Market Intelligence
Franchising Peru

Peru Franchise Market

The strength of U.S. brand affinity supports ample potential for growth of U.S. franchises in Peru.

The franchise sector in Peru includes almost 500 companies, of which 70 percent are primarily concentrated in food and beverage services. The Peruvian franchise market is evenly split between Peruvian and foreign ownership. The franchising sector has experienced rapid growth over the last 10 years with an estimated annual growth rate of 20 percent. Shopping Malls (pre COVID-19) were the ideal locations to establish foreign franchises due to the large amount of foot traffic and shoppers. In Peru, there are 85 Shopping Malls (45 within Lima and 40 in provinces), that have surpassed $7 billion in sales with more than 60 million monthly visitors.

Growth in the Peruvian franchising sector was attributed to the burgeoning middle class and its newfound purchasing power. Due to Peru’s reputation as one of the most gastronomically advanced countries in Latin America, food and beverage services continue to be the most represented among franchises in Peru. In addition, the Peruvian market remains a highly fragmented one—more than 90 percent of retail businesses are small family-owned enterprises—which leaves vast opportunities for U.S. franchises to expand to Peru. The average Peruvian consumer still views U.S. brands as “aspirational,” meaning that U.S. franchises espouse cultural values that Peruvians relate to. Because of the strength of U.S. brand affinity, there is ample potential for growth of U.S. franchises in Peru.

Although franchises in Peru are subject to general commercial law, there is no specific legislation governing franchising. However, a written license agreement must be registered with the Peruvian Government’s Patents and Trademarks Office (INDECOPI). Prospective franchisers must be aware of a 30 percent income tax on royalties, 18 percent value added tax (IGV) (paid by the local company), and import tariffs dependent on the type of good. Countries that have signed double taxation agreements with Peru maintain separate regulations for royalties and income tax withholding (the U.S. not included).

The U.S. Commercial Service in Lima, in cooperation with the American Chamber of Commerce – AmCham, and Grupo Nexo Franquicia, organize The Franchise Summit every year. This is unique to the region and is an effort towards better professionalizing the sector in Peru. The Franchise Summit introduces successful business models and best practices to those in attendance.

In additon, Grupo Nexo Franquicia, a top Latin America firm specializing in franchise consulting and brokerage, has joined efforts with the American Chambers of Commerce within Latin America, as well as the U.S. Commercial Service, in order to put together the first and only Franchise Certification Program of the Region. This Certification has as its main goal to develop and professionalize this sector in Latin America.

For further information about The Franchise Summit and The Franchise Certification Program please contact Commercial Specialist Jorge Prado jorge.prado@trade.gov

09/30/2020