Interview Of Mr. Jorge Amigo, Director General Of The Mexican Industrial Property Institute ("IMPI")

What is the authority and functions of IMPI?

The IMPI is an agency of the Federal government created in 1993 which has its own assets, personality and budget. IMPI has over a 1,000 employees in Mexico, most of them are concentrated in our headquarters in Mexico City, but we also have regional offices in Guadalajara, Mérida, Monterrey and León. In terms of our human resources, around 63% of our employees have a bachelor degree, 25% have technical and 2% masters or PHD degrees which allows us to provide high-quality services to users.

In term of its authority, IMPI is responsible for the regulation, registration and enforcement of all types of industrial property, including patents, trademarks, utility models, industrial designs, franchises, slogans, appellations of origin, and protection of In this regard, IMPI may impose sanctions and other remedies in the event of infringement. It also handles infringement disputes. IMPI plays an important role in the promotion of the inventive activity in Mexico, and in the international arena, IMPI is responsible for the promotion of the international cooperation between Mexico and other countries in the area of industrial property.

When were you appointed as Director General of IMPI?

I was appointed since its inception in 1993, and since then I have served as Director General of the institution.

In terms of counterfeiting, what are the steps that the Mexican government, and specifically the IMPI are taking to reduce this problem?

Counterfeiting and piracy are worldwide problems that challenge governments all around the globe. In developing countries this is not the exception. We have taken this challenge very seriously, and within our possibilities, we have taken all the measures to counteract this problem. During my administration, we have confiscated 43,041,731 items in different operations. In these type of activities, IMPI works together with other agencies of the federal government, including police and prosecutors. This is a very complex problem, involving the convenience of consumers to buy products at a very reduced price, so a comprehensive solution requires to review the roots and causes of the problem. Notwithstanding the above, we know that there are still a lot of things to do in this area and we are committed to continue working hard in this regard.

What is the involvement of IMPI in the franchising sector?

Franchise agreements are subject to general contract regulations in Mexico, but these contracts must be registered with IMPI in order to have effects against third parties. Please note that it is a simple registration and IMPI does not have to approve the terms of the franchise agreements. In terms of the process for registration, franchises are subject to the same rules and procedures than registration of licenses of use of trademarks. However, it is different to register a franchise than a license of use of a trademark because a franchise implies something more (i.e. know-how) than a simple license of use of a trademark. In this sense, the Area of Conservation of Rights at IMPI keeps track of franchises and licenses of use of trademarks registered with this institution. A registration may be only cancelled if (i) requested by all the parties of the agreement, (ii) the trademark has expired or been nullified, or (iii) there is a judicial resolution.

Mexican regulations also require that franchisor provides franchisee with a disclosure document containing some basic information prior to the execution of the franchise agreement.

As I mentioned, there is no specific set of regulations for franchises in Mexico and franchise agreements are regulated by general contracts law. There are some discussions among experts about the need or convenience of having more detailed regulations in this area, but there has been no consensus yet. As far as I know, it is not expected to have new legislation regulating franchises in the near future.

Also, it is important to mention that the Mexican Industrial Property Law and its Rules contain provisions which regulate franchises in Mexico.

How has franchising developed in Mexico?

I would differentiate between two stages: Pre-Nafta and Post-Nafta periods. Before Nafta was executed in 1994, the Mexican economy was closed to foreign investors, and foreign investment was the exception, not the rule in the market. Therefore, franchises were virtually unknown.

In what I call the Post-Nafta period, Mexico was fully opened to foreign investment with exception of few strategic sectors. In this Post-Nafta period, the franchising sector has grown enormously and has become one of the most stable business models in Mexico. According to some figures of the Mexican Franchise Association, Mexico has over 550 franchises in 65 different lines of businesses, where 35% have American origin, 3% Canadian, 2% Spanish, and surprisingly 60% have Mexican origin. This reflects that franchising is a business model that has been well received by Mexican entrepreneurs. As an example and according to such Association, 60% of independent businesses (not franchises) do not reach their second year of life, while 95% of the franchised businesses are still alive after their fifth year.

What is the future of the franchise sector in Mexico?

I believe that the franchise sector has a great future in Mexico. Such sector has gone through the required learning process in our internal market, and I expect its expansion in the near future.

In addition, Mexico has executed numerous free trade agreements with various countries, including Israel, European Union, European Association of Free Trade, most of the Latin American countries, and recently with Japan. These free trade agreements include the commitment of Mexico to comply and enforce its industrial property regulations at the same time that they provide great incentives to invest in Mexico. It is expected that such free trade agreements will also attract more investors to Mexico, and will facilitate the entrance of foreign franchisors into Mexico.

The expansion of the franchising sector will also be from Mexico to other countries. As a matter of fact, we have some important Mexican businesses which are currently franchising outside of Mexico. This trend has increased in recent years, and I believe it will continue. Mexico has successful businesses that should be very successful abroad.

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