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Brazil Exports Its Franchises to 39 Countries

Brazil's Boticário According to the ABF (Brazilian Franchising Association), Brazil has 52 franchised brands abroad, in 39 countries. This represents an expansion of 50% since 2006 when the number of franchises overseas was 35. They amount to about 5% of the income generated by franchising in Brazil.

Last year, the segment posted domestic growth of 15.6% over the previous year, informs the ABF. It was the highest growth rate recorded in the last seven years, resulting in revenues of 46 billion Brazilian reais (US$ 28.6 billion) to the franchises. Brazil is the world's third largest franchise market.

"Our sector is almost 100% formal and very organized. Companies have funding for marketing, strategic planning and performance goals," says Ricardo Camargo, executive director at the ABF.

In Brazil, the number of existing networks went from 1,013 in 2006 to 1,197 in 2007, growth of 18.2%. Taking into account the last two years, Brazilian franchised brands grew by more than 23%.

There was also an increase in the number of franchised units, which rose from 62,500 in 2006 to 65,500 in 2007, growth of 4.7%. In 2007, the franchising system created 30,000 new job positions, and currently it totals 594,000 direct jobs. The performance is reflecting in 2008 as well. According to Camargo, the franchise sector for the food segment, for example, grew 22%.

There are regions of the country with greater growth potential. The Northeast is one of the most promising markets for the franchise sector, according to Camargo. With the third largest number of franchises in Brazil – losing only to the Southeast and South -, the Northeast has been sought mostly due to the launch of shopping centers in cities such as Salvador, Recife and Fortaleza.

"The trend is for franchisers to seek new markets in the country, outside of the South-Southeast hub. One of the reasons for that is the expansion of the population's purchasing power in that region. With more money, northeastern consumers are now able to purchase brands that were previously inaccessible to them. And branding is the most important factor for franchises. Until a few ago, this type of business was not viable in the Northeast."

According to the director, only 11% of brands that own franchises in Brazil are foreign. "We have a high rate of nationalization. In Mexico, national brands answer to 75% of franchises and in Spain, to 85%."

The franchising sector will soon offer six new products in the domestic market, which are going to help select potential franchisers and franchisees. The Brazilian Micro and Small Business Support Service (Sebrae) and the ABF have developed lectures, courses, a textbook and support tools for those interested in entering the franchising segment, under the Sebrae Franchising program.

The new products are going to be launched during the 17th edition of ABF Franchising Expo, Latin America's largest trade fair for the sector, to be held from June 25th to 28th at Expo Center Norte, in São Paulo.

The fair will count on approximately 230 participating brands, which will be seeking entrepreneurs interested in establishing their own business. There will be offers for all tastes, pockets and regions of the country.

A Few Countries with Brazilian Franchises

Portugal 29

US 17

Angola 12

Paraguay 11

Mexico 10

Spain 7

Chile 7

Sebrae

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