Penner & Associates - Mexico Law Firm and Business Consulting for Mexico

For professional assistance & information on legal & business matters regarding Mexico and Latin America, please contact:

ATTORNEYS AT LAW FOR MEXICO
Please contact us at our Mexico offices located at:
Apartado Postal No. 9
San Miguel de Allende, Guanajuato, Mexico
TEL. US.: (800) 856-5709
Local Phone (415) 152-3648

e-mail E-MAIL

 

BUSINESS CONSULTANTS FOR MEXICO
REAL ESTATE BROKERAGE ASSISTANCE FOR MEXICO
At our Phoenix or Mexico Offices
P.O. Box 42773
Phoenix, Arizona 85080
Tel: (623) 242-7442

e-mail E-MAIL

OUR MEXICO CITY OFFICES
Montecito no. 38 Piso 37 Oficina 37
Edificio World Trade Center
Colonia Napolis C.P. 03810
Mexico, Distrito Federal

Tel: (55)5351-0438

e-mail
E-MAIL

   

INTERNATIONAL SALES, TRADE, DISTRIBUTORSHIPS, FRANCHISING, & JOINT VENTURES IN MEXICO

 

Choose One or more: International Sales ((After Market Attention , Agency or Not , Arbitration/Court , Competition , Compliance with Product Requirements , Domiciles , Exclusiveness of the Relationship , Language , Minimum Requirements , Marketing , Payment Process , FOB Where , Personnel , Privacy , Product Ownership , Records , Shipping , Taxation , Termination of the Contract , Commercial Agency , Sales Representatives )) , Distributorships ((Exclusive , Non-Exclusive )) , Financing , Franchising , Joint Ventures ( New Business and Entity , Branch Operations-Subsidiary ) , Legal Aspects form the U.S. Point of View , Who, What, Where, When and How , Finding Business Contacts and More ,

Related Webpages on this site: CUSTOMS , NAFTA , IMPORT/EXPORT ,
INTERNATIONAL TRADE RELATED WEBSITES FROM A USA PROPECTUVE

 

INTERNATIONAL SALES

After Market Attention: Either the "home office' or the "authorized party" are to be responsible in some manner for attending the warranty and servicing of the product sold and/or education of how to use and conserve the product.

Agency or Not: The parties are to determine whether the "authorized party" is or is not an agent of the "home office". If an agency relationship is to exist, then the terms and conditions of that relationship should be clarified. As well, there should be clarification regarding whether the "authorized party" is or is not an employee of the "home office".

Arbitration/Court: The parties should determine whether any disputes will be handled via arbitration of court litigation (for "Arbitration in Mexico" see elsewhere in this website). As well they should decide which jurisdiction will be applicable in the case of court intervention.

Competition: The parties should agree upon whether the "authorized party" will or will not be able to sell competitors products.

Compliance with Product Requirements: Either the "home office" or the "authorized party" is required to handle the issues of patents, trademarks, trade names, labeling, specific approvals (like health department, consumer protection legislation, environmental legislation and other), and certifications.

Domiciles: The parties are to identify their official domiciles for purposes of notices that may be forthcoming under their contract.

Exclusiveness of the Relationship: The party that will be performing the sales activities may be either an exclusive or non-exclusive sales person for a given geographical area.

Language: The parties are to determine whether the English language or Spanish language version of the contract is controlling.

Minimum Requirements: The receiving "authorized party" may have a minimum quota of sales to meet, a promptness of payment for product sold, and a requirement to follow the standard practices of the "home office". The "home office" may be required to provide a minimum of product and quality in the product, as well as provide certain educational information and training regarding the product and sales techniques.

Marketing : Either the "home office" or the "authorized party" may be required to perform promotional minimums.

Payment Process: The parties are to agree on how product is paid. Whether it is prior to shipment, against shipment documents, or upon delivery at destination. Financing issues should be agreed upon. If using letters of credit, the parties should agree upon under what terms will the letter of credit be paid, who will pay for the letter of credit cost and whether it should be a confirmed letter of credit or not.

If the "home office" is responsible for crossing the product at the international border, then the value of the product has increased for the "home office" but the payment risk is the same as if agreed FOB elsewhere. If the "authorized party is responsible for crossing the product at the international border, then the payment risk has increased (as compared to payment before crossing) since the product will be in the hands of the importer/"authorized party".

