Anyone who has had a popsicle in Mexico is probably familiar with the La Michoacana brand. It is as ubiquitous as Burger King is to hamburgers or Dunkin’ Donuts is to donuts. La Michoacana stores can be found anywhere — from the smallest villages to the largest metropolitan cities in Mexico and among Mexican immigrant communities in the United States. The signature product is called a paleta, a frozen fruit bar on a stick that comes in such flavors as spicy pineapple, cheese, and mango with chili. Although, at first glance, all La Michoacana stores appear to be alike, important differences indicate that they do not belong to a single franchise. The name suggests a common origin in the state of Michoacán, which stretches from the Pacific to central Mexico.
A common element in all of these stores — known as paleterías — is their name, which invariably features the words “La Michoacana.” Variants include La Fé Michoacana, La Michoacana Tradicional, La Michoacana Artesanal and La Michoacana Paletería y Nevería. Physically, all of these paleterías look similar: The format is typically an open-air storefront. Layout is kept simple and paletas are displayed in commercial freezers. The color scheme is pink and white. Fresh fruits, cheese nachos and fruit juices add a plethora of color. However, these paleterías do not pertain to any single franchise, but rather constitute an “informal chain.” While many employ a common logo, there are variations in store layout, decoration and product selection. Given the differences and the lack of centralized management, what is the relationship across these paleterías?
The origins of the La Michoacana tradition provide clues to the mystery of its present configuration. A number of different stories suggest how it developed. One version is that in the 1960s, an ice cream maker from Tocumbo, Michoacán, worked in the United States and then returned home where he used his savings to launch an ice cream and paleta-making business. A competing version states that in 1932 (or 1942), Agustín Andrade and Ignacio Alcazar, also natives of Tocumbo, moved to Mexico City, where they worked at a paletería and subsequently launched their own store. They then brought the business model back to Michoacán, where it was emulated by other entrepreneurs.
Family Connections
Regardless of which story is accurate, what is certain is that over the years, families from the region emigrated to other parts of Mexico, taking this business model with them. That gave rise to the ubiquity of paleterías in Mexico bearing the name La Michoacana or some variant thereof. Recipes, store set-up and the art of paleta production were mostly transferred via family connections. A 2003 Austin Chronicle article recognized that, at the time of La Michoacana’s inception, no one copyrighted or trademarked the name or the concept. Consequently, no single entrepreneur can claim ownership of the brand.
According to interviews with independent storeowners in Monterrey, Nuevo León, and Mérida, Yucatán, many owners of La Michoacana stores now seek to establish legitimacy by claiming a direct family link to the original founders; authenticity is usually cited through a tío (uncle) or other relative from Michoacán. For example, the owner of La Fe Michoacana in Mérida proudly relayed that, “my husband’s uncle brought the knowledge of how to produce the paletas and ice cream from Michoacán to Merida about 40 to 50 years ago. He eventually taught my husband and transferred the business to him.”
This and other anecdotes illustrate the importance to storeowners of establishing authenticity by citing a family link to the founders. It also illustrates the problem of objectively attributing brand ownership. Given that Mexican trademark and copyright laws were not well developed at the time the La Michoacana concept first evolved, there is little evidence of early attempts to copyright the brand. In recent years, however, there has been a rush to capitalize on the brand due to several factors — the evolution of intellectual-property law in Mexico, business owners’ increased awareness of intellectual-property issues and the migration of La Michoacana to the United States.
No business ever takes branding lightly. According to the American Marketing Association, a brand is defined as the “name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or a group of sellers and to differentiate them from those of the competition.” According to this definition, the name, symbols and products associated with La Michoacana, indeed, constitute a brand.
La Tocumbita S. A., a company based in Tocumbo, Michoacán, has attempted to leverage the brand power of La Michoacana through a unified brand image and standard product line. In the 1990s, Alejandro Andrade, the company’s director general, initially sought to develop a La Michoacana franchise. According to Andrade, attempts to convince the large number of independent storeowners to cede control were unsuccessful. In addition, by this time, many variants of the name had already been registered by other individuals with the Instituto Mexicano de la Propiedad Industrial (IMPI), the government body responsible for trademark, copyright and patent regulation in Mexico. This diminished Andrade’s ability to capitalize on the brand and further complicated trademark enforcement.
Andrade claims to have developed and trademarked the now ubiquitous and predominately accepted La Michoacana logo: an indigenous girl dressed in typical garb holding an ice cream cone with the words “La Michoacana–Es Natural” surrounding her. This logo proved to be highly effective and was eventually adopted by the majority of independently owned stores, mostly without Andrade’s authorization. For example, it became common business practice to stamp ice cream containers and freezers with the La Michocana logo, with or without La Tocumbita’s permission.
