Approximately 50% of the franchises present in the country are from the United States. The payment of royalties and the time of the contract depend on the brand. One way to grow an established business is through the acquisition of franchises or licenses.
In Ecuador, although there are no official figures, it is estimated that there are between 250 and 300 franchises, of which 80% are foreign and 20% national. 50% of foreign women are from the USA. One of them is Dunkin ‘Donuts, present in the country since 1984, which belongs to the Kronfle Corporation.
Mauricio Calero, manager of the franchise, said that the contract with Dunkin ‘Donuts has allowed them to invest in two plants in Quito and Guayaquil, to develop the products. They employ 120 people and, despite the fact that the formula for donuts is imported, they have 20 local suppliers for the rest of their products.
The firm has 13 locations in Guayaquil and two in Quito. Opening a store can cost up to $ 100,000. The contract with the US firm it is renewed every 5 years and cancel 5% of monthly sales. For the contract to be renewed, the business in Ecuador cannot stop its growth.
That is why they are now running a pilot sales plan in convenience stores and also through digital channels such as Glovo, Uber and Domicilios.com, the manager added. Another successful case is that of Fibran, the textile plant of Marathon Sports. They currently maintain four licensing contracts with Universal Studios, Disney World, Warner and Cartoon Network for mainly t-shirt prints. Cristina Carrera, sales manager of Fibran, explained that the company negotiates the licenses and the distribution of products from Teleshop and other chains such as De Prati, Megamaxi or Rio Store. This business started in 1996.
The amounts and costs of the contracts depend on each character. Carrera cited the example of Jurassic World. The license cost at least $ 15,000 guaranteed. For this, goals must be reached for $ 110,000 to pay royalties and comply with the contract. “The license is a differentiating element. Having an original character is an added value, “said Carrera.
Ecuadorian brands have also expanded through franchising. Among them are Los Ceviches de la Rumiñahui with restaurants in Tulcán, Pasto, Miami and Spain. Casa Nostra, Mongos, Disensa and Cruz Azul are other growing cases.
Process of acquisition of a franchise
Byron Robayo, partner of Paz Horowitz Abogados and director of the Intellectual Property Intangible Assets area, explained that the heart of the franchises is in the intangible assets, such as secret recipes, menus, industrial design or investment packages.
To enter this world, it is important to have a legally constituted company with qualified suppliers, guarantee good labor practices and comply with tax obligations. Robayo said it is necessary to make a franchise contract and other intellectual property assets that have previously been protected by the owner in the National Intellectual Rights Service.
Guido Santillán, manager of Ecuafranquicias, says that the advantage of this type of business for the owner of the brand is a rapid business growth with investment from third parties. And for those who acquire them, the franchises mean an endorsement in an already proven brand that also indicates how to solve problems and obtain better results.
Approaches to US brands they are made through the license fairs in Las Vegas and franchises in New York that take place in the middle of the year. Those interested can participate in these fairs through the American Embassy in Ecuador. (I)