Franchise in Venezuela
...a or Mexico had intended erroneously to adapt systems and procedures of franchise as of traditional plans to licenses brand names; was very common to see a franchisee operating a franchise under a franchisor name, but no following its procedure. Can you imagine a KFC chicken without the crispy taste? Fortunately, that change in the middle of the nineties. Today, almost all the franchisor offer a franchise distinctive element of all a system that experiences, knowledge, formulae prescriptions, administrative controls, patents, technical, and operating alignment of the franchisor in order to standardize all the franchises. Between 1995 and 1996, in Venezuela were given all the elements to occur the expansion of the franchise market; but the main factor to push it was the creation of the Venezuelan Chamber of Franchises (Profranquicias), because permitted the union of the franchisors and develop the rules and concept of the franchise in Venezuela and promoted the idea of the franchise as a successful business in Venezuela. Franchises are just now becoming very important to the Venezuelan economy and are sweeping through Venezuela, growing at an expected rate of approximately 15% this year. Last year franchises grew 20% and created an important source of both jobs and better services for the public. Venezuela now has a Venezuelan Franchise Chamber with approximately 140 members; as well as a Venezuelan Franchise Association, with more than 60 members. The Venezuelan franchise boom began in 1998 and it has now become the second economic sector of sustained growth in the country (20%) as indicated by the estimates of said chambers. The current wave of franchises has made Venezuela home to some of the world’s most successful individual franchised stores. Venezuela now has 190 registered franchises. (Venezuelan Statistic Office, 2002) The Venezuelan Franchise Chamber has drafted a Code of Ethics to establish a good customs and conduct guideline for the users of franchises in Venezuela. It establishes a definition of what is considered a franchise, the guiding principles for franchises, the obligations of the franchisor and of the franchisee, the obligations of the parties in the event of controversies, aspects regarding publicity and information, the basis for a uniform franchise offering circular, as well as the basic contents of franchise agreements. This Code however, does not replace any legislation or rules governing the franchise business nor does it constitute the origin of the juridical relationship between the parties of a franchise agreement. It is a good business to invest in buys a franchise in Venezuela? Because the political and economical crisis, sound very risky. Why to invest in a franchise instead to invest in mutual funds or save money in a bank? What happen if the franchise is not successful? Those are only few of many questions that all the people who want to buy a franchise in Venezuela (and everywhere) always do. Moreover, they are right to have those worries about their investment. Here are some of the pros and cons that we find in order to invest in a franchise in Venezuela: Smaller expenses in advertising and big diffusion (even international). Possibility of exploiting a business accredited with small commercial risk. Big admiration for foreign brands and needs for consume them. Reduction of risks upon investing in a business tested In addition, here are some cons: Dollar fluctuation- Bolivar Devaluation. Economical crisis: high inflation. Low range for decision making by the franchisee regarding improves. The system of franchises does not guarantee the immediate success Despite of these cons, the Venezuelan franchise market is growing. In agreement with the consulter Spanish Tormo & Associates, Venezuela occupies the third in place in Latin America in development of franchises, after Brazil and Mexico. Carlos Núñez, director of this firm, indicates, "Venezuela has the same growth of franchises that have had countries developed. The sector is growing to reason of 30% yearly in head offices of franchises. We are speaking of 210 brands approximately which 55% are local franchises and 45% from foreign countries". (Pro...