In brief
On 28 April 2026, the decree issuing the new Regulations to the Federal Law for the Protection of Industrial Property (“Regulations”) created new obligations that franchisors will have to comply with in franchise disclosure documents (FDDs) provided to prospective franchisees in Mexico. After publication in the Official Gazette of the Federation, the Regulations will enter into force on 22 July 2026.
Key takeaways
The Regulations expand the scope of the technical, economic, and financial information that franchisors must disclose to prospective franchisees in Mexico FDDs. Franchisors must include the following additional information in the disclosure document:
- Information on whether the franchise operates under a master franchise, development, multi-unit, or similar structure;
- A “specific and detailed” description of the franchisee’s rights and obligations (replacing the prior general description);
- Disclosure of general payment amounts and estimated return-on-investment timeframes;
- The number of company-owned and franchised units; and
- The number of units opened, relocated, transferred, and closed.
Franchisors must provide this information as part of the FDD at least 30 business days prior to the execution of a franchise agreement.
Practical implications
These changes impose a higher standard of transparency and accuracy on franchisors operating in Mexico. Particularly:
- FDDs must be reviewed and updated to reflect the expanded requirements;
- The information provided must be current, complete, and accurate, especially with respect to financial projections and return expectations; and
- Failure to provide accurate and truthful information may expose franchisors to claims for annulment of franchising agreements, as well as compensation for breach of this obligation.
Unfortunately, the Regulations do not provide additional guidance on the specific parameters concerning the depth and detail of the information to be provided for these new disclosures.
Moreover, we do not anticipate that additional administrative regulations will be issued to explain how franchisors should comply with these new disclosure requirements. Consequently, franchisors will need to rely on counsel to develop a market approach to making such disclosures.
The disclosure regarding a franchisee’s return on investment will be particularly vexing for franchisors without the help of further administrative guidance. Naturally, the data behind such assumptions will vary from franchisor to franchisor depending on whether or not the brand has existing units operating in Mexico and other factors. Therefore, it will be critical to include carefully crafted disclaimers and assumptions about the revenue, profits and investments used for such disclosures.
The Regulations also fail to specify whether the disclosures about the number of franchised and company-owned units and the number of units opened, relocated, transferred or closed should be limited to units in the Mexican market or whether it is a global or regional disclosure. The Regulations do not specify the time period to which these disclosures apply (e.g., end of calendar year for unit count and last 12-24 months for openings, closures, etc.). The Regulations also do not specify the geographic scope of the disclosure. If the scope is worldwide, this will be quite problematic for many global brands due to the lack of ready access to reliable and current data about units in all countries where they operate or have franchisees or sub-franchisees. An argument could be made that these disclosures may be limited geographically to only cover units in Mexico considering the territorial nature of the Regulations themselves, but market practice for this disclosure may develop differently given the lack of clarity in the Regulations and the potentially harsh consequences for failing to provide accurate disclosure.
Recommended actions
Franchisors operating in Mexico should:
- Review and update their FDDs for use in Mexico in accordance with the Regulations;
- Consider including historical figures and ranges rather than specific numbers for financial disclosures, anchoring to identifiable reference points of time or geography;
- Decide upon the geographic and temporal scope for disclosures about existing units, taking into account the brand’s existing footprint (e.g., whether they have existing units in Mexico) and the reliability of unit-count data;
- Recommend that prospective franchisees consult their own accountants and advisors before relying on the information provided;
- Ensure alignment between the FDD and the franchise agreement and related ancillary documents; and
- Assess any franchise agreements expected to be executed on or after 22 July 2026, to ensure compliance with the new Regulations.