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Notice

Mission Statement; Franchise Trade Mission to Mexico; March 3-5, 2010

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AGENCY:

International Trade Administration, Department of Commerce.

ACTION:

Notice.

Mission Description

The United States Department of Commerce, International Trade Administration, U.S. and Foreign Commercial Service is organizing a Trade Mission to Mexico City, March 3-5, 2010, with an optional spin-off visit to Monterrey. The mission will focus on assisting U.S. franchise companies to launch or increase their business in the Mexican market. The mission will help participating firms gain market insight, make industry contacts, solidify business strategies, and advance specific projects, with the goal of increasing U.S. business in Mexico. The mission will include business-to-business matchmaking appointments with potential local and regional investors at Mexico's International Franchise Fair—the Feria Internacional de Franquicias. The delegation will be comprised of U.S. franchise representatives in various industry sectors with potential in Mexico.

Commercial Setting

Today there are nearly 1,000 franchises in Mexico—ranking the nation seventh in franchises in 2008 by the World Franchise Council—due to market maturity, strong legal framework, support from the government, and franchise certification programs.

Mexico's franchise industry has proven to be one of the most important sectors for the country's economic growth, generating more than $7.25 billion in 2008, which represents 6 percent of total GDP. Franchising currently provides over 600,000 jobs and 55,000 points of sale throughout Mexico. The franchise sector has maintained constant growth between 14 and 17 percent over the last 5 years, claiming 15 percent of every peso spent in Mexico.

Its strong commercial ties to the United States and recognition and acceptance of U.S. brands make Mexico a natural path for expansion into Latin America. Mexico's strong legal framework and large and diverse market offer numerous opportunities for U.S. firms looking to expand abroad. Sixty-eight percent of Mexican franchises are domestic and 21 percent U.S., making the United States by far the largest international provider of franchises. The International FranCorp ranked Mexico as the 10th best country in the world in 2008 for penetration through franchises, with one franchise for every 800 citizens.

Traditionally, large cities in Mexico have provided the primary markets for franchises. Eighty-three percent of franchised businesses in Mexico are in Mexico City, Monterrey and Guadalajara. However, several franchises have expanded into smaller cities this year. While a non-franchise business in Mexico has only a 40 percent chance of surviving more than 2 years, 95 percent of franchised businesses in Mexico are still operating after five years, demonstrating the strength of the industry.

The Mexican Franchise Association (AMF) worked very closely with the Ministry of the Economy to develop the National Franchise Program (PNF) in 2007. This program promotes the development of international franchise concepts in Mexico with the goal of increasing employment and investment in the country. It provides opportunities to Mexican entrepreneurs to create or re-engineer a franchise concept, which not only supports growth and modernization of existing franchises, but provides support to investors looking to acquire international franchise concepts. So far in 2009, the Mexican government, through the PNF, has distributed nearly $15.3 million of the $27 million budgeted for 2009. Specifically, about $4 million was given to new entrepreneurs looking to acquire franchises. This program offers an extraordinary opportunity for U.S. brands looking to either enter or expand their presence in the Mexican market.

Mexico offers numerous opportunities for a wide variety of firms looking to expand into a new market. Training, automotive services, pawn shops, senior care, child care, fitness programs, and gyms account for 24 percent of the franchise market, followed by the restaurant sector with 23 percent, retail 21 percent, education 14 percent, personal care 8 percent, and entertainment 5 percent. The remaining 5 percent is a mix of other sectors, including cleaning, laundry, dry cleaning, and tailoring. In terms of best opportunities for U.S. firms, food concepts lead the industry, with fast food restaurants and casual dining the most attractive to Mexican investors. However, there are many other sectors that are growing rapidly and successfully in the Mexican market, including education/entertainment services for children and personal care services (spas, beauty shops, and health care).

Due to the economic downturn, the franchise industry expects reduced growth during 2009 and 2010, specifically for concepts that require large investments and big operational requirements. However, because the current economic crisis has led to increased unemployment, many Start Printed Page 5286Mexicans are looking to self-employment options to assure their future income, which provides more franchise opportunities. In order to make franchise concepts more attractive to new investors, many large companies looking for increased market presence in Mexico have developed a micro-franchise model packaging stores in smaller units in order to decrease investment requirements.

Both Mexico in general, as the gateway to Latin America, and the Feria Internacional de Franquicias (FIF) in particular attract prospective investors from Central and South America, as well as the Caribbean, all in search of opportunities to develop in their respective markets. With the franchise sector still demonstrating 10 percent growth in 2009 and the AMF prediction that the size of the Mexican economy will still allow for double the number of current franchises, Mexico offers numerous economic opportunities for U.S. franchisors looking to expand internationally.

