Before signing an agent/distributor agreement, all parties should fully understand theterms and conditions and the relationship to be developed. Many relationships arestrained because insufficient time is invested in developing a full understanding <strong>of</strong> whatis expected.The Commercial Service and other organizations, such as the American Chamber <strong>of</strong>Commerce in Mexico and U.S. state government representative <strong>of</strong>fices, maintain lists <strong>of</strong>Mexican agents/distributors, manufacturers, Mexican government <strong>of</strong>fices, and privatesector trade organizations. After identifying a suitable agent/distributor, the U.S.exporter is strongly encouraged to conduct a commercial background check on theMexican firm. The U.S. Commercial Service <strong>of</strong>fers an <strong>In</strong>ternational Company Pr<strong>of</strong>ilereport that provides background information on a potential business partner.If the product is new to the market, or if the market is extremely competitive, advertisingand other promotional support should be negotiated in detail with your representative.Product and industry knowledge, track record, enthusiasm, and commitment should beweighed heavily. It is suggested that the U.S. exporter schedule annual visits <strong>of</strong>Mexican personnel to the U.S. company for training. Another factor to consider isfinancing, as the commercial and industrial sectors’ resources are limited due to highinterest rates. Joint venture arrangements should also be investigated to strengthenmarket penetration. Direct marketing and telemarketing are still evolving marketingstrategies, but they are gaining in popularity and scope.Establishing an OfficeReturn to topFor U.S. companies interested in establishing a presence in Mexico, the General Law <strong>of</strong>Mercantile Organizations (or the Civil Code) regulates many different forms <strong>of</strong> businessentities. The type <strong>of</strong> business incorporation that a U.S. company or individual chooses isextremely important as it determines the operations they are allowed to perform inMexico and, among other liabilities, the amount <strong>of</strong> taxes they pay.Some <strong>of</strong> the most commonly used types <strong>of</strong> business classifications are the SociedadAnonima (Corporation) identified with "S.A." at the end <strong>of</strong> the company name, and theSociedad Anonima de Capital Variable (Corporation with Variable Capital) identified with"S.A. de C.V." One <strong>of</strong> the advantages <strong>of</strong> the latter is that the minimum fixed capital canbe changed subsequent to the initial formation.Limited Liability Partnership (Sociedad de Responsabilidad Limitada) identified with "S.de R.L." is similar to a closed corporation in the U.S. and has the option <strong>of</strong> havingvariable capital (S. de R.L. de C.V.). As this is an organization formed by individuals, ithas similar characteristics to a partnership with the exception <strong>of</strong> unlimited liability.Civil Partnership (Sociedad Civil) is the most common organization for pr<strong>of</strong>essionalservice providers. It has no minimum capital requirement and no limit on the number <strong>of</strong>partners, but it is taxable in the same way as a corporation. It is identified with "S.C."Civil Association (Asociación Civil) is the form that charitable or nonpr<strong>of</strong>it organizationsadopt to operate and is identified with "A.C." A foreign company may open a branch(“sucursal”) in Mexico as an alternative to incorporating. A branch can provide rightsand responsibilities similar to a corporation, including tax liability and access to localcourts, but requires the approval <strong>of</strong> the National Foreign <strong>In</strong>vestment Commission.
FranchisingReturn to top<strong>In</strong> 2009 the franchise industry in Mexico grew about 8%; with nearly 1000 franchiseconcepts in the country. The franchise sector is an important source <strong>of</strong> job creation, selfemployment,and wealth creation, even in difficult economic times. According to theWorld Franchise Council, Mexico is the 7 th leading nation in franchise development.Franchises in Mexico are regulated by Article 142 <strong>of</strong> the <strong>In</strong>dustrial Property Law andArticle 65 <strong>of</strong> its Regulations. Franchise agreements must be registered before theMexican <strong>In</strong>stitute <strong>of</strong> <strong>In</strong>dustrial Property in order to be effective against third parties.<strong>In</strong> January 2006, an amendment to the Mexican Franchise Regulations (Article 142) waspublished in the Mexican Official Gazette, stating a new definition <strong>of</strong> franchise,mandating requirements for franchise agreements, and providing new standards for presalefranchise disclosure.<strong>Business</strong> opportunities for franchises encompass many sectors: food (fast food/casualrestaurants), personal care services, education, and entertainment sectors for children,etc. Franchising in Mexico, as in any other country, requires a long-term commitment.Franchisors must commit human and financial resources, patience and time to maketheir concept succeed in the Mexican market.For more information on franchising in Mexico, please see Chapter 4 <strong>of</strong> this <strong>Country</strong>Commercial Guide: Leading Sectors for U.S. Export and <strong>In</strong>vestment – Franchising.Direct MarketingReturn to topWith the establishment <strong>of</strong> large international firms in Mexico and their emphasis inadopting similar marketing strategies to those <strong>of</strong> their international home base – inaddition to more and better educated consumers with higher quality expectations – themarketing services industry has evolved into a more segmented and specialized sector<strong>of</strong>fering U.S. companies a complete array <strong>of</strong> possibilities from which to choose.Today, the choices firms have for promoting their products range from marketingcampaigns through one-to-one contact at point-<strong>of</strong>-sale displays, to inserts distributed inmonthly bills, to mass exposure through billboards or internet campaigns.Companies in Mexico invested nearly $98 million pesos in marketing services topromote their products and services in 2009, with electronic media and in Point <strong>of</strong> SalePromotion (POP) as the most important vehicles <strong>of</strong> promotion:Breakdown <strong>of</strong> Marketing Tools in Mexico - 2009Publicity (printed & electronic media) 54.1%<strong>In</strong>-Store Promotions 25.8%Direct Marketing 12.2%Market Research 4.9%Public Relations 2.3%Design 0.7%
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The LFMN and its Regulation establi
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Mexico is the country with the larg
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SECTION 2: SECTORS RESERVED FOR MEX
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Expropriation and CompensationRetur
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For further information please visi
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Local Time, Business Hours, and Hol
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Mr. Garth ThorburnDirector, U.S. Ag
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Asociación Nacional de Importadore