On January 25, 2006, the Mexican Law of Industrial Property (LIP) was amended. Although the changes included some provisions on the filing of documents along with a complaint before the Mexican Trade Mark Office (IMPI), the main goal of the amendment was improving the regulation of the franchise system in Mexico.
The amendment will mainly protect franchisees who report abuses from franchisers, either at the execution of the agreement or when terminating it, which was affecting the growth of the franchise sector. The Mexican Association of Franchises (AMF) lobbied for the change, demanding more legal security for the franchise sector in Mexico.
According to AMF, 830 franchises operated in Mexico in 2005, pushing Mexico to 8th rank in the world regarding franchises operation. AMF found that in the same year the franchise sector reported sales of $8,000 million and generated 80,000 jobs, reporting a total of more than 500,000 jobs since franchises began operating in Mexico.
In light of the above the Mexican Congress agreed with AMF that the franchise sector is highly relevant to Mexican economy and decided that improving the franchise regulation was necessary. It approved the amendment lobbied by AMF, which was enforced in January 2006.
Goals of the changes
The main goals of the changes were to (1) define what a franchise is; (2) oblige franchisers to deliver the basic information regarding the franchise and fixing deadlines for the delivery of said information to franchisees before the agreement; (3) define the minimum elements to be included in the franchise agreements; (4) oblige the franchiser and franchisee to register the franchise agreement with the Mexican Trade Mark Office; and (5) introduce two new infringement causes related to franchise operations.
The main changes
Section V of article 2 establishes as an objective of the LIP to fix conditions of legal security for the operation of franchises and to warrant a non-discriminatory treatment for all the franchisees of the same franchiser.
Article 142 defines the franchise as follows:
There exists franchise when along with the license of use of a trade mark, granted in writing, technical knowledge is transmitted or technical assistance is furnished, so that the person whom it is granted may produce or sell goods or render services in a uniform manner and with the operative, commercial and administrative methods established by the holder of the trade mark, tending to keep the quality...