This section reviews several different factors in selecting and managing your distribution and sales in Nicragua.
Using an Agent or Distributor
Partnerships between U.S. and Nicaraguan businesses are common. There is no single information clearinghouse for identifying potential partners in Nicaragua or checking their bona fides. U.S. companies seeking agents, distributors, or partners in Nicaragua have requested an International Partner Search, Gold Key Service, or a Contact List through their nearest U.S. Export Assistance Center or the American Chamber of Commerce of Nicaragua. In some cases, the Economic Section of the U.S. Embassy in Managua may provide additional information on potential business partners.
Establishing an Office
The Ministry of Development, Industry, and Trade operates a One-Stop Shop for Investment (VUI) to streamline investment and business licensing. According to the VUI, it takes a maximum of 13 days to start a business in Nicaragua. The services of the VUI are equally available to domestic and foreign-owned businesses. An investor should retain a local attorney to assist in establishing a presence in Nicaragua. See E-Regulations Nicaragua for detailed information on registering an online business in Nicaragua.
For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statements website.
Nicaragua has no specific law regulating franchising, but the Commercial Code and the Foreign Investment Law apply. There are more than 25 foreign franchises operating in Nicaragua, including McDonald’s, TGI Friday’s, Pizza Hut, Papa John’s, Subway, Quizno’s, Napa Auto Parts, Avis, Budget Rent a Car, DHL, Best Western, Holiday Inn, and Carl’s Jr. Many Nicaraguans are familiar with popular U.S. brands and have grown accustomed to U.S. fast food outlets and other services.
No specific law or regulation governs direct marketing. Some consumer product companies report successful direct-selling campaigns. Restaurants often use courier services to distribute brochures offering coupons for modest discounts. Confusing postal addresses and mailing lists of limited reliability are an obstacle to profitable direct marketing. Digital marketing is increasingly popular, mainly for retail, clothing, and restaurants. Digital display advertisements are increasingly common, particularly on Facebook.
Nicaragua’s (pdf) Commercial Code governs the establishment of joint ventures, licensing arrangements, general and limited partnerships, and corporations. Foreign and domestic private entities have the right to establish and own business enterprises.
Nicaraguans are increasingly comfortable shopping online. U.S. express delivery companies, including UPS, FedEx, and DHL, operate in Nicaragua. Shipments from the United States arrive daily from Monday to Saturday. The overall delivery time for items originating in the United States has been as short as 48 hours. DGA at the airport commonly opens packages and even removes the contents of select packages (money, valuables, or biological items). Documents and small non-valuable items tend to arrive safely. Express delivery firms within the country are considered secure; many local businesses rely on these firms to deliver their products. Depending on distance, delivery times tend to take 24-to-48 hours.
U.S. companies should exercise caution when beginning a business relationship with a partner or agent in Nicaragua. With an unreliable judicial system, it is important to ensure that a business partner is solvent and capable of performing the promised services. The lack of transparency and absence of any reliable corporate registry makes it difficult to identify the owners of a business entity or other entities with which it may share business relationships. Business partners with links to the Ortega regime may be involved with corruption, money-laundering, or violations of human rights. Such businesses or individuals may also be the target of international sanctions. U.S. companies should consult an attorney and conduct appropriate sanctions-related research.
Thorough due diligence can mitigate some of the risk inherent in doing business in Nicaragua. Before finalizing any contract, agreement, or relationship, U.S. companies are urged to obtain information on the bona fides of the contracting firm, including reliable business and financial references. For commercial transactions, requiring cash in advance or negotiating a letter of credit is advisable until a payment track record is established. Representation or distribution agreements should include an arbitration clause and be reviewed by a local attorney.