Franchising: Expectations in Guatemala

After in 2020 most franchises operating in the country reported declines in their operations because of the pandemic, expectations for 2021 is to overcome the losses and in some cases grow.

Friday, April 16, 2021

According to the report "Prospects for 2021 and the situation of franchises in Guatemala and Central America" prepared by the Guatemalan Franchise Association (AGF), in the country in the current context four out of 10 companies have closed between 1% and 10% of their franchise units or establishments.

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Prensalibre.com reviews that "... 15.8% have closed between 11% and 25% of their units and another equal percentage has closed between 26% to 50%. Meanwhile, 5.2% have closed more than 50% of their stores."

One out of every five brands surveyed said that they have no closed units.

The closures of some units are explained by restrictions in terms of schedules for certain sectors, less pedestrian traffic in the sector where they operate, some are located in business centers, in call center buildings and other activities that are still mostly teleworking.

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Jose Fernandez, CEO of Francorp Central America, Mexico and Colombia, explained that "... in spite of these data and the 2020 decreases, it is reflected that in the surveyed franchises there is more expectation to grow than to decrease. It is important to note that 25% consider that they will grow between 10% and 24% and another equal percentage will grow from 1 to 9%."

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Franchising: Challenges and Expectations

February 2020

Recruiting the best staff to operate the points of sale and reducing the costs of the initial investments to set up a franchise are some of the challenges faced by franchisers, who expect better sales in 2020.

Access to financing, containment of operating costs, and maintaining profitability levels are other issues of concern to franchisors in Guatemala.

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From the total number of businessmen who replied to the survey, approximately 70% do not anticipate changes in the hiring of labor, 13% expect increases and 17% expect reductions, according to the report prepared by the University of Costa Rica.

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The effect of crime and the tax reforms that have been implemented are part of the factors that have caused companies in El Salvador to decide not to make more investments.

The Business Competitiveness Survey, prepared by the Salvadoran Foundation for Economic and Social Development (FUSADES), details that between 2011 and 2017 the number of companies that have no interest in investing in the country registered a 11% increase.

Business Expectations at Historic Low

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In Costa Rica, between the first and second quarters of the year, expectations of business leaders fell by 4%, registering the lowest value in the last eight years.

The Research Institute of Economic Sciences at the University of Costa Rica reported that " ... The result of the global index of business expectations reveals in general terms that the optimism of business leaders weakened by 2.3 percentage points compared to the previous quarter, standing at 51.3 ... ".

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