Updated on 02/15/2024
A. Macro-economic data
• General data [1]
- Population 2022: 203,080,756 inhabitants[2]
- Area: 8,547,403 km2
- Density: 25 inhabitants/km2
- GDP (nominal) 2022: $1,920 bn[3]
- GDP/capita 2022: $8,917.7[4]
- GDP (PPP) 2022: $3,838 bn[5]
- GDP (PPP)/capita 2022: $17,827.6[6]
- 2021 growth rate: 4.6%
- GNI/capita (PPP) 2021: $15,600
- HDI 2021: 0.754
- Literacy rate: 99.4%[7]
- Life expectancy 2022: 75.5 years
I. Economic data
Policy [8]
Brazil is a presidential republic comprising 26 federated States and one federal district (where the capital Brasilia is located).
At the time of writing, Luiz Inácio Lula da Silva has been the President, representing the Brazilian left since January 1, 2023.
The National Congress is made up of two chambers: the Senate and the Chamber of Deputies. On February 1, 2023, the Brazilian right won the parliamentary elections. The presidential party thus allied itself with the centrist party.[9]
The Brazilian president's political priorities are the fight against inequality and discrimination, and the preservation of the Amazon rainforest.
In terms of international policy, the Brazilian president is keen to improve dialogue with his partners and create new allies. Brazil is once again a member of the United Nations Security Council, and holds the presidency of the G20 for 2024.
Population
Brazil is the world's fifth largest country and seventh largest in terms of population.[19]
87% of the Brazilian population is urban.
20% of the population is under 15, 70% between 15 and 65, 10% over 65.
There are around twenty Brazilian cities with populations of over one million.
Brazil's ten most populous cities are São Paulo (11.45 million), Rio de Janeiro (6.21 million), Brasilia (2.82 million), Fortaleza (2.43 million), Salvador (2.42 million), Belo Horizonte (2.32 million), Manaus (2.06 million), Curitiba (1.77 million), Recife (1.49 million) and Goiânia (1.44 million).[20]
Economic development
Brazil is a member of the G20, the BRIC group of emerging countries (Brazil, Russia, India, China) and Mercosur (economic alliance between Brazil, Argentina, Paraguay and Uruguay).
The middle class now represents more than half of the Brazilian population (55.3%).[11]
Brazil experienced a period of recession due to the Covid-19 health crisis, causing the economy to shrink by -3.3%. Subsequently, growth largely recovered and even surpassed its pre-pandemic level with an increase of +4.5% between 2019 and 2022.
The inflation rate was brought down to 5.8% in December 2022 thanks to support measures taken by the government (e.g., lower fuel taxes, higher minimum social benefits under the "Bolsa Familia" program).
In 2023, Brazil had an excellent agricultural harvest, which supported the services sector and household consumption.[12]
The new government has passed two reforms:
- new budgetary control mechanism to reconcile increased social spending with budgetary stability;
- tax reform creating VAT.
The unemployment rate was 7.4% in the fourth quarter of 2023.[13]
Resources
Brazil is a major agricultural and industrial power. Brazil's resources are mainly agricultural (coffee, rice, cassava, sugar cane, citrus fruit), industrial manufacturing (automotive, electronics, steel) and mining (manganese, gold, bauxite, aluminum).[14]
Brazilian agricultural exports account for 7.3% of global agricultural exports.[15]
In 2021, services accounted for 74.2% of GDP and employed 71.3% of the workforce.[16]
Tourism, meanwhile, generated $3,099 million in revenues for the year 2020.[17]
Foreign investment
After a sharp downturn caused by the global Covid-19 pandemic, Brazil's trade recovered in 2021 to a value of $501 billion.[21]
Brazil's main suppliers are China, followed by the United States, Argentina and Germany.[22]
In 2022, Brazil received $90.6 billion in foreign direct investment.[23]
[1] Unless otherwise stated, the general data comes from the l’Atlas socio-économique des pays du monde, Larousse, édition 2024
[2] Source : IBGE
[3] Source : Groupe de la Banque Mondiale
[4] Source : Groupe de la Banque Mondiale
[5] Source : Groupe de la Banque Mondiale
[6] Source : Groupe de la Banque Mondiale
[7] Source : IBGE
[8]Unless otherwise stated, the general data comes from the Ministère de l' Europe et des Affaires Etrangères
[9] Source : rfi
[10] Unless otherwise stated, the general data comes from Ministère de l'Economie, des Finances et de l' Industrie
[12] Source : Ministère de l'Economie, des Finances et de l'Industrie
[13] Source : IBGE
[14]Source : Larousse
[15] Source : MordorIntelligence
[16] Atlas socio-économique des pays du monde, Larousse, édition 2024
[17] Idem
Historical background
Franchising first appeared in Brazil in the 1960s, and began to grow significantly in the 1980s. Over the last two decades in particular, the franchising sector has experienced strong growth in Brazil.
