Franchising in Argentina – How Adversity Produces Opportunity

07/21/2004

INTRODUCTION

Despite recent economic turmoil, franchising in Argentina has rebounded at a surprising rate.  In the 1990s, many foreign franchisors (particularly from the U.S.) expanded to Argentina.  At the height of the economic turmoil in 2002, the sector shrunk by 4% and the expectations for 2003 were very low.  However, contrary to expectations, in 2003, the sector grew by 70%, generating approximately US$1.9 billion in sales in 2003, and adding twenty-nine (29) new franchises.  Today, franchising in Argentina represents 20% of the total retailer sector, accounts for more than 13,000 retail stores, and employs more than 100,000 employees. Furthermore, the national franchising association (Asociacion Argentina de Franchising), an organization affiliated with the International Franchise Association, estimates that the sector will continue to enjoy strong growth, projecting sales volume to reach US$2.35 billion in 2005 and for the sector to account for 30% of the retail sector in the next decade.

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