A franchise is a business model that has gained prominence in Costa Rica in recent years and can be utilized by small, large, or medium-sized entrepreneurs.
Through franchising, the owner of a brand, service, or business, referred to as the franchisor, grants another person (franchisee) the right to exploit their brand.
The franchisee pays a fee for the use of the brand and, in return, also receives administrative, financial, and commercial guidance.
Common types of franchises include:
- Food sector franchises: Fast-food restaurants
- Specialized services franchises: Hotels
- Beauty and personal care franchises: Beauty salon chains
- Nutritional supplements franchises
What are the requirements for buying or selling a franchise?
Requirements for buying or selling a franchise:
- Your business must be successful and financially organized.
- It should be a business with characteristics that allow replication in various markets and countries.
- The business must have a well-defined target audience to be eligible for buying or selling a franchise.
- Since the franchisee, who pays for the brand’s exploitation, also receives administrative and financial guidance, the business must always have up-to-date operation and procedure manuals.
- If you want to sell your franchise, you first need to register your brand with the National Registry.
- The franchisor (brand creator) and the franchisee sign a contract for at least five years, specifying all conditions for transferring the franchise, payments to be made, and the rights and obligations of both parties.
- Approximate initial amount to acquire a local franchise in Costa Rica: less than $50,000.
- Approximate initial amount to acquire an international franchise in Costa Rica: between $100,000 and $250,000.
What are the advantages of a franchise?
Advantages of a franchise:
- Be the boss of your own successful business: Acquiring a franchise provides a business that is already successful on its own.
- Quick return on investment: If the franchise is managed properly, the initial investment is recovered in less than two years in 64% of cases.
- Constant support: The franchisee receives constant support from the brand creator in areas such as know-how, administration, personnel management, business exposure, finances, among others. They also gain access to technology and systems that facilitate service delivery and proper business management.
- Exposure: Whether acquiring a local or international franchise, the person benefits from the brand’s general-level advertising.
- Expansion: Franchises are not limited to the local level but allow for business expansion internationally.
