Well-known U.S. products are often imported through distributors rather than being directly sourced from the manufacturer. However, a product may gain brand recognition before establishing a formal supplier/distributor relationship. Owners of small stores often travel to the United States to purchase small quantities of products for resale, particularly for items such as auto parts, clothing, jewelry, cosmetics, and certain household goods.
Most containerized imports enter via Guatemala and Honduras and are transported by truck to El Salvador. Little cargo enters through El Salvador’s Pacific maritime Acajutla Port, which was built to manage bulk exports and imports. Air cargo enters via the international airport. Major distribution centers are in free trade zones. Large distributors typically import consumer and non-consumer products, selling them to wholesale distributors or directly to retail stores. Large department stores and importers of machinery and raw materials buy directly from U.S. manufacturers, consolidate shipments, and then export them to El Salvador.
El Salvador follows the international commercial terms (INCOTERMS) for drafting contracts to stipulate the obligations of buyer and seller. All the INCOTERMS that apply to sea and inland waterway transport are implemented and accepted, among them: Free Alongside Ship (FAS), Free on Board (FOB), Cost and Freight (CFR), Cost, Insurance and Freight (CIF), as well as those that apply to any mode of transport, Ex Works, Free Carriers, Carriage Paid to, Carriage and Insurance Paid to, Delivered at Terminal, Deliver at Place and Delivered Duty Paid.
Using an Agent or Distributor
Using an agent or distributor is a proven market entry strategy for El Salvador, although conducting due diligence on your prospective partner is highly recommended before entering into any agreements. For most products and services, one agent for the country is sufficient as commercial activity is concentrated in San Salvador, Santa Ana, and San Miguel. An exclusive territorial contract is recommended only when the business relationship has proven stable, professional, and profitable for both parties. U.S. companies must include CAFTA-DR provisions when drafting distributorship agreements with Salvadoran companies. The full text of CAFTA-DR Chapter 11 (Cross-Border Trade in Services) can be found on the following website: CAFTA-DR Chapter 11.
U.S. companies should become familiar with Sections “B” and “C” of Chapter III, Title III of the Salvadoran Commercial Code, which regulates the agent and distributor relationship. According to Article 392, an agent, representative, or distributor is a natural or juridical person who, permanently and with or without legal representation, is appointed by a principal to establish a representative or distribution agency for a particular product or service in the country through a contract. The representative or distribution agency may be exclusive or not, as agreed upon by the parties. The Commercial Code also specifies causes to terminate or modify the contract. These include failure to fulfill the contract, fraud by the agent, serious negligence, and a continued decrease in sales. A representative agent revealing confidential information is also grounds for termination.
Under Article 398 of the Commercial Code, if a principal terminates, modifies, or declines to renew a representation, agency, or distribution agreement without complying with the conditions established in that article, the agent is entitled to compensation for damages as defined by law.
In El Salvador, as in other countries, finding the right partner or representative is key to success. For a nominal fee, the U.S. Commercial Service offers a range of services to help U.S. companies find potential partners, agents, or distributors. U.S. firms interested in these services should contact the nearest U.S. Export Assistance Center (USEAC) or visit the U.S. Commercial Service San Salvador webpage.
A local lawyer is critical in providing in-depth analyses of the legal requirements regarding contracts or agreements with local partners. A lawyer can also offer valuable insights to U.S. companies interested in participating in government tenders. As the company’s legal representative, a lawyer can obtain bid documents. While the U.S. Commercial Service cannot recommend a specific law firm, it can provide a list of Business Service Providers in different areas who can assist companies.
Establishing an Office
The government of El Salvador’s National Investment Office (ONI - Oficina Nacional de Inversiones), within the Ministry of Economy, operates a “one-stop” window to help foreign companies and individuals complete the requirements needed to obtain a license to establish a business in El Salvador as a branch, agency, office, or joint venture. It also aids with labor-related issues, immigration, and information about the free trade zone law regime. Hiring a local legal representative or a lawyer to work with ONI is recommended to help ensure that all steps are completed.
The Registry of Commerce Office in the National Registry Center (CNR-Centro Nacional de Registro) has created an Integrated Services Window so individuals can submit the requirements to open a business requested by the National Registry Center, Ministry of Finance, Ministry of Labor, and Social Security Institute (ISSS) in one place. There is a public website of the National Center of Registry where companies can consult the names and abbreviations of existing companies.
The following is a list of required authorizations or licenses that can be obtained at the Integrated Services Window:
- Company Registration
- Initial Balance Registration
- First-time Establishment Registration
- Income Tax Identification Number (NIT) (Ministry of Finance) Value Added Tax Identification Number (IVA) (Ministry of Finance) Invoices Correlative Registration (Correlativo de Facturas) (Ministry of Finance)
- First-time Employer’s Identification Number (NIP) (Salvadoran Social Security Institute)
- Workplace Registration (Ministry of Labor)
According to the Salvadoran Commercial Code, the minimum capital required for a business to commence operations is USD [NF7.1]2,000[EH8.1][KD8.2]. In February 2024, El Salvador amended its Commercial Code to introduce a new corporate structure known as the Simplified Joint-Stock Company (SAS). An SAS can be established by one or more shareholders, with a minimum capital requirement of only one dollar. Furthermore, there are no registration fees associated with forming an SAS, making it an accessible option for entrepreneurs. All companies operating in El Salvador are required to prepare and maintain their accounting records in Spanish. A certified public accountant must approve the Spanish version of the accounting system. The names of the company’s board of directors and administrative personnel must be provided to the Registry of Commerce Office at the National Registry Center. A SAS can keep its corporate and financial records in electronic format. When the assets of an SAS are less than USD 12,000, it can handle its own accounting without the need for a certified public accountant.