Mission Goals

The Franchise Trade Mission to Mexico will help U.S. firms initiate or expand their business to Mexico by providing business-to-business introductions and market access information.

Mission Scenario

The mission will begin in Mexico City, where participants will attend market briefings by Embassy officials, meet with government and industry contacts at networking events, and participate in one-on-one business matchmaking meetings with potential local and regional investors at FIF. Scheduled for March 4-6, 2010, FIF is Latin America's definitive franchise expo, typically hosting more than 20,000 visitors and recognized by franchisors as an effective gateway to international expansion. A presence at FIF is expected to enhance opportunities for the trade mission participants. (U.S. companies seeking to exhibit at FIF can visit the show Web site at http://www.fif.com.mx). The mission will continue with an optional spin-off visit to Monterrey, where additional matchmaking will take place.

Proposed Mission Timetable

Wednesday, March 3, 2010Participants arrive in Mexico City. Evening Market briefing.
Thursday, March 4, 2010 Friday, March 5, 2010Business matchmaking meetings at the International Franchise Fair in designated Commercial Service area.
Monday, March 8, 2010Matchmaking in Monterrey (spin-off option).

Participation Requirements

All parties interested in participating in the Commercial Service Franchise Trade Mission to Mexico City (and Monterrey) must complete and submit an application package for consideration by the Department of Commerce. A minimum of 8 and a maximum of 12 companies will be selected to participate in the mission from the applicant pool. U.S. companies already doing business with Mexico as well as U.S. companies seeking to enter Mexico for the first time are encouraged to apply.

Fees and Expenses

After a company has been selected to participate on the mission, a payment to the Department of Commerce in the form of a participation fee is required. The participation fee for the Mexico City portion of the mission will be $2,305 for large firms and $2,265 for a small or medium-sized enterprise (SME).[1] Expenses for travel, lodging, most meals, and incidentals will be the responsibility of each mission participant. Mission participants will have the opportunity to take advantage of additional business matchmaking in Monterrey, available to large firms for $1,400 and $1,369 for SMEs.

Conditions for Participation

  • Applicants must submit a completed and signed mission application and supplemental application materials, including information on the company's products and/or services, primary market objectives, and goals for participation.
  • Each applicant must certify that the products (if any) and/or services it seeks to export through the mission are either produced in the United States, or, if not, marketed under the name of a U.S. firm and have at least 51% U.S. content of the combined value of the finished product or service.

Selection Criteria for Participation

Selection will be based on the following criteria:

  • Suitability of the company's products or services in the Mexican market;
  • Applicant's potential for business in Mexico, including likelihood of exports resulting from the mission;
  • Consistency of the applicant's goals and objectives with the stated scope of the trade mission.

Referrals from political organizations and any documents containing references to partisan political activities (including political contributions) will be removed from an applicant's submission and not considered during the selection process.

Timeframe for Recruitment and Applications

Mission recruitment will be conducted in an open and public manner. Outreach will include posting on the Commerce Department trade mission calendar (http://www.ita.doc.gov/​doctm/​tmcal.html) and other Internet Web sites, press releases to general and trade media, direct mail, notices by industry trade associations and other multiplier groups, and publicity at industry meetings, conferences, and trade shows. The International Trade Administration will explore and welcome outreach assistance from other interested organizations, including other U.S. Government agencies.

Recruitment for the mission will begin immediately and close February 12, 2010. Applications will be available online on the mission Web site at http://www.buyusa.gov/​mexico/​en. They can also be obtained by contacting the mission contacts listed below. The mission will open on a first come first served basis. Applications received after February 12, 2010, will be considered only if space and scheduling constraints permit.Start Printed Page 5287

Contacts

Martha Sánchez, U.S. Commercial Service Mexico City, Tel: 011 52 55 5140-2621, E-mail: martha.sanchez@mail.doc.gov.

Kristin Houston, U.S. Commercial Service California, Tel: 949-660-1688, ext. 314, E-mail: kristin.houston@mail.doc.gov.

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Sean Timmins,

Global Trade Programs, Commercial Service Trade Missions Program.

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Footnotes

1.  An SME is defined as a firm with 500 or fewer employees or that otherwise qualifies as a small business under SBA regulations (see http://www.sba.gov/​services/​contractingopportunities/​sizestandardstopics/​index.html). Parent companies, affiliates, and subsidiaries will be considered when determining business size. The dual pricing reflects the Commercial Service's user fee schedule that became effective May 1, 2008 (see http://www.export.gov/​newsletter/​march2008/​initiatives.html for additional information).

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[FR Doc. 2010-2115 Filed 2-1-10; 8:45 am]

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