UNIVERSIDAD AUTÓNOMA

DEL ESTADO DE MÉXICO

Subject: International contracts

Teacher: Susana Espinosa Pineda

Students:
Franco Ayala Ximena
Landa Elizalde Jacquelinne
Lopez Estrada Fatima
Torres Araujo Jatsiri Jashui

Delivery date: May 3rd, 2023

SUMMARY
Legal scope of franchises
In Mexico there is a limited franchise regulation in which the relationship between
franchisor and franchisee is based primarily on a franchise agreement. The Law for the
Promotion and Protection of Industrial Property was promulgated on June 27,
1991, seeking economic opening for the country towards the entire world, this law added
new concepts to Mexican legislation including the concept of the franchise acknowledging
it for the first time.

The Law for the Promotion and Protection of Industrial Property, now called the
Industrial Property Law (LPI), prevailed around commercial relations and between the
interactions of each member of the community, giving a sense of security towards its
goods, ideas and services.
Article 142 of the Industrial Property Law, "There will be a franchise, when with
the license to use a trademark, granted in writing, technical knowledge is transmitted
or technical assistance is provided, so that the person to whom it is granted can
produce or sell goods or provide services in a uniform manner and with the
operational, commercial and administrative methods established by the owner of the
trademark, tending to maintain the quality, prestige and image of the products or
services to those that it distinguishes."

Further, the use of other laws such as the Commercial Code, the Economic Competition
Law and the Civil Code; this last one mentions in article 1794 that there are some
requirements without which there would be no franchise, the existential requirements
are the object and the consent.
• Purpose of the franchise/ object
The delivery of the License of Use of a Trademark from the franchisor to the franchisee;
transfer of technical knowledge from the franchisor to the franchisee. If the franchisor
does not grant the distinctive technical assistance of the company to the franchisee, there
can be no Franchise Agreement.
• Consent
The consent is the signing of the contract, which the LPI in its article 142 mentions that
it must be in writing, since if there is no signed contract, there will be no franchise.
"Whoever grants a franchise must provide the person who intends to grant it, at
least thirty days prior to the execution of the respective contract, the relative
information on the status of their company, in the terms established by the
regulations of this Law."
Stipulates that if the information in this document, known as the Franchise Offer
Circular or COF, is not true, the franchisee may demand the nullity of the contract and
demand payment for damages that caused, as long as demand these rights within one
year of the signing of the franchise agreement.
According to article 65 of the Regulations of the Industrial Property Law, the COF must
include the following information:
1. Name, denomination or company name, domicile and nationality of the
franchisor.
2. Description of the franchise.
3. Age of the original franchising company and, where appropriate, master
franchisor in the business subject to the franchise.
4. Intellectual property rights involved in the franchise.
5. Amounts and concepts of payments that the franchisee must cover the
franchisor.
6. Types of technical assistance and services that the franchisor must provide
to the franchisee.
7. Definition of the territorial area of operation of the negotiation operated by
the franchise.
8. Right of the franchisee to grant or not sub-franchises to third parties and,
where appropriate, the requirements that he must meet to do so.
9. Obligations of the franchisee with respect to the confidential information
provided by the franchisor.
10. In general, the obligations and rights of the franchisee derive from the
execution of the franchise contract.
The franchise is made up of several elements such as:
• The Franchise Agreement.
• The Registered Trademark.
• The Franchise Offer Circular (COF).
• Operation manuals.
It also contains many administrative legal requirements that must be carried out and
fulfilled so that the franchise is operated in an entrepreneurial manner and with a good
probability of success.

Documentation required to have a franchisee to function and develop activities.

• Trademark license

Certifies that as owners of the brand or franchisors grant our new partner or franchisee
the right to use our brand during the time that we would have defined in the franchise
agreement, Important to have in case any franchisee of improper or non-established
use of your brand, causing problems with your franchise.

• Franchise Offer Circular (COF)

The COF is delivered to potential investors, this document must include the industrial
property rights, the considerations, the type, and assistance that will be provided,
territorial information obligations, sub-franchise rights, among others. This document
has a commercial and legal purpose, informs about the offering to potential investors
 and avoids problems; defining the rights and obligations that you provide before the
investor wants to become a franchisee.

• Franchise promise contract.

