With an annual turnover of US$ 13.7 billion (32 billion reais), franchises currently account for 1.7% of the total wealth produced in Brazil, referred to as the Gross Domestic Product (GDP).
And the sector continues to grow: It expanded 9% last year and is expected to grow 10% this year. These figures were furnished by the Brazilian Franchising Association (ABF).
Contrary to popular belief, 90% of the franchises are Brazilian. They generate 30 thousand direct jobs each year, on average, and there are 804 networks operating in the country, with 59 thousand sales or service outlets.
Globally, Brazil is ranked sixth in this market, after the United States, Japan, China, the Philippines, and Canada.
For Ricardo Toledo de Camargo, executive director of the ABF, the franchise market is advantageous and more secure than that of the independent businessman.
He explains that, while conventional businesses have a 45% success rate, the annual failure rate for franchises is only 2.5%.
“Investment in a franchise is naturally much more secure, in consequence of all the organization the firm is required to have and all the orientation provided to the franchise operator,” he affirms. On average, the initial investment is recovered in two to three years.
A new Franchise Law proposal will soon be submitted to the Presidential Advisory Staff. The main objective is to guarantee greater security to franchise operators, according to Patricia Mayana, an adviser with the Market Access division of the National Sebrae (Small and Medium Business Advisory Service).
Under existing law, a business can be transformed into a franchise system immediately after the inauguration of the original establishment.
The new proposal would only permit this transformation after the business has been inaugurated and functioning for two years.
“This protects the franchise operator, since one can assume that the business that is being offered as a franchise has had time to mature and achieve market success,” he observed.
ABr – www.radiobras.gov.br
