With FASA one of the founding members of the World Franchise Council, Vera Valasis, FASA’s Executive Director made her way to Mexico to attend the bi-annual WFC Meeting. The 18 countries represented gave their feedback on how their franchise industries were faring within the context of the global recession. “Franchising appears to be healthy in most countries,” says Vera Valasis “as the franchised industries appear to be taking a bigger market share than non-franchised business. Funding, however, remains a problem in many countries including large markets like the USA, Britain and various other countries. Job creation is also of concern especially where job losses occurred in respect of the armed forces in the UK and the USA and in European countries like Greece who are under economic pressure. It was also very obvious that those countries that have government backing have a much more buoyant franchise sector, such as:
- Japan, with 1233 franchise concepts, for instance, not only has various loan programs for both franchisors and franchisees from commercial banks but government-affiliated financial institutions secure support for SME’s that are suffering under funding problems.
- Korea, with a staggering 2 400 brands, 260 000 units and 1 million employees has a specific franchise law with mandatory registration for franchisors and a support program from the SMBA (Small & Medium Business Administration).
- Malaysia has strong support from its government – with a Franchise Act to which all franchise systems have to register and adhere – and its franchise agency PNS has financing programs for the establishment of a franchise business or conversion to a franchise as well as for training. In addition the Malaysia External Trade Development Corp (MATRADE) focuses on internalizing home grown businesses and provides financing for international expansion.
- Brazil has a very buoyant franchise sector with 1 855 brands, 86 365 units and most of their concepts are home-grown. The franchising sector benefits from an exclusive credit loan program offered by the 4 biggest public and 3 top private banks. In addition the government has an ‘incubator project’ that gives support on micro and middle enterprises.
- In Mexico government’s National Franchise Plan (PNF) finances the creation of new franchise concepts as well as the purchase of franchises, with the government financing 50% of the cost of the franchise consult (for developing new franchises) or 50% of the franchise fee. This has a cap of $50 000 cost and is payable in 3 years with no interest. This program has been responsible for the fast growth of the franchise sector in the past four years.