Personal Data is the competent authority for ensuring compliance with the federal law on the protection of personal data held by private individuals, receiving complaints and, if necessary, imposing sanctions.
 
- Special provisions for foreign investments
 
In principle, foreign investment is free in Mexico. Foreign investment is governed by the Mexican Constitution and the Foreign Investment Act[36].
 
Pursuant to Section 2 of the Foreign Investment Act, foreign investments include:
 
- the participation of foreign investors, whatever the percentage, in the share capital of Mexican companies;
 
- investments made by Mexican companies in which foreign a shareholder holds a majority stake;
 
- the participation of foreign investors in activities set out in the Foreign Investment Act.
 
Section 3 of the law states that investments made by foreigners with permanent resident status are considered Mexican investments.
 
Foreign investments may be made in any proportion in the capital of Mexican companies. Foreign investments may also be made with a view to acquiring fixed assets, engaging in new areas of economic activity or manufacturing new product lines, opening and operating establishments, and expanding or relocating existing establishments (Section 4 of the Foreign Investment Act).
 
Section 5 of this law lists the activities that may not be subject to foreign investment. These include activities related to hydrocarbons (e.g., oil exploration and extraction), control of national electricity, nuclear power and postal services.
 
Main websites
 
-Intellectual property: https://mxmarks.com/trademark/impi/;
-Mexican Franchise Association: https://amfranquicias.mx/;
-Personal data: https://home.inai.org.mx/;
-Competition: https://www.cofece.mx/;
-National Institute of Statistics and Geography: https://www.inegi.org.mx/;
-Legislation: https://web.diputados.gob.mx/inicio;
-World Bank: https://www.banquemondiale.org/fr/home.

[1] Unless otherwise stated, the data below is taken from the Atlas socio-économique des pays du monde, Larousse, 2024 edition.
[2] https://donnees.banquemondiale.org/indicator/NY.GDP.MKTP.CD?locations=MX
[3] https://donnees.banquemondiale.org/indicator/NY.GDP.PCAP.CD?locations=MX
[4] https://donnees.banquemondiale.org/indicator/NY.GDP.MKTP.PP.CD?locations=MX
[5] https://donnees.banquemondiale.org/indicator/NY.GDP.PCAP.PP.CD?locations=MX
[6] https://www.tresor.economie.gouv.fr/Pays/MX/face-a-la-recession-economique-quelle-sortie-de-crise-pour-le-mexique#:~:text=According%20to%20the%20National%20Institute%20of,WEO%20October%2022).
[7] https://donnees.banquemondiale.org/indicator/SE.ADT.LITR.ZS?locations=MX
[8] Unless otherwise stated, the information below is taken from https://www.diplomatie.gouv.fr/fr/dossiers-pays/mexique/presentation-du-mexique/#:~:text=Policy%20int%C3%A9terior,and%20%C3%A0%20the%20majorit%C3%A9%20relative.
[9] Atlas, socio-economic of the countries of the world, Larousse, 2024 edition
[10] Unless otherwise stated, the information below is taken from https://www.diplomatie.gouv.fr/fr/dossiers-pays/mexique/presentation-du-mexique/#:~:text=Quinzi%C3%A8me%20%C3%A9economy%20global%20and%20dixi%C3%A8me,Am%C3%A9rique%20latine%20apr%C3%A8s%20le%20Br%C3%A9sil.
[11] https://www.tresor.economie.gouv.fr/Pays/MX/face-a-la-recession-economique-quelle-sortie-de-crise-pour-le-mexique
[12] https://en.www.inegi.org.mx/
[13] Atlas, socio-economic of the countries of the world, Larousse, 2024 edition
[14]Atlas, socio-economic of the countries of the world, Larousse, 2024 edition
[15] Unless otherwise stated, the information below is taken from the Atlas socio-économique des pays du monde, Larousse, 2024 edition.
[16] https://www.inegi.org.mx/app/scitel/Default?ev=9
[17] https://www.gob.mx/cms/uploads/attachment/file/846308/20230531_FR._Presentaci_n_Desarrollo_del_Sur_Sureste_CIIT_REVISADA.pdf
[18] https://www.tresor.economie.gouv.fr/Pays/MX/mexique-le-dynamisme-du-commerce-exterieur-se-maintient-malgre-des-perspectives-economiques-incertaines
[19] https://www.franchise-land.com/imgs/files_doc/avril-2011-l-officiel-de-la-franchise-la-franchise-au-mexique-1795-0.pdf
[20] https://amfranquicias.mx/asociacion-mexicana-de-franquicias-abre-convocatoria-para-el-prestigioso-premio-nacional-a-la-franquicia-2023/
[21] Montecito 38, Nápoles, Benito Juárez, 03810 Ciudad de México, CDMX
[22] https://www.fif.com.mx/
[23] Unless otherwise stated, the information below is taken from https://www.trade.gov/country-commercial-guides/mexico-franchising
[24] https://www.franchise.org/sites/default/files/2022-09/2023%20Franchise%20-%20Mexico.pdf
[25] https://www.expressnews.com/business/article/Why-SMEs-in-Mexico-Fail-The-Reasons-Nobody-Talks-16173775.php
[26] https://www.trade.gov/country-commercial-guides/mexico-franchising#:~:text=The%20franchise%20model%20has%20been,market%20than%20high%2Dfee%20models.
[27] https://www.franchise.org/sites/default/files/2022-09/2023%20Franchise%20-%20Mexico.pdf
[28]https://amfranquicias.mx/
[29] https://www.trade.gov/country-commercial-guides/mexico-franchising
[30] https://www.wipo.int/wipolex/en/legislation/details/20034
[31] https://www.diputados.gob.mx/LeyesBiblio/regley/Reg_LPI_161216.pdf
[32] 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards
[33] https://uncitral.un.org/fr/texts/arbitration/modellaw/commercial_arbitration/status
[34] https://www.diputados.gob.mx/LeyesBiblio/pdf/LFCE_200521.pdf
[35] https://www.diputados.gob.mx/LeyesBiblio/pdf/LFPDPPP.pdf
[36] https://www.diputados.gob.mx/LeyesBiblio/pdf/44_150618.pdf