Chile - Franchising Chile - Franchising
Franchise companies operating in Chile are subject to general Chilean trade laws, but there is no legislation specifically governing the franchise industry. In general, royalties and fees are subject to a withholding tax ranging from 15% to 35%. U.S. companies are encouraged to register their trademarks prior to entering the Chilean market.
A major challenge in Chile for franchises is identifying local investors interested in obtaining a master franchise. A group of established local companies own the master franchises in the principal sectors, but it can be very challenging for new concepts to enter the market and reach new investors. For those franchises committed to entering the market, it is recommendable to utilize newspaper advertisements and/or reach out to the 2-3 franchising consultants in the market. Other challenges include securing financing, finding affordable locations, and identifying employees.
Franchises with low initial investments (in the range of US$100,000-200,000) continue to encounter stronger market potential than those requiring larger investments (US$500,000+). Non-traditional Chilean franchise investors, however, may be seeking opportunities in the market, including young people and those with business experience who became unemployed during the recent economic slowdown.
It is important to keep in mind that the typical U.S. franchise model continues to face some obstacles in the country. Given a very conservative and risk averse Chilean business culture, U.S. franchisors will find Chileans less willing to make large, upfront investments until the concept has first been proven successful in one or two locations in the market. For further information, please contact the U.S. Commercial Service in Santiago, Macarena Marin macarena.marin@trade.gov Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.