Franchise Business Forecasts

Because of the slowdown in the economy and the entry into force of new taxes, in 2020 is expected a slight growth of 1% in the number of franchise brands in Costa Rica.

Friday, July 19, 2019

In the last year, the growth in the number of franchises reported a significant slowdown, since the figures of the guild specify that up to May this year the net number of brands reached 361, a value that exceeds by just 0.6% the 358 registered in the same month of 2018.

Karol Fallas, director of the National Franchise Center (Cenaf), explained to Nacion.com that "... the slight increase responds to the economic context in which the country lives since last year. In addition, the entry of new taxes could also mean an important weight for future business. That's why the growth projection for next year is reserved: just 1%."

See "Economic Activity Does Not Rebound

Regarding the low economic dynamism in the country, the Monthly Economic Activity Index reported in May a 1.3% year-on-year increase, one of the lowest growth rates reported in recent years, since a similar variation had not been registered since November 2013.

Fallas added that "... The companies that closed in 2018 is attributed to not being able to contain their operating costs in this context, but if they are selling they cannot stop paying operating costs and as there is a fall in sales, because there is less consumption by uncertainty, in the end what happens is that they contract, cut expenses where they can, but there are companies that cannot do it at all."

Regarding the distribution of franchises by type, Cenaf statistics detail that 56% correspond to individuals, 18% to regional and 10% to master.

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