by Sarah Vogel

Franchises have been booming worldwide. Close to 10 million employees work at approximately 400,000 franchise locations worldwide. Franchise owners enjoy that they can open a restaurant without as much risk, and the restaurants enjoy the increase in revenue coming from new stores in a variety of countries. One of the most recent booms in the franchise world is the massive growth in Latin markets. In the past year alone Brazil has experienced a 15% growth in franchises, Mexico has had a 13% increase, and Argentina also had double digit growth with 10.5%. 

The large franchise growth in Latin America has many considering if it could be a good investment. Owning a franchise restaurant is not without risk however, there are many obstacles that franchise owners must also overcome. Start-up costs can be substantial, and continuing operating costs can also add up quickly. In Latin countries it can also be difficult to find enough skilled workers to employ. Still, it has been a great option for many especially considering the enormous growth of this type of business in Latin America. McDonalds, KFC, and Burger King along with Latin based stores like Havanna, Pao de Queijo, and Heladerias Grido have all expanded tremendously across Latin America.

There are many pros for brands to franchise in Latin America, but there are also many considerations. Legal issues, trademark considerations, political conditions, and international fees all need to be taken into account. In addition, taste differences are a major hurdle. Careful testing and marketing research needs to be used to ensure that the products offered will appeal to the local preferences. This often means altering the menu significantly. For example KFC serves black beans as a side in Brazil, and McDonalds offers Kosher options in Argentina to appeal to the large Jewish population.

Once cultural adjustments have been made, Latin America offers some of the highest potential markets in the world for franchisers. With its large population and growing middle class, Latin America is ideal for many international restaurant chains. Growth is expected to continue as new stores are opening daily and more brands expand into the area.

( Vivian )07 May,2012

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