Chile - FranchisingChile - Franchising
There are 270 franchises in the country, with stores located primarily in the Santiago Metropolitan Region, with representation also in Chile’s 5th and 8th Regions (i.e. Valparaíso and Bio-Bio, respectively). The vast majority of franchises in Chile (82%) are sourced from five countries: Chile, the United States, Spain, Peru, and Argentina. These franchises are distributed among the a variety of sectors, including the food industry (39%), including restaurants, coffee shops, and ice cream shops; services (23%), including healthcare providers, fitness centers, real estate, financial services, hotels, and car rental; apparel (17%), including clothing and footwear; commerce (14%), including shops that sell sweets, tea, coffee, pharmacies, cosmetics, and other goods; and education (7%), including technical institutes, test-prep institutes, and others.
Franchise companies operating in Chile are subject to general Chilean trade laws, but there is no legislation specifically governing the franchise industry. In general, royalties and fees are subject to a withholding tax ranging from 15% to 35%. U.S. companies are encouraged to register their trademarks prior to entering the Chilean market.
A major challenge in Chile for franchises is identifying local investors interested in obtaining a master franchise. A group of established local companies own the master franchises in the principal sectors, but it can be very challenging for new concepts to enter the market and reach new investors. For those franchises committed to entering the market, it is recommendable to utilize newspaper advertisements and/or reach out to the 2-3 franchising consultants in the market. Other challenges include securing financing, finding affordable locations, and identifying employees.
Franchises with low initial investments (in the range of US$100,000-200,000) continue to encounter stronger market potential than those requiring larger investments (US$500,000+). Non-traditional Chilean franchise investors, however, may be seeking opportunities in the market, including young people and those with business experience who became unemployed during the recent economic slowdown.
It is important to keep in mind that the typical U.S. franchise model continues to face some obstacles in the country. Given a very conservative and risk averse Chilean business culture, U.S. franchisors will find Chileans less willing to make large, upfront investments until the concept has first been proven successful in one or two locations in the market. For further information, please contact the U.S. Commercial Service in Santiago, Macarena Marin macarena.marin@trade.gov Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
Franchise companies operating in Chile are subject to general Chilean trade laws, but there is no legislation specifically governing the franchise industry. In general, royalties and fees are subject to a withholding tax ranging from 15% to 35%. U.S. companies are encouraged to register their trademarks prior to entering the Chilean market.
A major challenge in Chile for franchises is identifying local investors interested in obtaining a master franchise. A group of established local companies own the master franchises in the principal sectors, but it can be very challenging for new concepts to enter the market and reach new investors. For those franchises committed to entering the market, it is recommendable to utilize newspaper advertisements and/or reach out to the 2-3 franchising consultants in the market. Other challenges include securing financing, finding affordable locations, and identifying employees.
Franchises with low initial investments (in the range of US$100,000-200,000) continue to encounter stronger market potential than those requiring larger investments (US$500,000+). Non-traditional Chilean franchise investors, however, may be seeking opportunities in the market, including young people and those with business experience who became unemployed during the recent economic slowdown.
It is important to keep in mind that the typical U.S. franchise model continues to face some obstacles in the country. Given a very conservative and risk averse Chilean business culture, U.S. franchisors will find Chileans less willing to make large, upfront investments until the concept has first been proven successful in one or two locations in the market. For further information, please contact the U.S. Commercial Service in Santiago, Macarena Marin macarena.marin@trade.gov Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.