Franchise Market Predominates in Jalisco

The franchise industry has become an attractive business and investment model for Jalisco residents. Following Mexico City, Jalisco ranks second for the highest number of franchises, which together total 14,000 points of sale, according to figures from the Asociación Mexicana de Franquicias (AMF) (Mexican Franchise Association).

“Jalisco today accounts for 14 percent of the total sales in the franchise sector. Today, two out of ten franchises come from our state. That gives us great pride because they keep pushing and growing,” said Jacobo Buzali Rahmane, president of the organization.

He shared that in the last five years, the franchise sector has registered an annual growth of 10 percent nationally, that is, between four and five times more than the Mexican economy is growing.

“Given the situation in the country, we see that more and more people are interested in entering the world of franchises because it is a business that clearly represents a lower risk versus an independent one.”

Buzali said that the market profile that continues to dominate the demand for franchises is 45-year-olds who have already worked in companies and are now seeking their patrimony to leave an inheritance to their children.

However, one of the generations that shows increasing interest in this model, he said, are the millennials, who see this industry as an attractive business instrument.

“It’s the millennials and people from 30 to 35 years old who are beginning to realize that there are franchises for them, that there is a market they can enter, and we see them increasingly interested in creating sources of employment, in developing their own business.”

Currently, the franchise sector in Jalisco generates more than 150,000 direct jobs and more than 900,000 jobs nationally and abroad.

Dominating the Market

Buzali pointed out that 85 percent of the franchises that exist in our country are Mexican and only 15 percent are foreign, a pattern that was completely the opposite three decades ago.

“It is a matter totally contrary to how franchises began 30 years ago in Mexico, where about 90 percent were foreign and only 10 percent Mexican.”

The president of AMF explained that this situation is a product of the fact that Mexicans have learned to adopt the investment and business models of franchises, elevating the name of the country not only domestically, but also in foreign markets.

“Today, we proudly see Mexican franchises in the Orient and Europe, as well as in faraway places people wouldn’t imagine.”

Regarding the type of franchises preferred in our country according to product or service, he stated that food and beverage franchises continue to be in the most demand; however, health and beauty are becoming more and more important in these business models.

He also noted that Mexico City, Nuevo León and Puebla are other entities rising in the demand for franchises, while the states of Querétaro, Aguascalientes, Veracruz, Chihuahua and Tijuana are beginning to stand out in the industry.

Renewing to Keep Growing

As time goes by, consumer expectations are increasing. New technologies redefine the concept of consumption and lead companies to renew themselves to adapt to new market demands.

In this regard, Buzali pointed out that many companies are investing in the use of technology to improve their processes and give the consumer a better experience, with strategies ranging from digital marketing to investment in systems and applications that can streamline customer service.

“Lately, all technology has been a relevant factor at the systems level, at the level of how to better serve the customer, how to better understand the needs of consumers, their habits and customs.”

However, like other sectors, the franchise sector is not exempt from situations that require them to continue pushing to keep growing in the face of political changes and decisions that have omitted programs that supported those who want to start a business.

“It is a little bit stalled because ProMéxico and INADEM, which were institutions that helped us a lot, are now completely dismantled. I had the opportunity to be with people from the Secretaría de Economía (Ministry of the Economy), and I see that there are good intentions to start generating new loans for microentrepreneurs, but I think it is going much slower than I expected.”

In addition, he said, it is necessary to continue eroding the myth that investing in franchises is an expensive and impossible business model to enter or that by becoming a franchisee you now have a business that will run itself, without the need to look after it.

Finally, Buzali explained that although the percent of return will always be linked to the size of the investment, in the bulk of the franchises it occurs in approximately two or three years.