There exists insurance on payment of the product exported in the U.S, which is issued by the Export-Import Bank of the United States (Eximbank) For information on this you can contact Export-Import Bank, 222 N. Sepulveda Blvd., Suite 1515, El Segundo, California, 90245 (their telephone is (310) - 322-1152).

FOB Where: FOB stands for "Free on Board", which normally indicates that possession is passing hands and/or that the price of the product includes costs to that location (examples FOB the seller's plant, FOB the customs broker's lot at the U.S. border side) (also see "Shipping" elsewhere on this page).

Personnel: The "home office' may be required to provide personnel be sent to the "authorized party" to provide assistance in one or more areas.

Privacy: The parties should agree on what, if anything, should be kept private.

Product Ownership: Either the "home office" will be required to hold product at its' warehouse or at the "authorized party's" warehouse, or the "authorized party" may receive on consignment or be required to purchase outright product and hold for sale.

Records: The parties should agree upon what recording keeping system is to be performed and what the rights are to receive these records.

Shipping: The parties should agree on who pays for the insurance, storage, shipping, customs' duties and filings and, in its case, the loss of a shipment (also see "FOB" on this page).

Taxation: The place of sale is to be determined for the effects of paying (or not paying) any sales tax (or value added tax). As well, if the "authorized party" is considered an employee of the "home office", then there may be a requirement of a: registering the "home office' as doing business in Mexico, b: paying income tax in Mexico for income earned there by the "home office", c: to pay withholdings or supplemental payments (like social security and infonavit/housing) on the employee's behalf.

Termination of the Contract: The parties should determine what the causes for termination of the relationship and contract should be.

Commercial Agency

This is where an individual or company acts on behalf of the principal company, with authority to sell product or do a deal. The key word is agency (power of attorney or authority)

Sales Representatives

This is where an individual or a company receives products on consignment from the principal company . In the case of a sales representative he does not run any risks, it is the principal company that bears the risks. The main risk is that the product will be paid for and it will be delivered to its' destination. The sales representative just takes orders for the principal company and receives a commission and/or salary.

DISTRIBUTORSHIPS

This is where an individual or a company receives products from the principal company and pays for them . In the case it is the distributor that runs the risks. The main risk is that the product will be paid for and that it will be delivered to its' destination. Although not customary it is possible for the distributor to just takes orders for the principal company and receive the difference between wholesale and retail.

Exclusive Distributorships

This us where a distributor has the exclusive or sole right, given it by the principal company, to sell the principal's product in a given geographical area, known as a territory. When exclusivity is given, it is normal to see that the principal also will demand a certain sales quota be meet on an on-going basis (and in occasions, that the distributor competently handles all complaints of service and product and claims of warranty.

Non-Exclusive Distributorships

This us where a distributor doe not have the exclusive or sole right to sell the principal's product in a given geographical area, known as a territory. In this case the distributor is to compete with other distributors in the territory.

FINANCING

The business can finance it's own sales abroad or borrow money on short or medium term. Some US banks will provide financing on short or medium term loans if they can get an Eximbank guaranty.

For more on this subject contact the international department of your favorite bank.

We received a flyer by E-mail of a purported company that can provide this financing. Following is their promo. (Note: we make no representations regarding this company since we do not know who they are.)

"Our company specializes in Eximbank medium term (2-5 years) loan guaranty program, which is funded by Eximbank qualified US major banks. (250,000 Minimum).We can offer to finance the acquisition of new or used US manufactured equipment, machinery, and other capital goods, for end user buyers, rental fleet, or inventory for re-sale.For all details, please double-click the following link: mailto:dunn8@bigfoot.com?subject=SupplierInfo
Company Name:
Contact:
Title:
Address:
City, State, Zip:
Tel:
Fax:
Email:
Thank You
Export Financing Dept."

FRANCHISING

A franchise is a continuing business relationship between two business oriented parties, whereby the first (the franchiser) grants a permission or license to the second (the franchisee) to use the first's trade names, trademarks, products, procedures, formulas of services, publications, marketing.

Franchising in Mexico has become very common in the past years. With the desire of the Mexican population to also enjoy the "good life" and the continued influx of foreign investment and foreigners into Mexico, many of the commercial outlet stores (and in particular fast food restaurants) from the foreigners' countries of origin have also come to Mexico to set up shop as franchises.

Source of information: International Franchise Association, 1350 New York Avenue NW, Suite 900, Washington D.C. 20005-4709, telephone: (202) 628-8000.

JOINT VENTURES

This is where the US business seeks out and enters into a permanent or semi-permanent business relationship with a third party, each putting into their joint business that which they have to offer.

