Franchises in Brazil
What we aim to expose in this article is an overview of the franchise market in Brazil, considering its current status, characteristics, issues and solutions.
Recent studies have shown positive predictions to this market in Brazil. In 2010, the growth was of 20% in comparison to the previous year.
Such promising market requires qualified professionals and this has become the greatest challenges of franchisors in Brazil. As there is a high demand for these professionals in the market, entrepreneurs have to develop modern and flexible management models.
The Process
If you are willing to open a franchise in Brazil, you probably will have to deal with training issues. Many franchisors point out training matters as one of their main obstacles to open a franchise in Brazil.
One of the reasons why is the fact that on-line teaching still is not a common practice in Brazil, so most of the companies have to provide classroom training, which is much more expensive and takes much more time.
Who provides the training:
The majority of the franchisors believe that the most efficient way of providing training to the franchisee is through a consulting company. There are also those who believe that the franchisor's Human Resources department could be in charge of the training, but this option may not be very viable for smaller companies that do not have too many people working in this department.
Who receives the training:
This training is generally offered to the franchisee and its employees or to the manager of the franchisee and then he would be in charge of how the information would be transmitted to his staff.
How long does the training lasts and what are the most common methodologies:
The duration of the training varies according to the size of the company, but those that last more than 40 hours have proven to be the most efficient and are the most commonly adopted in Brazil.
These training are usually offered twice a year, as a way of “recycling” the employees. This number varies, as smaller franchises tend to train their franchisees once a year and bigger franchises once every two months.
Different methodologies are adopted, but most of then are focused on presentations and lectures, which make the training not so useful as people tend do absorb less than 30% of what they are taught through the usage of these methodologies.
Some franchisors, however, seem to have started to realize that those methodologies were no longer as efficient as they expected and have started to invest in case studies, simulations and more dynamic methodologies that promote interaction among the employees.
Incentives
As previously mentioned, qualified workforce is one of the main issues for the franchisors who want to establish in Brazil, so as there is a high demand for these professionals, franchisors adopt several policies and measures in order to avoid labour turnovers.
The most common are:
- Bonuses and prizes: this practice is the most commonly adopted by franchisors who want to keep their professionals in the company.
- Remuneration: this is the second more common practice in Brazil. However, there is some controversy about it as when inquired about this remuneration, most franchises say that the salaries they offer are the same as those practiced in the market, so it is questionable if it really constitutes a benefit.
- Benefits: as mentioned in the article 7 Things to Consider Before Hiring in Brazil, Brazilians are used to receive several benefits besides the salary, so franchises that offer benefits such as health insurance, profit sharing or fourteenth month salary, for example, are one step ahead.
- Carrier Plan and Education: there has been a tendency of using carrier plans and education to avoid labour turnovers. This is very positive as it works both ways: the employee gets to invest in his/her carrier and the franchiser gets a better qualified professional. The most common form of this benefit is to pay half of the tuition fee for those who are still in college.
Successful Enterprises
Here is a gathering of the most successful franchising enterprises in Brazil, according to their segment:
Food Industry
In Brazil, specially in big cities, it is very common to see food corners where you can find all types of food, such as Italian, Japanese, Chinese, Arabic and also regional food. This aspect has been absorbed by Brazilian culture and Brazilians see these foods as regular part of their diet.
This aspect of the Brazilian culture is viable for franchisors from the food industry, that has been clearly successful in the country. As examples of successful franchises we can mention McDonald's, Habib's, Bob's, China in Box, Casa do Pão de Queijo, Cacau Show and Kopenhagen.
Just to give an idea in terms of numbers, Bob's minimum investment is of 530.000,00 BRL and the pay back forecast is of 36 months. As for China in Box, the minimum investment is of 350.000,00 BRL and the pay back forecast is of 24 months.
Apparel and Footwear
Arezzo, Chilli Beans and Hering Store constitute the most successful franchises in Brazil in 2010.
In 2009, Hering Store experienced a growth of 47% in comparison to 2008, reaching a billing of BRL 646 million. Until 2012, 405 new units will be inaugurated throughout the country.
Cosmetics and Drugstores
Along with Contém 1g and Drograrias Farmais, the brand O Boticário has experienced an increasing success over the last few years. It currently has almost 3 thousand units and 900 franchises.
Technology
In 2010, Nokia was ranked as one of the most successful franchises in Brazil. In 2008 it was considered the fifth most valuable brand in the world.
The first Nokia Store was inaugurated in São Paulo, in 2010, and in only one year, Nokia was able to inaugurate one thousand Nokia Stores, throughout Brazil.
The minimum investment is of 590.000,00 BRL and the pay back forecast is of 36 months.
Other Related Information
- 7 Things to Consider Before Hiring in Brazil
- Trends of Doing Business in Brazil in 2011
- 4 Lessons to Learn from Starbucks in Brazil