The number of franchises in Colombia tripled during the last seven years, from an estimated 100 at the end of 2002 to about 300 by the end of 2009, according to the latest research carried out by Tormo & Asociados-Colombia in November 2009. Local companies created this boom because they began to implement the franchising concept to market their products and services. They also viewed franchising as a safer and less complex means of expanding their business.
Although no reliable figures exist regarding the true size of the franchise market in Colombia, the U.S. Commercial Service estimates there are 90 foreign franchises in Colombia while Tormo & Asociados estimates there are 61. The difference in the estimates is because Tormo & Asociados uses its own criteria and data base and does not rely on public sources. The United States currently represents an estimated 46 percent or 29 of the total number of foreign-origin franchises, followed by Brazil (8), Spain (7), Venezuela (5), Italy (3), France (2), and other countries with one franchise in Colombia, like Argentina, Ecuador, Canada, Japan, England, Germany, Belgium and Guatemala.
Services accounts for 63 percent of the franchising sector, while the retail accounts for 37 percent. Within the services segment, restaurants and fast food services lead with 14 percent of the market. This segment also includes firms engaged in education, financing, mailing and courier, real state, telecommunications, dry cleaning, information technology, and entertainment.
There is no specific legislation governing the franchising industry in Colombia. The legal aspects of franchise contract use the same framework as the chapters of the Colombian Civil and Commercial Codes that regulate commercial contracts. A franchising contract is considered to include: brand licensing, technology transfers, technical assistance, etc. Contracts should emphasize a clear description of the parties’ mutual rights and responsibilities.