SPOTLIGHTON: LATIN AMERICA
market. Franchising is not regulated and market entry is not difficult.
Chile has enjoyed economic stability and consistent growth for the past two decades. It is a relatively small market with a large segment of the population concentrated in the capital city of Santiago. For a concept requiring a significant critical mass of locations for development, the scope of growth outside the metropolitan area may be limited. There is a substantial middle and upper middle class with real disposable income and appetite for the lifestyle. With no franchise regulations, a free trade zone and free trade agreement with the US and several other countries around the world, importing of goods is not a detriment to business. There are markets where the old ways continue to stall the growth of franchising for political and/or economic factors. Both Argentina and Venezuela are markets we are staying away from for the near future. Hyperinflation due to governmental stranglehold on taxes, imports and regulations, political corruption and lack of foreign investment has stalled the growth of franchise systems in these countries. Ecuador, Uruguay and Paraguay, even though small markets, are all showing rapid
growth. With little regulation, and huge interest from the growing middle class, franchising is a very attractive option for local investors.
“As the new century approached, we saw the region stabilise itself, attracting many brands”
Most franchisors treat Central America as
a group: Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Belize. These are small markets with few major cities and a growing middle class that favour franchise concepts. Many well-known franchise brands have presence in the region. Free trade agreements between the countries allows for fairly easy importation of goods and repatriation of fees.
Panama is a favourite destination for US and Latin American brands. Free trade agreements with the US and several developed countries and some of the most relaxed regulations in banking, investment and strict privacy laws, make this country an ideal
launching pad for further expansion in the region. Real estate prices, although rising daily, continue to be competitive in comparison with those in the US and Europe. Franchise concepts are well received with a large number of brands represented. The US Dollar is the official currency.
Although the Caribbean is a great region for a vacation, the challenge in expanding into multiple countries there by one group or individual is that the laws of their original European protectorates regulate many of them. Countries like St Martin, Guadeloupe and Martinique, fall under French jurisdiction and must comply with French franchise disclosure laws, whereas in Barbados or Bermuda, UK rules apply. There is limited potential if your concept requires a critical mass of locations and for this reason most franchisors work with direct franchising as the most reliable method of expansion. Jamaica and the Dominican Republic are the exceptions as they have several potential cities for store development and a significantly larger population. Travel between the islands is expensive and the flight schedules are not easy or flexible. It is always advisable to register your trademark and protect your intellectual property prior to entering any market. n
ABOUT THE AUTHOR
William Le Sante is managing director and CEO of Le Sante International, a global franchise development firm that represents a number of companies in their international expansion efforts. William is a frequent speaker at franchise and business conferences throughout the world. He can be contacted at
william@lesante.net
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