This can be accomplished by silent partnership (with or without a new entity), a general partnership (with or without a new entity) or by creating a new business entity.

The benefits of joint ventures may seem endless, but here are a few more:
-you can save money when businesses share operating costs
-you can get referrals from other businesses
-you can save valuable time when businesses share the workload
-you can offer your customers new products and services
-you can gain new business associates
-you can save money by sharing advertising and marketing costs
-you can get free advice and important information from other businesses

New Business and Entity

In this case, the two partners form a new business entity and supply it with the capital, assets and expertise that each brings to the group.

Branch Operations (Subsidiary)

In this case, either the US business by itself sets up a new business and hires the local parties to runs the new business for them, or the US business simply opens the new business, places its own personal in the company and solely seeks outside assistance when needed.

Legal Aspects form the U.S. Point of View

Please see the site http://www.ita.doc.gov/legal to view legal aspects of international trade and Investment from the U.S. point of view. sponsored by the Office of the Chief Counsel for international Commerce - U.S. government. Examples Foreign Corrupt Practices Act; Intern-American Convention Against Corruption; Apostille: Authentication of Official Documents; Letters of Credit; International Arbitration;

Who, What, Where, When, Why and How

These are question you should ask yourself when you are thinking about going for international markets. When you ask these questions, remember the "AAB" rule (never act without you Attorney, Account and Banker).

Who will be my customer?, Who will be my representative ?, Who will be my partner/do I need one ?

What are my needs ?, What will my partner put into the group ?, What are the markets I want ?, What are the rules for setting up Business where I am going, What will be my setup costs ?, What will be my ongoing costs ?

Where will I set up my business ?, Where will I find the people I need to help be ?

When will I be able to start my business, When will I see a profit?

Why am I going to this international market?

How will I do business there (agent/distributor/franchise, joint venture) ?

 

FINDING BUSINESS CONTACTS AND MORE

Data Bases and directories : The Commerce Department (International Division) of each US state (Az. (602) 280-1300). The Federal Commerce Department (they may have an office in your state or check Washington, D.C.)

Franchising Source of information: International Franchise Association, 1350 New York Avenue NW, Suite 900, Washington D.C. 20005-4709, telephone: (202) 628-8000.

Trade Related Activities: World trade Center in your state (in Arizona (602) 495-6480)

Trade Shows: Check with your Commerce Department (of your state) and the Federal Commerce Department (they may have an office in your state or check Washington D.C.)

 

INTERNATIONAL TRADE RELATED WEBSITES
FROM A USA PROSPECTIVE

Asia Pacific Economic Cooperation (tariff rates) http://www.apectariff.org
Asia Development Bank http://www.asiandevbank.org
Bureau of Export Administration (BXA) http://www.primenet.com/bxawest/  
US Census Bureau http://www.census.gov/
Cross-Cultural Communications http://www.worldculture.com/
US Customs Service http://www.customs.ustreas.gov/
US Environmental Protection Agency http://www.epa.gov/
US Export-Import Bank (tariff rates) http://www.exim.gov
US Export Legal Assistance Network http://www.sbaonline.sba.gov/
US Federal Grants
(Catalog of Federal Domestic Assistance)
http://www.gsa.gov/fdac
US GEMS - Global Export Market Information System
Country and regional information for American exporters
http://www.itaiep.doc.gov
US Harmonized System/Schedule B Numbers http://www.census.gov/foreign-trade/www
International Monetary Fund http://www.imf.org/
International Standards Organization http://www.iso.ch
US International Trade Administration http://www.ita.doc.gov/
Japan Export Information Center http://www.jetro.go.jp/
NADBank: North American Development Bank http://www.nadbank.org/
NAFTAnet Small Business Information
Guide to trade with Mexico, trade, finance info
http://www.nafta.net/smallbiz.htm
US National Trade Data Bank (NTDB)
Comprehensive source for international trade info
http://www.stat-usa.gov
(registration fee required)
US Small Business Administration (SBA) http://www.sba.gov/
Thomas Register
Database of manufacturers and suppliers
http://www.thomasregister.com
Trade Compass
Trade library and forum, market information
http://www.tradecompass.com/
TradePort
Trade info, leads and company databases
http://www.tradeport.com
USATrade
Collection of international country reports, trade events
http://www.usatrade.gov
USAID - United States Agency for Int'l Development http://www.info.usaid.gov
World Bank  http://www.worldbank.or

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