Additionally, the U.S. company must obtain a municipal services clearance from the municipality where the company and its facilities are located, as well as certification that the firm is correctly registered in the National Industrial and Commercial Establishments Directory at the National Office of Statistics and Census (Oficina Nacional de Estadisticas y Censos, ONEC). Once the Registry of Commerce Office has issued the company’s license, it must be published in a local newspaper.
Firms that sell or manufacture pharmaceuticals must obtain a permit from the SRS. The SRS must also approve each pharmaceutical product as safe for sale in El Salvador and issue a registration certificate (per product) renewed every five years.
Companies in the banking and insurance sectors are regulated by the Financial System Superintendency (Superintendencia del Sistema Financiero). They are required to register with this agency.
An environmental permit is required for many projects, including road infrastructure, activities at maritime ports, sewage systems, mining, energy transmission, dams, water development, commercial fishing, tourism services, food processing, commercial construction, and others listed in the environmental law of the Ministry of Environment and Natural Resources, MARN.
For the latest information on investment and business environments in foreign economies pertinent to establishing and operating an office and hiring employees, visit the U.S. Department of State’s Investment Climate Statements website.
Franchising
El Salvador began adopting the franchise business model in the late 1970s when McDonald’s and KFC entered the market. Since then, the business environment for U.S. franchises has been favorable, and Salvadoran consumers have shown a clear preference for U.S. franchises over local or other international franchise concepts.
El Salvador is a small and competitive market; overall, there are no significant challenges for U.S. franchise firms. Additionally, the country’s proximity to regional markets offers a valuable opportunity for scalable expansion. Currently, more than 50 U.S. franchise brands operate in El Salvador, with investments ranging from low-cost models to larger-scale ventures such as hotels.
U.S. franchise systems operate successfully in many segments, including hotels, car rentals, accounting, fitness, mailing and shipping, real estate, credit cards, and travel. Fast-food franchises and casual dining restaurants have been the most successful, including Starbucks, Taco Bell, Domino’s, Denny’s, Olive Garden, Panda Express, Pizza Hut, and KFC. New U.S. franchises such as Teriyaki Madness (May 2025) and Jimmy John’s (September 2024) [EH9.1][KD9.2][EH9.3]also entered the Salvadoran market, expanding the variety and options available to consumers.
There is no specific law or government agency regulating franchise operations or contracts in El Salvador. CAFTA-DR enhanced protection for U.S. brands and trademarks, removed technical barriers for U.S. exports, and provided alternative dispute resolutions for U.S. companies doing business in El Salvador.
Trademark laws meet international standards to protect trademarks and distinctive signs. For complete protection, trademarks must be registered with the Salvadoran Institute of Intellectual Property.
A highly publicized court case between a prominent U.S. franchisor and its former franchisee suggests enforcing franchise contracts in court can be a challenging process. Consequently, the Commercial Section urges franchisors to develop their business plan based on careful analysis of the business bona fides of their potential franchisees.
Direct Marketing
In El Salvador, direct marketing is still used. Companies use catalogs, flyers, and mailers, and other modes of communication. Most often, a marketing advertisement is inserted in Salvadoran newspapers or magazines. When companies hire advertising or marketing services, it usually includes a special report on TV news or in newspapers. Marketing services can also contract with local utility companies to put advertisements on utility bills. Distributing flyers at busy street corners and parking lots is also a common practice. Wireless telecommunication companies and the financial sector aggressively use marketing through call centers, particularly banks and credit card companies.
Joint Ventures/Licensing
Joint ventures involving U.S. and Salvadoran companies must be legally established in a contract signed by both parties. Foreign investments must be incorporated in El Salvador to operate, whether in the form of a joint venture, direct investment, partnership, branch, or subsidiary. Once incorporated and duly registered, the investment is entitled to national treatment.
Intellectual Property Law includes licensing and raises protections for trademarks and distinctive signs to internationally accepted standards. This law also obliges national and foreign firms to register in the Commerce Registry and the Salvadoran Institute of Intellectual Property (ISPI). To have the exclusive right to use commercial names and trademarks, any expression, and/or advertising sign, including patents and industrial designs, a lawyer or legal representative must register the trademark at the Salvadoran Institute of Intellectual Property (ISPI).
Express Delivery
U.S. express delivery companies (FedEx, Transexpress, UPS) operate in the country, with daily arrivals and departures to and from El Salvador. DHL is also present in the market, and there are local express delivery companies, such as C807 Express and Cargo Expreso. Although couriers strive to meet their service standards, customs procedures for express shipments can be burdensome. El Salvador has not established a de minimis amount; however, in 2021, it approved the Law to Promote Non-Commercial Online Purchases, which creates an exception to import tariffs for online purchases under USD 300. Nevertheless, the 13% VAT remains applicable.
Due Diligence
The success or failure of an operation in a foreign country is often closely tied to the quality of the information a company can obtain about the local partner’s creditworthiness, bona fides, and business practices. The Commercial Section strongly recommends checking the bona fides carefully as soon as a business relationship develops. The Commercial Section offers a service known as the International Company Profile (ICP) to help a U.S. firm determine if a company is a suitable trading partner. The report includes data on the firm’s management, business activities, product lines, financial conditions, creditworthiness, and trading experience. Some private sector credit-reporting services, including Equifax and TransUnion, also provide credit reports on Salvadoran firms.