Unauthorized permutations of the logo are also widespread. Some incorporate the La Michoacana girl holding a paleta in place of the original cone, while others contain variations on wording and font. La Tocumbita lacked the financial resources to enforce its trademark in Mexico and eventually lost control of the brand image it had developed. According to Andrade, “we really can’t do anything about it…. [W]hen I tried to fight [brand] piracy, I realized that I would have to spend large sums of money… and that I would never recover the cost [of doing so]…. In the end, piracy far exceeded [our capacity to combat it].”
In response to these violations, La Tocumbita redefined its business model and began to offer pseudo-franchise packages to new, independent storeowners. The most comprehensive package consists of a step-by-step formula for launching a successful store, including everything from recipes to supply chain management. La Tocumbita provides advertising, equipment, and training and, perhaps most importantly, works closely with its clients. La Tocumbita’s business model, however, is different from that of a true franchise in two important respects. Storeowners are not obligated to follow the recommendations and standards put forward by La Tocumbita. Although the company receives payments for its services, it does not charge franchise fees. Once franchisees have successfully established their stores, they can choose to stop purchasing La Tocumbita’s services at any time. As Andrade points out, “we can’t force them [to conform] because we don’t sign a franchise contract … due to legal loopholes in the registration of the trademark.”
Despite the challenges of piracy and the inability to enforce their trademark in Mexico, La Tocumbita’s business continues to grow. It claims between 400 and 500 total clients to date, with the number who have bought their full package at approximately 150. “My company continues to grow … although not as fast as I would like,” he observes. Andrade’s clients include several in the United States, though by the time he made his first moves into this growing new market, he found that he was blocked from using the logo and brand name he had developed.
18 Separate Trademark Applications
Given the success of La Michoacana in Mexico, it was only a matter of time before Mexican immigrants brought the brand to the U.S. Growth in the U.S. followed a pattern similar to that in Mexico: Independently owned stores characterized by the La Michoacana theme proliferated throughout the country. Numerous entrepreneurs in the U.S. have tried to lay claim to the La Michoacana brand by attempting to trademark it themselves. Public records at the U.S. Patent and Trademark Office (USPTO) contain at least 18 separate trademark applications for some variant of the name and logo.
According to a 2005 Wall Street Journal article, La Tocumbita did not immediately attempt to trademark its signature logo with the USPTO. Andrade claims that by the time La Tocumbita sought to market its services to customers in the U.S., American paleta manufacturers had already adopted the logo and brand image that he had developed. The Wall Street Journal cites one such company as Paleterías La Michoacana, based in Cerres, Calif., which mass produces paletas and ships them to supermarkets, convenience stores and snack-cart owners throughout the U.S.
Paleterías La Michoacana uses Andrade’s original logo and brand image without paying royalties. Although Andrade attempted to set up a licensing agreement with this company in the U.S., he claims that owner Ignacio Gutierrez refused to comply. According to the Wall Street Journal, Gutierrez disputes La Tocumbita’s claim to ownership of the logo and brand name.
After several other manufacturers in the U.S. also attempted to use the brand image, Paleterías La Michoacana moved to register the name with the USPTO in 2003 and filed to trademark the signature logo La Michoacana–Es Natural in April 2008. It is unclear what legal recourse, if any, La Tocumbita now has to contest the claims of Paleterías La Michoacana and enforce its Mexican trademark in the U.S. “Where I sell a dollar, he sells a million…. I don’t have the resources to combat [brand piracy] here in Mexico, much less in the United States,” says Andrade.
Unable to leverage its brand image in the U.S., La Tocumbita has decided to focus its U.S. business on selling services and equipment to storeowners. Packages now also include helping clients to develop and trademark their store brand, which is typically a variation of the La Michoacana theme. As Andrade states: “We tell [our customers] that we don’t want the same thing to happen to them as happened to us in Mexico [with respect to the piracy of their brand names].”
The case of La Michoacana illustrates the importance of international brand protection and trademark enforcement. It is an example of a universally recognized “brand” that is not a concept or item attributable to a single company. Rather, La Michoacana developed through the efforts of multiple protagonists who created and fostered the growth of this cherished Mexican phenomenon. The La Michoacana story illustrates the complexities of entrepreneurial brand development in a rare demonstration of an orphaned brand owned by none, but loved by all.
This article was written by Hussein Kalaoui, Stacey-Ann Johnson, Nicole Karlisch, and Leeatt Rothschild, members of the Lauder Class of 2010.
