Franchises grow 8% in 2022, recover pre-pandemic levels

2022 was a year of recovery for Mexican franchises because the sector showed a 8% growth, reaching the same pre-pandemic level (2019), reveals the consultancy Feher Consulting.

growth shows three percentage points higher than last year, when it closed at 5%, since the health measures were maintained.

According to Ferenz Feher, CEO of Feher Consulting, the recovery is due to the reactivation of the economy, the reduction in cases of Covid-19 since people have chosen to go out to restaurants and do their shopping in person.

Despite the fact that during the pandemic the franchises were resilient and no brand disappeared, in 2020 they closed 5% of units. Some branches reopened last year or relocated.

“Today we can affirm that we will have more than 90,000 units, generating just over 1 million direct jobs. The contribution to the GDP is 5%, one point higher than last year”, highlighted Feher.

In the country there are 1,550 brands operating as franchises and 83% is national.

Feher also highlighted that although the collateral effects of the pandemic were felt at the beginning of 2022, the year showed a slight recovery that is expected to be maintained during the following months and achieve an increase in the number of franchises and jobs created.

Growth 2023

The following year the franchise sector expects a faster recovery and reaching double digits, showing a 10% growth despite the fact that it could impact the political and socioeconomic environment.

Likewise, inflation has impacted the costs of franchises, due to the rise in construction supplies and equipment for commercial premises, but the investment spirit does not stop.

The following year the investment to acquire a franchise will be between 1.5 to 2 million pesos, For this reason, low investment brands will not be a trend.

“Low investment franchises will not be a trend and part of the reasons, unfortunately, are inheritances, we continue to see people who are investing in franchises due to inheritance issues and job losses”.

Feher also explained that health franchises, such as pharmaceuticals, offices and laboratories, will continue to grow in 2023. Naturists and food and beverages will also have a greater impact.

According to the consultancy, the health sector generates approximately 8% of all franchises, meanwhile, food and beverages represents 32%, has more than 17,000 units and generates more than 140,000 jobs.

Another important turn is that of specialized commerce, with 10.2% of the total franchises in Mexico and around 823,000 jobs. Likewise, the specialized services business represents 7.8% and contributes more than 23,000 jobs.

Technology, an ally

The pandemic forced franchises to reinvent themselves and use technology, an example of which were food and beverage brands that implemented the use of delivery platforms and technological platforms for business control, training, customer service, and multimedia programs.

“These platforms help save up to 86% of the time that businesses spend on administration, reduce 70% learning curve and process training, and reduces training costs by two thirds”.

Franchises now need to be omnichannel in order to respond to consumer habits, that is, allow the customer who consumes in an online store to make a change in a physical store and vice versa.

“Regardless of the turn to which they are inclined, all investors should keep in mind that things have changed. Today, technology plays a fundamental role in the development of any business and made a huge difference among those that survived the pandemic, since innovation and creativity were key pieces at the sales level,” Feher concluded.