Guatemala Franchise Market
After the pandemic, signs of recovery are expected in 2022 in the franchise sector in Guatemala.
Guatemala is the largest franchise market in Central America, with over 300 franchise brands and 3,500 shops, which provide more than 25,000 direct jobs. There is a high concentration of franchise retailers in Guatemala City, the most populated city in the country with four million people. Other cities, Quetzaltenango, Antigua, Huehuetenango, Cobán, and Escuintla have also shown growth in franchising.
With regard to COVID-19 pandemic and its effect on the Guatemalan commercial environment since March 2020, franchises and other businesses faced sales declines and total or partial closures of their establishments due to the suspension of operations imposed by the government. However, according to a survey carried out by Francorp and the Guatemalan Franchise Association (AGF) among their members, they consider having a growth in sales above 25% in 2022 and 36.8% responded that their sales recovered in the last quarter of 2021.
According to Francorp, fast food is the most popular subsector with 35% market share; followed by full-service restaurants with 30%, services with 20%, retail 10%, and “other” 5%. Also, recently the AGF has seen a strong increase in health care businesses, such as spas, beauty salons and gyms.
Guatemalan investors are very selective when showing interest in brands that are well-known and successful. CS Guatemala has found that there is little interest in developing unknown brands, or concepts, because they would have to struggle to compete and stay afloat with the existing strong brands. Also, competition in the industry – especially among food concepts has increased significantly.
The CAFTA-DR Free Trade Agreement provides full market access to franchising. Trademark provisions protect the franchisor’s name, and tariff liberalization allows lower-cost exports of key equipment required to supply the franchisee.
The Guatemalan businesspeople are used to doing business with the U.S. and they expect good after-sales service and support.
In Guatemala there is no franchise law as in other countries. The franchise model is a commercial contract named within the commercial code in Guatemala, but not specifically regulated. Decree Number 57-2,000 of Congress is in force, which includes the Industrial Property Law as a legal instrument that partially regulates franchise contracts. This document only considers the regulation on trademarks including registration, rights, limitations, license of use, etc. but it does not include the essential elements of the contract, such as the territory in which the contract will be developed, confidentiality, the duration of the contract, etc. For these reasons, it is recommended to obtain technical and legal advice to start, continue or terminate a business under the franchise regime.
Central America Trade Mission August 21 - 26, 2022
The Trade mission will start in Guatemala on August 21st, where U.S. companies will have the opportunity to choose up to 2 countries to engage in an agenda of one-on-one meetings with local companies/institutions interested in U.S. products or services.
For additional information on events and activities within the franchise industry, please reach out to Karla Salas at firstname.lastname@example.org