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Franchising Sector

Country

Number of Brands

Points of Sale

Number of Employees

United States

Over 2,500

825,000

18 million

Brazil

1,855

86,365

Over 770,000

France

1,477

58,531

335,700

Mexico

Over 1,200

70,000

800,000

* Source: Feher&Feher Consulting Firm

The franchise sector in Mexico grew between 9 - 12% in 2011, continuing to be one of the most important sectors in the country´s economic growth. Conservative estimates indicate that this sector will grow at least 8 percent in 2012.

Mexico is among the top ten nations in franchise development, due to the number of concepts operating in the market, strong legal framework as well as support from the government to continue developing new business opportunities.

According to the Mexican Franchise Association, Mexico has approximately 1,200 franchise concepts, including international brands, mainly from the United States. About 80 percent of the franchises operating in the country are Mexican brands, 10 percent are from the U.S., 3% from Spain, and the other 7% of the market is shared by Canada, Central & South America and Europe. Firms from other Latin American countries are finding Mexico as their best option to expand internationally, and are focused on exploring secondary markets.

The Mexican Franchise Association (AMF) has worked very closely with the Ministry of the Economy to develop the National Franchise Program (PNF). This program promotes the development of franchise concepts in Mexico with the goal of increasing employment and investment in the country. It provides opportunities to Mexican entrepreneurs to create or re-engineer a franchise concept, which not only supports growth and modernization of existing franchises, but provides support to investors looking to acquire international franchise concepts.

Due to the importance of the franchise industry to the Mexican economy, both in terms of job creation and percentage of GDP, the Mexican government has made numerous legislative changes to strengthen the legal framework for franchises. In 2006, the Mexican Congress amended the Law of Industrial Property to provide a clearer definition of a franchise, mandate requirements for franchise agreements, and provide standards for pre-sale franchise disclosures. These amendments help to protect franchisees who report abuse from franchisors when executing or terminating agreements. This has allowed further expansion of the franchise sector as the previous lack of regulation limited growth.

Franchising in Mexico, as in any other country, requires a long-term commitment. U.S. franchisors must commit human and financial resources, patience and time to make their concept succeed in the Mexican market.

U.S. franchises must be aware that since the Mexican market is dominated by local franchises, a requirement for a successful franchise concept in Mexico is to adapt, or customize, the concept and characteristics to Mexican tastes.

Best Products/Services

Although the food/restaurant sector in the franchise industry in Mexico has always been a very popular business model, the services sub-sector is rapidly growing. Services such as entertainment concepts for children and personal and home care services, have a great potential in the Mexican market.

*Source: Asociación Mexicana de Franquicias

Opportunities

Mexico is a diverse country that offers excellent business opportunities especially for U.S. franchise concepts due to the commercial ties between the countries and the recognition and acceptance of U.S. brands by the Mexican population. Low cost investment franchise concepts will be in demand in the next few years, as investors will be looking for innovative concepts to open in secondary markets.

Resources

Asociación Mexicana de Franquicias: www.franquiciasdemexico.org

Feria Internacional de Franquicias: www.fif.com.mx

Programa Nacional de Franquicias: www.franquicia.org.mx

For more information on the franchising sector in Mexico, please contact:

Ms. Martha Sanchez, Commercial Assistant

U.S. Commercial Service, U.S. Embassy Mexico City

Tel: (011-52-55) 5140-2621

Fax: (011-52-55) 5566-1111

martha.sanchez@trade.gov