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Franchise opening in Brazil. International franchising investors bet on the country.Posted 05/12/2018
To explore the business world is the dream of many businessmen. The franchise model has already proved itself to be a great alternative to fixate the brand, attract investments and acquire more space in the market. International franchises are aiming at South America and have already found a way, expanding their franchise operations in Brazil could turn into good profits.
In the last years some international franchises from the United States, Europe and other countries brought their brands, business models and are motivated to invest in Brazil. The presentations and ROI (Return on Investment) potentials have attracted many investors through business events, specialized trade fairs and workshops. With support of offices specialized in franchises in Brazil, many brands have established themselves successfully and have been winning their target on Brazilian soil, from North to South, from East to West.
Brazil is already among the countries with the biggest opportunities in the World’s franchising market. According to data released by ABF (Associação Brasileira de Franchising; the Brazilian Franchising Association), Brazil is already the 7th country with the highest average of franchised stores, reaching almost 50 franchises per brand. In Brazil there are over 144,000 franchisers (investors and businessmen) and almost 3,000 franchise chains.
This demonstrates the international potential of franchising in Brazil, the growing numbers, even in moments of economic challenges. According to a study by ABF, in 2017 the franchising numbers in 2015 and 2016 showed that the franchising sector managed to stand out in the international market, growing 8,3% in Brazil.
The revenue of franchises reached the R$ 151 billion mark and this has drawn the attention of many foreign investors. Besides expressive revenue, the number of franchised units has also grown. In a comparative balance, between 2015 and 2016 the number of new franchises increased by 3,1%.
In Brazil the franchises are already in 2,321 municipalities (about 42% of the municipalities of Brazil) and there’s still much space to grow. The increase of these opportunities has been favorable due to the big shopping centers projects in Brazil and the maturing of the tourism sector.
According to a study by international franchises, Brazil already has almost 80 international brands, and this number represents about 2,5% of the total franchising market.
Some very well-known fast food brands from the United States have already been in Brazil for many years and have been intensifying investments, like Mc Donald’s, Burger King, Subway, KFC, Sephora, PSG Academy and many others. Besides, other franchising sectors such as education, transportation, health, real estate and services are growing in the country.
In the Brazilian market the startups and apps are already establishing themselves In Brazil and closely following the franchising market. Taking advantage of the same trend, many Brazilian franchises are also leaving Brazil and exporting their operations like Localiza (car rental), China in Box, Habib’s, iGUi Piscinas, Dudalina, Giraffas, Pucket, Hering, Spoleto, Wizard (English-language school), among others.
Despite the growing numbers, expanding the brand and investing in an international franchise requires attention and specialized consultancy. “Doing research, knowing the rules, studying and developing an administrative and marketing plan are important to know if the product or service will adhere to the country’s culture. Another important point is knowing the taxes and tax burden, when compared to other countries Brazil offers many opportunities but also possesses a bigger tax burden and some bureaucratic processes, which if done incorrectly could delay the franchise’s arrival in Brazil”, says Mathieu Piques, managing partner of Europartner – accountancy office specialized in helping international companies and franchises in Brazil.Author's post: Europartner Accounting