Avoid problems with your franchise when deciding that an investor is not suitable to
be part of your network of franchisees, since this document has the function of
protecting your information as a franchisee in case the investor does not adhere to the
ideals and values that a franchisor of your network must have, this is done together
with the payment of a minimum amount that acts as an advance or deposit with which
it seeks to guarantee compliance with said contract for having received valuable
information and important of you as a franchisor.

• Franchise contract.

Establishes several legal options so that as a franchisor you avoid problems due to
lawsuits, misuse of your brand, legal issues, and others. This document should define
more clearly the specifications that come with being part of your network of
franchisees. Used in the final stage of contracting a franchise where the investor is
already accepted by the franchisor as a franchisee.

• Bailout of manuals

This document certifies the delivery of the Know How transmission to the franchisors
and emphasizes that the information contained in the knowledge transmission
manuals belongs to the franchisor, the loan will help you avoid having problems if a
franchisee would like to use the know how incorrectly.

The Franchise Offer Circular

The Franchise Offer Circular involves all the most important documents that a
franchisor must deliver to his franchisees during the process in which he is offering his
business model, his brand.

The franchisor main objective is to create a valuable and benchmark brand in the
market, with a target that feels identified and create a large community around it,
make it known through professional, competent people who represent the brand, its
philosophy, and its values.

The Franchise Offer Circular must express even the smallest detail of the business idea,
to help franchisees, develop the business model accordingly and in accordance with
the values and requirements demanded by the franchisor.

1. Name or business name, domicile address and nationality of the franchisor.

 2. Company history: mission, vision and values. How the company came about,
where it wants to go and in what way.
3. Description of the franchise. What are the products or services that your brand
offers? What value do they bring to customers and why is it better than that
offered by competing companies?
4. Market research carried out by the franchisor of the brand, environment,
internal and external factors, competition, prices….
5. Recommendations for the location and distribution of the brand, if it is local,
provincial, national or international. And, if it is international, many other
variables must be taken into account such as: language, currency, customs,
country legislation, different target, etc.
6. Intellectual ownership rights included in the franchise.
7. Detailed specification of all the elements that will be received in the franchise,
both tangible and intangible. For example, if specific machinery is needed
(think of a printing company that uses a special type of printer), or simple
knowledge (at the level of communication or marketing, for example).
8. Detailed data on the initial investment that the franchisee must make. How
much money should you shell out? In what terms? What do you get in return?
9. Royalties and advertising guidelines towards the brand.
10. Assistance and training offered to successfully start developing and marketing
the brand.

The Trademark Use License Agreement

Document where agreement of two people is recorded, whether they are natural or moral
or legal persons, by which rights and obligations are created for both parties.
Specifically, in this contract, a person who owns and has the right to exclusively use a trademark
for having registered it with the Mexican Institute of Industrial Property (IMPI) grants another
person the right to make non-exclusive use of the trademark. for the purposes specified in the
contract.

The trademark use license agreement is a permission granted by the holder or owner of a
trademark to another person so that they can use it for a specific purpose. Regulated by
the Intellectual Property Law it is given for an specified occupation.

In order to enter into a trademark license agreement, a trademark must exist, and the way
in which it becomes existing in legal life is by having it registered with the IMPI. Rights must
be passed totally or partially.
What is the usage of a trademark use licen se agreement?

It is used for the person who owns the brand to allow other people who want to use it to
commercially carry out the promotion, production or commercial exploitation of it, in
order to obtain a greater positioning and diversification in the market, making the brand
more famous and increasing its commercial value.
Who intervenes?

Licensor. It is the person who owns the registered trademark. In other words, it is the
person who owns the industrial, patrimonial and moral property rights of a brand that is
registered with the IMPI.

Licensee. It is the person who is being authorized to make use of the brand in accordance
with the purposes established by the Licensee.
Characteristics of a trademark use license agreement

• Identification of the parties.

• Subject.
• Territory.
• Exclusivity
• Products / services involved

Link #1: https://www.franquiciasen.mx/Noticias/Ver/marco-legal-de-las-

franquicias-en-mexico

Link #2: https://amfranquicias.mx/evitaras-problemas-con-tu-franquicia/

Link #3: https://emprendepyme.net/que-es-la-circular-de-oferta-de-

franquicia.html

Link #4: https://www.legalario.com/document/contrato-de-licencia-de-marca