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Why Good Franchises Are Great Business for Argentina

On August 30, 2011, In entrepreneurs, foreign investment, franchises, by InvestBA
Hollywood Burger Employees

Franchises like Hollywood Burger create opportunities for employees (pictured) and investors alike.

This time last year we posed the question if more Argentine franchises would find success abroad. “The Art of Exporting Franchises” in La Nacion singled out Havanna as one of the few Argentine business models that has translated to foreign soil. While Argentina is often associated with great generics like beef, leather, tango and the Patagonia, franchise experts believe there is potential for well-established Argentina brands once they focus on a creative niche.

Now an article from Panama’s La Estrella takes a closer look at the benefits of nurturing successful franchises in Argentina and other corners of Latin America. Author David Santa Cruz focuses primarily on Mexico where the number of foreign franchises is 21%, relatively high compared to a country like Spain (15%) or Brazil (11%). Mexico is one of the few countries that has a government office dedicated to encouraging franchise entry and growth, because research shows successful franchises mean two important things for an economy: employment and entrepreneurship.

In terms of employment, the Mexican Franchise Association found that 90% of new franchises are still operating after one year while 70% are still going strong after five. While striving to generate steady employment for workers, the Mexican program seeks to provide incentives to potential franchisees. The franchise model gives entrepreneurs the opportunity to plow their savings into a well established business concept or reinvent themselves after a layoff or long-overdue career change.

And while 21% of all franchises in Mexico are foreign companies, only 2% of Mexican franchises have opened outlets on foreign soil, which takes us full circle to last year’s post, Can It Go Both Ways? The answer is a resounding “Sí” for companies like KidZania a family entertainment center where kids dress up and act like adults.  After launching just last year in Mexico, KidZania is now in 16 countries including Japan, Brazil, China and Dubai. (Full Story in Spanish)

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Wendy’s Returns to Argentina This Year

On January 27, 2011, In foreign investment, franchises, us companies, by InvestBA
Wendy's in South America

Hincha: If she's going to keep wearing the colors of the Seleccion, the girl belongs in Argentina.

The White House may be giving Argentina the cold shoulder today, but we can take comfort knowing a familiar redhead will definitely pay us a return visit this year. When the Wendy’s in Argentina rumor mill kicked into high gear during the last quarter of 2010, we started to have Cuadrada Cravings. Fortunately today we have confirmation of the franchise development agreement and a taste of what’s to come over the coming decade.

As anticipated, the franchise agreement is between Atlanta-based Wendy’s/Arby’s International Inc. and Desarrollos Gastronomicos S.A. (DEGASA), the private investment company that controls D&G, the operator of the successful Havanna Cafe franchise. “As part of an organization with a proven track record running successful food service operations, (DEGASA) has the strength and resources to rapidly build Wendy’s presence in Argentina,” said Wendy’s/Arby’s Group President and CEO Roland Smith.

That presence will begin with the first Wendy’s opening in Buenos Aires later this year and plans for 50 new restaurants in Argentina over the next 10 years, according to today’s announcement. The third largest quick-service restaurant company in the U.S., Wendy’s/Arby’s is aggressively pursuing growth opportunities in emerging markets like Brazil, China and Japan. And we can add Wendy’s/Arby’s to the growing list of Atlanta-based companies doing business in Argentina.

For more information about Argentina franchise opportunities, download the new issue of InvestBA Privada.

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Foreign Banks Rethink Buenos Aires Branch Strategy

On April 28, 2010, In competitiveness, foreign investment, franchises, us companies, by InvestBA
Banks in Buenos Aires Argentina

Next window please: Foreign banks are shifting operations, employees to Miami & Montevideo.

“In Puerto Maderero and Recoleta these days, the executive suits are everywhere. Suddenly, we are seeing more limos and formally-dressed men entering and leaving meetings in cafes and luxury hotels,” says Argentine daily Clari­n.

