Published in February 2012

Growth franchise requires careful selection

The country should receive about 9,000 franchise units this year, which will be added to the existing 90,000, according to the ABF (Brazilian Franchising Association).

Although the survival rate of these businesses is 98.5%, the model retains traps, like any other. But many entrepreneurs only realize this when they are abandoned by franchisors.

Adriano Agostini, 38, says he has been left aside soon after acquiring the franchise IWL (Institute Wanderley Luxembourg, sports education) in Victoria in 2008.

The brand sold material with the same content to a network of teaching school, which opened less than a mile from the unit Agostini. By contract, the franchiser guarantee that there would be competition from brand radius of 50 kilometers.

In 2009, the institute closed shortly after Agostini have quit the business. "The administrators were not prepared."

In court, he asks £ 470,000 in damages. After a victory, the case returned to the first instance to have been tried in absentia (the IWL no defense).

"It's a tactic to delay the decision," says Mauricio Costa, lawyer Agostini. Representatives of the IWL did not answer calls Leaf.

Processes such as Agostini take years. Estevanato Vicente, 57, a former franchisee of Arby's sandwich shop, still hangs court battle. The network opened in 1991 and closed in 1999, to have strict standards of quality and low profitability. William Ferreira, director of Bahema, former franchisee, says he feels "some responsibility". But he said: "[Estevanato] did when he entered the evaluation."

Secrecy protects action outside the Justice

To resolve disputes quickly and confidentially, franchisors and franchisees provide that any disputes be settled by arbitration chambers, private institutions that decide disputes over property.

In the Arbitration Council of the State of São Paulo are about 40 cases per year, says the superintendent of the institution, Ana Claudia Pastore.

It is precisely because of the confidentiality that future franchisees often have no access to what was decided in chambers. By law, the franchisor must report that lawsuits facing.

There is no legal opinion on the duty of the mark list where the arbitration was used, says the attorney from ABF Edna dos Anjos.

"The proceedings in arbitration are not disclosed to potential franchisees, but they should," says Vanessa Baggio, a lawyer representing 12 cases of franchisees. In all, she tried to get agreement without success.

Three years after buying the franchise network Spoleto, Laertes Manduca, 76, has agreed to go out of business.

There was not enough customers, making it impossible business. He decided to change the branch and opened a clothing store at the same point.

The end of the contract "was peaceful," he says. There was no penalty for leaving before the deadline.

"When the unit is not going well, it's easier to make amicable termination," says Renata Rouchou, director of the Wheat Group, owner of the network.

Source: Folha de São Paulo - Business

INDUSTRY FRANCHISES updated Mar/2010

The Brazilian Franchise Industry closed 2009 with revenues of approximately $ 63 billion, an increase of 14.5% over 2008. For 2010, the expectation is to reach 15%, an amount exceeding $ 72 billion. With these numbers, Brazil is in 5th position in world ranking of Franchising.

Brazil still has much to grow, when it comes to franchise, considering that the sector accounts for 20% of GDP in the U.S. and here, only 3% of GDP.

In 2008, there were 1,379 franchise networks operating in the country - the expectation for 2009 was 1460 and for 2010, 1540. Data for 2008 totaled 72,000 points of sale throughout Brazil, 700,000 direct jobs and 2.5 million indirect jobs.

Among the factors responsible for growth in this sector are the unemployment that reached executives in recent years, resulting from successive waves of mergers and acquisitions in various sectors, which led these executives to seek entrepreneurship. The lack of resources these entrepreneurs to expand their business, which led them to seek relief as a strategy of expanding its business.    And the expected growth of the Brazilian economy, which attracted large international networks.

On the demand side, the franchises drove the increase in purchasing power of social classes that had not previously consumed, the expansion of credit, and consumption niches, such as the female segment.

Another motivator for the development of franchises is the mortality rate in the industry, 10% in the first 10 years, against 80% in independent businesses.

Brands operating in Brazil, 90% are genuinely national.

Source: ABF site, the Examination. 25.

RANKING OF FRANCHISES - extracted from the ABF site in Mar/2010

Guide to Franchising> Franchises Rankings

COCOA SHOW - LEADING FOOD FRANCHISES

DATA

FOUNDER AND PRESIDENT - Alexandre Costa

FOUNDATION - October 1988

HEADQUARTERS - Itapevi, in São Paulo

NUMBER OF STORES - 750 spread across 24 states (all of which are franchises)

SALES IN 2009 - R $ 272 million

STRATEGIES

Adopt Zara chain as benchmarking, quality, air of sophistication priced 25% lower.

Constant watch on costs.

Lean structure: only two directors.

Fast delivery:   meet the franchisees within 2 days.

The franchisees have day and time each week to make their requests.

Uses outsourced fleet of up to 40 trucks.

Objectives: to 10 spears news every 15 days to encourage the customer to return the store.

Constant renewal, flavors and packaging.

Expansion for the purchase of a chocolate shop in Belgium.

Buy an ice cream factory in Brazil - considering that it is the Sottozero.

Source: Gateway Exam.

INCOMING NEW POSTAL SECTOR - YOGOBERRY, Source: The Globe.