By Flávia Amaral

In Brazil, the franchise system became very popular during the last decade. Although many of the aspects of a typical franchise relationship could be found in some segments of the domestic market prior to the nineties, researches show that the net sales in the franchise market had an expressive growth from 1995 to 2001, which increased from 9 billion to 21 billion dollars during those years, as per “Exame Novos Negócios” magazine1.

The propagation of franchising allowed the usage of this system by other sectors of the national economy, creating several opportunities of jobs, as well as developing Brazil’s internal and international trading with investments, imports and exports. This recent experience with franchising widened its scope of acting, which was concentrated in specific activities in the past, such as English courses, vehicles distribution, fuel and drink bottling.

Nowadays, the importance of franchising is so substantial that a law (Law no. 8955, of 15 December 1994, also known as the “Franchise Law”) was created in 1994 to establish some provisions under which franchise relationships shall be ruled. This law defines franchise business in Brazil as the “system whereby a franchisor licenses to the franchisee the right to use the trademark or patent, along with the right to distribute products or services on an exclusive or semi-exclusive basis and, possibly, also the right to use technology related to the establishment and management of a business or operating system developed or used by the franchisor, in exchange for direct or indirect compensation, without, however, being characterized as an employment relationship”.

According to the Brazilian Franchising Association – ABF Internet site2, the success of franchising can be verified by its constant growth, that, even in economic crisis times, was higher than the Brazilian Gross Domestic Product. And this is confirmed by the 1013 networks/brands of formatted franchises – 11% (eleven percent ) of which are international franchises - that can be found in the country in the current days.