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Mexico’s franchise market: food and beverages

The food and beverage sector accounts for 35% of the Mexican franchise market, followed by retail, personal care services, healthcare, education and business consulting, according to a report by the U.S. Department of Commerce (USDOC).

The franchise model in Mexico has been particularly successful for concepts that do not require high investment fees.

Concepts with investment fees ranging from $50,000 to $250,000 have more opportunities to grow in the market than models with high fees.

In 2020, some franchise companies developed crowdfunding programs to attract smaller investors and continue their operations in the market.

USDOC refers that, in the last couple of years, 10 concepts in different industry sectors related to franchising have successfully achieved their expansion plans through crowdfunding, and experts predict that more local and international brands will adopt this model to finance their growth.

Traditionally, large cities such as Mexico City, Monterrey and Guadalajara have been the dominant options to position a new franchise concept, comprising around 70% of the total number of franchises in the country.

Franchise

However, the development of franchise business opportunities has also been successful in smaller cities where the local population is looking for new products and brands.

Franchising in Mexico, as in any other country, requires a long-term commitment.

U.S. franchisors must commit human and financial resources to develop a business plan (including market research) to identify the best growth strategy, as well as show flexibility to adapt to the local culture.

Because Mexico is so large and diverse, it is challenging to award a master franchisee contract to develop the entire country.

Therefore, the USDOC recommends approaching the country on a geographic basis and awarding at least three regional rights covering northern, western and central Mexico.

U.S. franchisors must support master/regional franchisees throughout the business relationship if they are to be successful.

One of the main challenges cited by franchisees is the lack of support from franchisors once the agreement is signed.

Close communication with partners, ongoing training and regular in-country visits are important to facilitate long-term success.

 

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