Five things to know before expanding your brand into Mexico
One of the benefits of attending franchise trade missions, such as the one to Mexico October 6-10, is the country briefings by experts.
Not wanting to bore the participants—“because we lawyers tend to be boring,”—Pablo Hopper of Gonzalez Calvillo, a law firm in Mexico City, presented his information in the form of five tips. Here’s the even more abbreviated version:
• Before even considering coming to Mexico, register your trademark (simple, but not everyone does), because in Mexico it’s first-come, first-served. In addition, register your domain name (.com.mx) and if your name can be translated into Spanish, protect it as well.
• Draft an international version of your letter of intent. Don’t use your U.S. version, it could be binding.
• Franchises fall under federal law, not state law here. It’s a pro-franchisee law, so only disclose what is necessary. Hooper estimates that may be just 10 percent of what franchisors disclose in the U.S. Note that there’s a required 30-day cooling off period before signing.
• Invest in a good tax attorney early on. A good tax structure can save both the franchisor and franchisee significant taxes.
• Mexicanize your business documents or they won’t “have teeth.”
Contracts can be signed in English as long as you have an acknowledgement from the franchisee that he or she is fluent in and understands English, Hooper said.