The number of franchises in Colombia more than doubled during the last six years, from an estimated 100 at the end of 2002 to about 270 by November 2008. This boom was due mainly to the implementation of the franchise concept by many local firms which have realized that franchising their products, services, and marketing systems may be a safe and less complex way of expanding their business.
There is a growing interest in the local market for franchising systems. However, there is an increasing competition from local and third country firms. U.S. firms interested in the Colombian market must be aware that competitive prices, product quality, strong promotion campaign, customizing products to local market, using appropriate labeling and packaging, very clear contracts, and an excellent training of local franchisees are some of the main factors determining a successful market penetration.
The following factors led to substantial growth of the Colombian economy during the last four years and also have a direct positive impact on the franchise market:
• improved domestic security
• low inflation policy (5.69 as of December 2007)
• Colombian peso appreciation and stability
• increase in petroleum price
• a significant growth of foreign trade and investments
• high GDP growth rate (6.6% in 2007)
Although there are no reliable figures on the franchise sector in Colombia, the industry sector estimates that currently there are some 90 foreign firms franchising in Colombia. Approximately, 44 % of these firms (40 companies) are from the United States, followed by Italy, Argentina, Spain and France. It is estimated that 52% of the franchise businesses have at least 10 locations; 25% have from 10 to 24 locations and the remaining 23% have more than 25 locations. Most of these locations are located in the city of Bogota, D.C., followed by Medellin, Cali, Barranquilla and Cartagena.
By Rebeca Rueda