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Franchises grew despite the recession and boosted the commercial rental market: booming sectors - Infobae
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www.infobae.com
October 15, 2024
In the first half of the year, they increased by 3.6% compared to December 2023. 90% of brands plan new openings in the second half of the year. Ideal properties for franchises
By Jose Luis Cieri
Aesthetics and Health are two of the sectors that lead the growth of new franchises and store openings in the country
Despite the recessionary environment, 55% of franchises managed to expand their outlets in the first half of 2024, with a growth of 3.6% compared to December 2023. Although this pace is slower than in previous years, the ability of business models to adapt allowed many brands to continue growing.
According to the Argentine Association of Brands and Franchises (AAMF), 90% of franchises are planning new openings for the second half of the year, with strategies to mitigate risks and more accessible formats.
“The franchise system has demonstrated its ability to adapt to economic instability. The results for the first half of 2024 and expectations of more than 10% growth, with 90% of brands looking to open new locations, show sustained growth and reflect the strength of the brands and the entrepreneurial spirit of Argentines,” said Susana Perrotta , president of AAMF.
They are one of the main drivers of the occupation of commercial premises, both in the city of Buenos Aires and in the rest of the country.
Despite the recession, franchises continue to open new outlets thanks to their efficient business models, which are resistant to economic fluctuations.
Ezequiel Devoto , general manager of AAMF, told Infobae that “logically, the pace of openings in this context is lower (3.6% in the first half of 2024 vs. 5.2% in 2023) than they would be in times when the economy is expanding, but since these are long-term development plans, growth is maintained.”
There are a set of characteristics of the franchise system that allow the growth of the sector even in a recessionary environment:
Training is another of the sectors that has grown the most in the country through the business model offered by franchises.
Devoto said that the growth of sectors “such as Aesthetics and Health and Training is due to the fact that, in times of uncertainty, consumers prioritize physical and emotional well-being. In addition, digitalization boosted demand in areas of technology and personal development, seen as investments in the professional future.”
Beauty franchises, with more flexible models and lower costs, expand more easily than gastronomy. In Training, digitalization reduces costs and expands reach without the need for more infrastructure.
In CABA, the gastronomic sector and coffee shops are expanding strongly . “It remains essential, although its growth was more moderate at the national level due to the challenges inherent to the sector: higher operating costs, especially in inputs, rents and labor, in addition to the volatility in consumer purchasing power,” added Devoto.
Source: Argentine Association of Brands and Franchises (AAMF)
Of the 76 brands surveyed, 56 (73%) have operations in more than one region or province of the country, which demonstrates the virtues of the franchise system to expand beyond a brand's city of origin.
The ranking is led by AMBA, since two out of three brands surveyed have a presence in that region, followed by Córdoba with 59%, Litoral/NEA, NOA and Sur with 50%, CUYO with 47% and the interior of the Province of BA with 46% of the brands.
Several adjusted their business models, renegotiating rents and suppliers, and adopting new technologies to reduce costs.
Cafecitos are becoming more and more popular and are growing in the main cities of the country
Devoto mentioned that “customer loyalty and retention programs, as well as special discounts for recurring customers or loyalty rewards, are also part of the strategies used.”
Source: Argentine Association of Brands and Franchises (AAMF)
Given the overall economic context, it is again encouraging that 42% of the brands surveyed said they were achieving ROI in line with plans and 15% slightly above plans. However, the economic impact is reflected in the increase in brands that are achieving returns slightly below plans, which was recorded at 43% during the first half of 2024 vs. 26% in 2023.
Devoto highlighted that “although demand is strong in the AMBA, in the interior of the country there is also a presence of franchising brands, which reflects the success of this model in various regions.”
In stores dedicated only to delivery, a space of 50 m2 may be adequate, while those with sales peaks may need up to 70 m2 to operate efficiently.
The surface area of the premises is key when renting, especially in the gastronomic sector. For these businesses, a minimum of 100 square meters is recommended to ensure sufficient space and recover the investment. Demand is concentrated in premises of between 50 and 150 m² in neighborhood areas with high traffic, but outside the main avenues of CABA, for example.
Prices vary depending on location and features, ranging from $1,000,000 to $3,000,000 per month, in areas such as Palermo, Villa Crespo, Belgrano or Recoleta.
Source: Argentine Association of Brands and Franchises (AAMF)
If these projections are met, it is estimated that by the end of the year there will be around 55,000 points of sale operating in Argentina.
In this context, the National Franchise Convention will be held on November 21 at La Rural. “It will be a key space to listen to specialists and participate in business rounds where brands will present their proposals to investors,” Perrotta concluded.
www.buysellba.com
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Crecieron las franquicias pese a la recesión y dinamizan el mercado de alquileres comerciales: los rubros en auge
En el primer semestre, aumentaron 3,6% versus diciembre de 2023. El 90% de las marcas proyecta nuevas aperturas en la segunda mitad del año. Inmuebles ideales para franquicias
www.infobae.com
October 15, 2024
In the first half of the year, they increased by 3.6% compared to December 2023. 90% of brands plan new openings in the second half of the year. Ideal properties for franchises
By Jose Luis Cieri
Aesthetics and Health are two of the sectors that lead the growth of new franchises and store openings in the country
Despite the recessionary environment, 55% of franchises managed to expand their outlets in the first half of 2024, with a growth of 3.6% compared to December 2023. Although this pace is slower than in previous years, the ability of business models to adapt allowed many brands to continue growing.