And while these meetings between wealthy Argentines with investments abroad and their financial advisors used to take place in local offices, new Argentine Central Bank regulations are forcing 14 foreign banks to reconsider their BA presence.

In addition to limiting consumer choice and stifling competition, the measures offer a glimpse of what could happen in the U.S. if the federal government succeeds in creating what the Wall Street Journal calls a new “Super Regulator.”

The measure in question, A4981/09, began changing the rules of the game for foreign banks providing wealth management services to clients in BuenosAires. In essence, it makes it more difficult for these banks to take new deposits locally and invest them abroad. If they maintained a physical presence with local branches, these foreign banks would only be able to offer financial advisory services to clients who had previously shifted their funds abroad.

The subsequent decision by several banks including Wells Fargo, HSBC, Merrill Lynch and Credit Suisse to move employees and operations to Miami and Montevideo should not, however, be viewed as a defeat or even a retreat. On the contrary, videoconferencing and Internet-enabled money transfers will allow the banks equal or better interaction with their clientes bonaerenses, hence a happy ending: creativity and technology trump bloated bureaucracy every time. (Full Story)

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HoJo & PoLo: Howard Johnson Hotels Go Upscale in Argentina

On March 22, 2010, In argentina polo, foreign investment, franchises, real estate, us companies, by InvestBA
Howard Johnson Buenos Aires Argentina

Howard Johnson S.A., the largest hotel chain in Argentina features luxury projects with polo fields.

As the wave of new developments and gated communities grows in Buenos Aires, Clari­n reports on the simultaneous growth in the number of local projects featuring luxury hotels and resort-style amenities.

“The goal is to offer a value-added service to the property owner,” says Clari­n, “giving them benefits within the development (assorted discounts) and enhancing the overall comfort level of the project. Several of these mega-hotels are located in the interior of the country (the majority in the Patagonia), taking advantage of the benefits and natural beauty in this part of Argentina.”

But BA residents don’t have to travel all the way to Bariloche or San Martin de los Andes to find these types of luxury developments. In fact, several hotels are being built in the surrounding Province of Buenos Aires, and U.S. investors will recognize one of the names behind some of the most high-profile projects.

Located in Brandsen, roughly 60 miles from downtown BA, the Howard Johnson Finca Maria Cristina features a 40-room hotel, Spa, Convention Center and Polo Fields. A HoJo with PoLo? That’s the level of style and sophistication the chain has achieved in Argentina where the Master Franchisee, H.J. Argentina S.A., has become the largest hotel chain in the country with 23 completed hotels and 18 under construction.

In addition to professional polo instruction and a helicopter transportation option, the Finca Maria Cristina project features a variety of accommodation styles including large, six-person Boutique Villas. The developer currently plans to build 15 of these upscale villas and make them available to the public.

For more information about Buenos Aires real estate opportunities, download IncomeBA and the new issue of InvestBA Privada.

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Argentina’s Golden Arches Burning Brightly

On September 24, 2009, In foreign investment, franchises, us companies, by InvestBA

Source: Arcos Dorados S.A.

Source: Arcos Dorados S.A.

Bloomberg is reporting that Buenos Aires-based Arcos Dorados, owner of the license to operate McDonald’s restaurants in Argentina and several other Latin American countries, will tap international debt markets and issue $450 million in 10 year bonds this week. Bank of America Merrill Lynch and Morgan Stanley will manage what Bloomberg calls “the first Argentine corporate bond sale in international markets in almost two years.” The transaction is a positive signal for the largest restaurant operator in Latin America as well as for other Argentine companies whose borrowing costs have fallen considerably this year thanks to diminished country risk. With more than 1,750 locations in 19 countries, Arcos Dorados reported net revenue of over $3.5 billion in 2008. While Arcos Dorados is targeting porteño coffee lovers with the recently launched McCafé concept (Story), the McDonald’s Argentina facebook page promotes new menu innovations like the McFlurry Cadbury and the Doble McNífica. Me encantaâ„¢.

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