It may not be Europe’s largest franchise market, but Portugal shouldn’t be overlooked for international expansion.
Words by Kieran McLoone, deputy editor for Global Franchise
PORTUGAL IN NUMBERS
• Population: 10.28 million
• Size: 92,391 sq. kilometers
• GDP: $240.7bn
• GDP per capita: $23,407
It may not be the strongest of all the European countries, but Portugal is still an attractive franchise market brimming with possibilities. Couple this with the country’s attractive economic condition that has made it an appealing destination for investors and retirees alike, and you’ve got a region that definitely shouldn’t be ignored.
Strong track record
Franchising was first introduced to Portugal in the 1980s when large international brands began opening locations throughout the region. The Portuguese Franchise Association was later founded in 1987, but the business model really came into its own in the 1990s, when domestic brands grew large enough to begin competing with the sizable foreign concepts.
Since then, franchising has exploded, with 500 unique brands now operating throughout Portugal, totalling an estimated 11,300 units.
Domestic franchisors make up the majority of the Portuguese franchise market at 53 per cent, but foreign investment is still prevalent, with Spain accounting for 17 per cent of the market, followed by the U.S. at 9 per cent, comprised of around 40 brands.
Despite not making up a complete majority of the market, the U.S. has some deep ties to Portugal that make the country a natural development step for States-side brands. The U.S. is Portugal’s largest trading partner outside of the EU, for example, and according to U.S. Census data, Portuguese customers purchased approximately $1.46bn worth of U.S. goods and services in 2018.
A hotbed of foreign investment
Portugal was hit hard by the financial crisis of 2008, but thanks to some ingenious legislation introduced since then the country has not only managed to recover but position itself as stronger than ever before.
In 2009 for example, Portugal introduced a range of tax benefits for both EU and non-EU citizens which made attaining residency quick, easy, and financially lucrative. The country also has a top-tiered tax rate of 48 per cent, which tends to be lower than elsewhere in Europe.
Not only does this make Portugal a great place to retire once you’ve come to the end of a long franchising career, but it’s a win-win for franchisors: the Portuguese market is full of consumers who are both affluent, but also hugely international. Brands attempting to introduce their foreign concepts into the domestic market will be met with an engrained brand awareness, thanks to Portugal’s diverse and globe-spanning demographic.
So just because Portugal’s franchise market isn’t as vast as some of the others in this continent, don’t write it off just yet; it could be the hidden European gem you’ve been looking for and could be a stepping stone to further growth across this exciting continent.