According to the Argentine Association of Brands and Franchises (AAMF), 90% of franchises are planning new openings for the second half of the year, with strategies to mitigate risks and more accessible formats.
“The franchise system has demonstrated its ability to adapt to economic instability. The results for the first half of 2024 and expectations of more than 10% growth, with 90% of brands looking to open new locations, show sustained growth and reflect the strength of the brands and the entrepreneurial spirit of Argentines,” said Susana Perrotta , president of AAMF.
They are one of the main drivers of the occupation of commercial premises, both in the city of Buenos Aires and in the rest of the country.
Despite the recession, franchises continue to open new outlets thanks to their efficient business models, which are resistant to economic fluctuations.
Ezequiel Devoto , general manager of AAMF, told Infobae that “logically, the pace of openings in this context is lower (3.6% in the first half of 2024 vs. 5.2% in 2023) than they would be in times when the economy is expanding, but since these are long-term development plans, growth is maintained.”
There are a set of characteristics of the franchise system that allow the growth of the sector even in a recessionary environment:
- It is a proven and replicable model that provides confidence to franchisors and franchisees.
- Franchising chains often benefit from large-scale purchasing and preferential agreements with suppliers, which allows them to reduce costs and offer competitive prices.
- Argentine franchises have developed an ability to adapt, adjusting their products, prices and business models to consumer needs.
- Franchisees are provided with a support network in areas such as training, marketing and operational management, allowing them to overcome challenges that independent businesses find more difficult to overcome.
Training is another of the sectors that has grown the most in the country through the business model offered by franchises.
Sectors leading the advance
The Aesthetics and Health sectors, as well as Training, were the ones that expanded the most, with growth of 16.7% and 14.6% respectively.Devoto said that the growth of sectors “such as Aesthetics and Health and Training is due to the fact that, in times of uncertainty, consumers prioritize physical and emotional well-being. In addition, digitalization boosted demand in areas of technology and personal development, seen as investments in the professional future.”
Beauty franchises, with more flexible models and lower costs, expand more easily than gastronomy. In Training, digitalization reduces costs and expands reach without the need for more infrastructure.
In CABA, the gastronomic sector and coffee shops are expanding strongly . “It remains essential, although its growth was more moderate at the national level due to the challenges inherent to the sector: higher operating costs, especially in inputs, rents and labor, in addition to the volatility in consumer purchasing power,” added Devoto.
Employment
The AAMF survey in conjunction with the Córdoba Franchise Cluster, carried out during August 2024, included the participation of 76 franchising brands from all over the country, sectors and sizes, with a total of 5,621 Operating Points of Sale (POS), of which 88% are franchises and the remaining 12% are owned and which employ 28,108 people directly in Argentina.
Source: Argentine Association of Brands and Franchises (AAMF)
Of the 76 brands surveyed, 56 (73%) have operations in more than one region or province of the country, which demonstrates the virtues of the franchise system to expand beyond a brand's city of origin.
The ranking is led by AMBA, since two out of three brands surveyed have a presence in that region, followed by Córdoba with 59%, Litoral/NEA, NOA and Sur with 50%, CUYO with 47% and the interior of the Province of BA with 46% of the brands.
Challenges and adaptation strategies
43% of the brands surveyed reported lower returns on investment than expected, reflecting the impact of the economic context.Several adjusted their business models, renegotiating rents and suppliers, and adopting new technologies to reduce costs.
Cafecitos are becoming more and more popular and are growing in the main cities of the country
Devoto mentioned that “customer loyalty and retention programs, as well as special discounts for recurring customers or loyalty rewards, are also part of the strategies used.”
Return on investment and employment
The system is based on the integration of third-party capital to accelerate the growth of recognized brands (franchisors), where franchisees seek a return on their investment with limited risk based on proven business models.
Source: Argentine Association of Brands and Franchises (AAMF)
Given the overall economic context, it is again encouraging that 42% of the brands surveyed said they were achieving ROI in line with plans and 15% slightly above plans. However, the economic impact is reflected in the increase in brands that are achieving returns slightly below plans, which was recorded at 43% during the first half of 2024 vs. 26% in 2023.
Investments and rentals
Franchises offer a variety of investment models, with amounts starting at USD 5,000, depending on the sector and characteristics of the business.Devoto highlighted that “although demand is strong in the AMBA, in the interior of the country there is also a presence of franchising brands, which reflects the success of this model in various regions.”
In stores dedicated only to delivery, a space of 50 m2 may be adequate, while those with sales peaks may need up to 70 m2 to operate efficiently.
The surface area of the premises is key when renting, especially in the gastronomic sector. For these businesses, a minimum of 100 square meters is recommended to ensure sufficient space and recover the investment. Demand is concentrated in premises of between 50 and 150 m² in neighborhood areas with high traffic, but outside the main avenues of CABA, for example.
Prices vary depending on location and features, ranging from $1,000,000 to $3,000,000 per month, in areas such as Palermo, Villa Crespo, Belgrano or Recoleta.
Expectations for the final stretch
Nearly 90% of franchises have concrete plans to open 379 new outlets in the second half of the year, which could generate cumulative growth of 10.6% in 2024.
Source: Argentine Association of Brands and Franchises (AAMF)
If these projections are met, it is estimated that by the end of the year there will be around 55,000 points of sale operating in Argentina.
In this context, the National Franchise Convention will be held on November 21 at La Rural. “It will be a key space to listen to specialists and participate in business rounds where brands will present their proposals to investors,” Perrotta concluded.
www.buysellba.com
