Discusses opportunities for U.S. franchisers and legal requirements in the market.
Last Published: 1/27/2020
The local franchising industry has evolved into a challenging and highly competitive environment for international franchisors seeking local partners. Market size during 2017 was approximately $6.5 billion, with an annual growth rate of approximately 10%.  Currently, 90% of local franchises are of Argentine origin and approximately 10% are of international ownership. The low level of foreign peneration in the sector is in part due to strict regulations for transfer of funds in previous years. New measures are creating greater opportunities for international firms. After decades of unregulated expansion, the new Civil and Commercial Code of the Nation (CCCN) came into force August 2015 and for the first time establishes a legal framework for franchising agreement.  The CCCN covers franchise agreements in Chapter 19, Articles 1,512 through 1,524.

Development of franchising in Argentina shows a high level of concentration.  There are approximately 400 franchise brands in the market. The most popular sectors for international franchisors are fast food, foreign language training, dry cleaning, hotels, and rental car services. Tourism and aesthetic services are two new segments where franchising is growing. Starbucks entered the Argentine market in 2008, opening more than thirty stores since its arrival.  Other significant U.S. market players across all industries include Kodak Express, McDonald's, Burger King, Wendy’s, Cartridge World, Kentucky Fried Chicken and Subway.   Real Estate franchises have also entered the market, including Re-Max, Keller-Williams, Coldwell Banker and Century 21.
Local franchises have been particularly successful in apparel, food, ice cream, "empanada" delicacies, fitness and health clubs, and education.  Apparel franchising, however, has suffered in recent years due to import restrictions.  Currently, coffee shops and stores are experiencing a growth stage, with local brands such as Havanna and Bonafide.  Franchise contracts are generally protected under the aforementioned Argentine Commercial Code, which is still rather vague.  The scope of the service, commercial trade name, market expertise, and shared production elements are covered by contractual obligations of both the franchisor and the franchisee. Elements of the contract include the license, methods and systems of operation, proprietary information transferred to a franchisee, inputs supply, sales methods, and quality standards. The franchisor has the ultimate control of the contract elements.

Franchising models have been successfully used in Argentina, but the obligations of the franchisor must be clearly established in the contract to avoid potential liabilities related to the operator, such as defaulting, declaring bankruptcy, etc.  The Civil and Commercial Code gives a legal framework for franchising agreements, although enforcement of these laws is still in the beginning stages.  Therefore, legal counsel should be sought prior to entering the Argentine marketplace and appointing a franchisee.
 

Prepared by the International Trade Administration. With its network of more than 100 offices across the United States and in more than 75 markets, the International Trade Administration 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 trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Argentina Trade Development and Promotion