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Franchising Explodes in Latam

This post is also available in: Spanish

While Latam emerges as the hottest retail market in the world, local and international firms are heavily expanding their brands all over the region. These include Taco Bell, Calvin Klein, Subway, Swarovski, JW Marriott, Chili’s, KFC and more. Among the hot Latin American franchise markets:

Colombia
• 400 franchised outlets by the end of 2010 but should have 500 more by the end of 2012—a 125% increase
• Century 21 plans to launch 8-10 franchises in 2011
• Recent entries include Taco Bell (part of Yum! Brands, which includes Pizza Hut and KFC), which opened its first store in Bogotá in November
• Spanish retail giant Inditex has been in the market since 2007 with its Zara store, following that up with Bershka and Stradavarius stores, which draw younger, trendy shoppers
• JW Marriott opened in Bogotá in 2010, while InterContinental, Meliá and Sheraton all plan to launch hotels in the Cartagena area

Brazil
• Favors local over international franchises: 92% are Brazilian
• The franchise sector grew by 70% between 2005 and 2009, with double-digit growth projected for 2011
• Women driving growth with new purchasing power: beauty treatment stores like Onedera have expanded by 30% in the past 3 years
• Language schools are also taking off due to Brazil hosting the 2014 World Cup and the 2016 Olympics: top firms include Grupo Multi, owner of Wizard, Skill, Alps and Quatrum language school franchises

Peru
• A shopping mall construction boom is fueling the franchise growth
• Food franchises are 80% of the market, with key players including McDonald’s, Burger King, Subway and Dunkin’ Donuts
• One of the fastest-growing franchises is local—Pardo’s Chicken, projected to more than double over the next 4 years from 22 to 50-plus stores

Mexico
• A more mature franchise market, but it still posted 10% growth in 2010
• CKE Restaurants (franchisor of Hardee’s Carl’s Jr. and La Salsa chains) has 128 stores, opening 15-20 per year over the past 5 years
• Mail Boxes Etc. has grown to 52 stores since entering the market in 2004

Argentina
• 500 franchises with 20,000 outlets nationwide, growing 14% annually
• Fastest-growing sectors are restaurants (34%) and clothing (21%)
• Growth likely in Argentina’s interior in cities like Córdoba, Mendoza and Rosario
• New franchises opening include Hollywood Burger, Cala Pizza, Reina Batata and Markus Day Spa for Men
• Subway is opening 3 stores per month in Argentina and is expected to add an additional 20 by the end of 2011, half of them in Mar del Plata, Rosario and Córdoba
• Desarrollos Gastrónomicos, S.A. is targeting Argentina with more KFC, Pizza Hut and Wendy’s outlets in the near term

Maybe ZenithOptimedia’s projected 26% in Latam ad spend in 2011—on top of a 21% growth in 2010—will prove to be conservative.

To learn more about how we can help you reach Latin America with a customized campaign, contact us at info@usmediaconsulting.com.

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