Chile Keeps Warming to U.S. Franchising
Santiago, Chile sits near the meeting of the Nazca and South American tectonic plates, vast slabs of the Earth’s surface that grind past each other at a rate of about three inches a year, sometimes causing earthquakes and tremors.
But what shook up this prosperous, stable nation last week was a U.S. Franchise Trade Mission, which brought 25 U.S. brands to a country with the highest per capita income in South America and a growing, diversifying economy.
Tony Valles, Vice President of Business and Concept Development for McAllister’s Deli, believes the country is more than ready for a franchise boom. “We came on the trade mission because we’re getting steady interest from Latin America. In the past, we took a more opportunistic approach. Given the potential of these markets, we want to take a more strategic approach,” he said.
The interest in McAllister’s dovetails with growth in the Hispanic market in the U.S. “The big operators are interested in our brand,” he said. “With a little tweak in the menu, we think our product will work very well in Latin America.”
Home Instead Senior Care President Jeff Huber jetted in to join Senior Vice President and Chief Operating Officer of Global Operations Yoshino Nakajima for a back-to-back set of meetings in Santiago.
Huber majored in English literature and also earned a law degree from Jesuit-run Creighton University in Omaha, Neb. before clerking for a federal judge and practicing law on the way to Home Instead, where he became President and COO two years ago. “For me, it’s about being of service,” he said. “We provide very personal care to vulnerable people in the sanctity of their homes. You need a high level of commitment and passion to do that well.”
As such, Home Instead looks for a special kind of business partner. But that hasn’t hampered international growth: The brand operates about 1000 units in 16 countries, so far.
With a well-educated population of 17 million, Chile has attracted other top U.S. firms, including Wal-Mart, Turner Broadcasting, Oracle, Equifax and MetLife in addition to the largest U.S. franchise brands.
Growing at about five percent per annum, it has the highest per capita income in South America – equivalent to Russia and Malaysia. And if the natural beauty, mineral wealth and educated populace don’t impress, hear this: Chile’s debt-to-GDP ratio is 10 percent – compared to 100 percent in the U.S.
…Now, back to positive thoughts.
By 2016 all tariffs on U.S. goods in Chile will be phased out, thanks to a 2004 bilateral trade agreement, further improving the attractiveness of U.S. products. Seventeen percent of Chile’s imports already come from the U.S. – with import growth surging each year overall.
Ray Hays of Edwards Global Services said his clients, BrightStar Care and Sport Clips, Inc., will benefit from the growth in Latin America. “In the case of BrightStar, it’s pretty clear where they fit. It’s the type of brand that is attractive and needed,” Hays said, adding, “It’s important for a master franchisee to know the regulatory and medical sector in the country.”
About Sport Clips, Inc., “People see it and they just get it,” he said. “The response has been, ‘This is something we could really use here.’ They have very few options for men’s hair care. The barber trade is disappearing. The franchise is able to offer more for a similar price and dominate the market.”
While Hays said due diligence and follow-up are necessary to further qualify potential franchise partners in Latin America, the trade mission fostered a series of high-quality meetings set up by the U.S. Commercial Service team led by Veronica Pinto in Santiago.
“The 2012 International Franchise trade mission to South America exceeded Global Franchise Group’s expectations in every way,” said Chief Development Officer John Barber, joined by Santiago-based international franchise consultant and former IFA executive Marcel Portmann on the trade mission. “We could never have scheduled this productive a trip without the help and support of the U.S. Commercial Service, the International Franchise Association (IFA), and Franchise Times.”
“For anyone still thinking that South America is a future possibility for franchising, I encourage them to rethink their position,” said Don Burleson, Executive Vice President of Jani-King, “because the opportunity exists now.”