Recent Changes to Mexico´s Franchise Law

A new law has been enacted in Mexico that has significantly changed the provisions of Article 142 of the Mexican Industrial Property Law locally known as MIPL, which is the primary law specifically governing franchising in Mexico. By decree published on January 25, 2006, which became effective January 26, 2006, Article 142 now not only sets forth the broad parameters for disclosure and possible registration of Franchise Agreements in Mexico, but includes relationship law elements that were previously not part of the law. Further, the changes now provide prospective Franchisees the right to rescind a Franchise Agreement for a Franchisor’s failure to timely or accurately provide disclosure document (notably, with no materiality threshold). The changes, among other things, attempt to limit a Franchisor’s right to terminate a franchise relationship without "good cause."