Frequently Asked Questions
1.- Which model is appropriate for Mexico?
If your expansion strategy involves a Master franchise, the Franchisor should be diligent when calculating the initial franchise fee to ensure an efficient promotion of the venture.
2.- Are the franchise fees the same as in the USA?
The Single Unit franchise model, the initial franchise fee prevalent in the U.S. market may not necessarily be the same for the Mexican market.
3.- What aspects should be considered when establishing the franchise fee?
4.- What steps should you take prior to establishing your franchise in Mexico?
It has proven beneficial that the Franchisor perform an in-depth financial analysis with a consulting firm in Mexico that can accurately determine appropriate amounts for the initial franchise fee or royalties, whether the model is structured as Single Unit or Master Franchise. This aspect will contribute to the success of the sale of your franchise in Mexico. When negotiating with an investor in Mexico to grant a Master franchise, the U.S. Franchisor will benefit from seeking legal advice from a law firm or consulting group with experience in franchise law and practices.
5.- What aspects should be considered in a financial analysis?
When applying a financial viability analysis, it is important to include a benchmarking study to determine the financial aspects that any direct or indirect competitors consider when granting franchises.
7.- What are the specific expectations the Mexican investor will have?
8.- Should the Mexican investor visit franchised units abroad?
When negotiating, we recommend a visit and tour of the Franchisor's headquarters by the prospective Franchisee to examine the operation of existing franchises in the U.S. Expenses should be covered by the future Franchisee.
9.- Which are the important elements involved in the franchise negotiation?
When drafting and negotiating the UFOC, we highly recommend a complementary document, which is the Mexican equivalent known as the COF. (Circular de Oferta de Franquicia or franchise offer letter). The COF must be delivered to the future Franchisee 30 days prior to signing the franchise contract.
Allow time for the future investor to review the contract with his advisory firm. It is advisable to request that any comments or questions regarding the contract be sent to you for review prior to the final round of negotiation and signing.
Try to have short and to-the-point meetings with the investor and his consultants or lawyers and remember, "Time is Money".
10.- If the future Franchisee is negotiating alone
Try to create a lighter format, and understand that the closing may take 2 or 3 days to finalize.
The protocol in Mexico includes certain formality and fanfare. Make the signing of the contract a formal event and celebrate with your new partner.