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Franchise Fever Grips Mexico in Modern-Day Gold Rush : Trade: With the hope of free trade on the horizon, entrepreneurs hurry to grab a slice of a grande cash pie.

April 26, 1993|From Associated Press

MEXICO CITY — Haagen-Dazs is opening its first Mexican cafe, Ripley's Believe it Or Not has become the latest tourist stop, and American hot dogs are on the way.

Franchised businesses are rushing to steal the march on free trade. Although the North American Free Trade Agreement has yet to be approved, entrepreneurs are trying to grab a slice of Mexico's lucrative pie of 81 million consumers.

"Business is booming. . . . There seems to be an enormous amount of interest in franchising," said American business consultant James Gregory. "Last year I was under the impression a lot of U.S. businesses were holding back and watching NAFTA. But they aren't waiting anymore."

If the 1992 agreement between the leaders United States, Canada and Mexico is ratified, it will create the world's largest tariff-free zone--with 360 million potential consumers.

But franchise fever has already brought Mexico at least the trappings of free trade: foreign fast-food chains are vying with traditional taco stands for customers, warehouse club retailers are competing against Mexican department stores, and famous-name clothing outlets are sprouting up everywhere.

Franchisers began arriving after President Carlos Salinas de Gortari eased restrictions on foreign businesses in 1990, granting trademark protection that opened the door to American and European chains.

"Mexico has already become littered with fast-food franchises from the United States: Dunkin' Donuts, Arby's, McDonald's, Domino's Pizza--they're all here," said Gregory. "And this is just the start."

The Mexican Franchise Assn. reported that in 1992 franchises with combined sales of $1.4 billion employed 45,290 people. It was the first year such figures were recorded, but the trade group says growth has been phenomenal.

"We've gone from a handful of members to nearly 150 in just a few years," said Derek Stilwell, a vice president at the association, which includes budget motel operators, cookie and hearing aid manufacturers and shops that do quick oil changes.

On top of that, Ripley's Believe it or Not, the museum of oddities, last year opened an ersatz castle with 70-foot turrets.

Many Mexicans aren't pleased about the littering of their cultural landscape with the fast-food strips, fashion icons and other flotsam from Western consumer society.

"Our hamburger is the taco," insisted Homer Aridjis, a Mexican writer and defender of Mexican culture, complaining that most of the new goods and services are beyond the reach of Mexico's poor majority and even the small middle class.

"These restaurants are expensive, these new fashions and video toys are expensive," he said. "Many of our people will never afford them."

Executives are aware of that fact. They caution that with the franchise business aimed at the small sector of Mexican society with extra money to spend, it could quickly become a saturated market.

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