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Mexico


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One of the first things every franchisor hears about international expansion is to look north. We’re looking South in this first installment of country profiles. Check out our international blog for brands’ stories about their experience franchising in Mexico.

GDP: $1.78 trillion (2012); ranking of purchasing power is 12th

Mexican Flag

At a glance

Population : 116 million (2013)
Language of business : Spanish
Education: 36 percent of 25-64 year olds have high school education

Sources: The CIA World Factbook, the IFA, Wikipedia, ProMexcio and the U.S. Commercial Service, OECD index

Currency: Peso

Type of government: Federal republic

Legal system: Civil law system

Favorable regulations: The North American Free Trade Agreement (NAFTA) between the U.S., Mexico and Canada, put into place in 1997, making it affordable to export proprietary items to Mexico for franchisees.

Capital: Mexico City

Border Towns: Tijuana, just south of San Diego, and Ciudad Juarez, across from El Paso, Texas

Neighboring countries: U.S. to the north, Guatemala and Belize to the south

Challenges: Crime, which includes kidnapping executives and drug trafficking 

Franchise challenge: Provision requiring the disclosure document must be presented to the prospect 30 business days before it can be signed, which amounts to six weeks lag time.

Visa requirement: Not required for U.S. citizens.

Franchise association: Mexican Franchise Association, founded in 1989. http://franquiciasdemexico.org; chairman is Diego Elizarraras a

No. of franchise systems operating in the country: 1,500, based in 70 sectors, and supporting 78,000 franchisees, according to the Mexican Franchise Association.

Top 3 sectors: Food and beverages, retail and beauty.

U.S. Commercial Service Offices:

Mexico Map

Mexico City: Tel: + 52 (55) 5140-2600

Guadalajara: Tel: +52 (33) 3615-1140,

Monterrey: Tel: + 52 (81) 8047-3450

State of supply chain: Established

Below the poverty line: 51 percent

Labor force: 63 percent of the labor force (50.6 million at last count by the CIA World Factbook) are in the service sector.

Transportation: 76 open airports; 27,000 kilometers of railroad tracks and 133,000 kilometers of paved roads, according to ProMexico, a business promotion site. 

Examples of local franchises: KidZania, an educational play center; El Fogoncito (tacos) and  Café Punta del Cielo

Examples of U.S. franchises: McDonald’s, Century 21, Subway, to name just a few.

Why EGS is bullish on Mexico

• About 70 percent of all franchises are local. This is optimal as it shows franchising is well developed and that it is possible to bring foreign brands in. 

• The Mexican franchise laws and regulations are well defined, and the requirements to grant franchises are the same for local and foreign brands.

• The Asociación Mexicana de Franquicias (Mexico’s national franchise association) is well developed, strong and balanced with both franchisors and suppliers. They are a strong force on government issues related to franchising.

• Mexico has reached the third stage of franchising maturity: service franchises are growing as the middle-class population grows rapidly.

• U.S. franchises of all types are currently strongly desired in Mexico.


Franchise Int’l Fair

On March 6-8, MFV Exposition’s 37th FIF, one of the largest franchise expos in the world, will be held at the World Trade Center in Mexico City, with a prominent U.S. pavilion.  Last year 400 companies exhibited, and an estimated 40,000 people attended.

Vacation hot spots

With beaches on both the Pacific Ocean and Gulf of Mexico,  Mexico is known for a host of resort towns, most notably: Acapulco, Mazatlan, Puerto Vallarta, Cabo San Lucas and Cancun. A plus for U.S. franchisors because resort towns attract American tourists.

 

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