Contract content
The investment required to join a franchise network varies according to the franchise, and can reach several million reals. For example, to join the KFC franchise, you will need a total investment of between 2 and 4.7 million reals.[29]
Economic impact
In 2023, sales in the sector rose by 13.8% to 240,788 billion reals, or around $48.7 billion.
The franchise sector has created 1,701,726 jobs, representing a 7.1% increase over 2022.
Institution
Brazil set up the Brazilian Franchise Association (BFA)[24] in 1987. The BFA has drawn up a franchise code of ethics that applies to its members.
Trade shows
The BFA is organizing Franchising Expo in São Paulo, Latin America's largest franchise fair. Held annually since its inception in 1992, the show will take place in São Paulo from June 26 to 29, 2024.[25]
The Rio de Janeiro Franchising Expo (RIO Franchising Expo), organized by the BFA, will be held from September 26 to 29, 2024.[26]
International
According to the Brazilian Franchise Association, there are 205 foreign franchises in Brazil, from 30 countries. The USA is the country with the most brands established in Brazil, with 84 brands, followed by Portugal (20 brands), Spain (16 brands), the UK (10 brands), Argentina (9 brands), Italy (9 brands), France (8 brands), Germany (6 brands), Canada (6 brands) and the Netherlands (5 brands).[31]
Statistics [27]
According to the latest BFA statistics, the sector had 3,311 networks in 2023, compared with 3,077 in 2022.
The number of sales outlets has also risen, from 184,354 in 2022 to 195,862 in 2023, an increase of 6.2%.
Growth was particularly strong in the food (+17.9%), health, beauty and well-being (+17.5%) and hotel and tourism (+16.4%) sectors.
In BFA's ranking of the fifty largest franchises in Brazil, 33% of these franchises are food franchises, 16% are in the health, beauty and well-being sector, 16% are in the fashion sector and 12% are in the education sector. Furthermore, 95% of these franchises are stores, while only 5% are kiosks.
Micro-franchises, meanwhile, are largely dominated by the service sector, which accounts for 55%. 80% of Brazil's top twenty micro-franchises are stores, 5% are kiosks and 14% are home services.
In 2023, 5.9% of existing franchised stores closed.
The Brazilian franchise market is the world's 6th in terms of franchise units and the 5th in terms of franchise chains.[28]
[19] Source : Ministère de l'Europe et des Affaires Etrangères
[20] Source : Statista
[21] Source : Ministère de l'Europe et des Affaires Etrangères
[22] Idem
[23] Source : Statista
[24] Av. das Nações Unidas, 10989 - Brooklin, São Paulo - SP, 04578-000, tél : (11) 3020-8800
[25] Source : ABF Expo
[26] Source : Franchise.org
[27]Sauf indication contraire, les informations ci-dessous proviennent d' ABF
[28] Source : Daniel
[29] Source : ABF
[30] Source : ABF
[31] Source : ABF
B. Economic data specific to franchising
Applicable legislation
In 2019, Brazil adopted the Brazilian Franchise Act[32]. Commercial franchising is defined, by Section 1 of the Brazilian Franchise Act, as a system whereby a franchisor authorizes, by contract, a franchisee to use trademarks and other intellectual property objects associated with the right to produce or distribute products or services on an exclusive or non-exclusive basis, as well as the right to use methods and systems for implementing and administering a business or operating system developed or owned by the franchisor, by means of direct or indirect remuneration.
Brazilian franchise law requires the franchisor to share a great deal of information with the franchisee, prior to signing the franchise agreement.
Pre-contractual information
Section 2 of the Brazilian Franchise Act requires franchisors to provide prospective franchisees with a pre-contractual information document containing the following information:
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a summary of the franchised business;
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the full name of the franchisor and any related companies, identified by their respective registration numbers in the National Register of Legal Persons (CNPJ);
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balance sheets and financial statements for the last two years of the franchised company;
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a history of legal actions related to the franchise, which call into question the franchise system or which may compromise the operation of the franchise in the countries in which the franchisor, the controlling companies, the sub-franchisor and the owners of trademarks and other intellectual property rights are established;
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a detailed description of the franchise and a general description of the franchise business and the activities to be carried out by the franchisee;
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the profile of the ideal franchisee in terms of previous experience, training and other characteristics, whether mandatory or preferable;
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requirements concerning the franchisee's direct involvement in the operation and administration of the business;
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the estimated total investment required to acquire, set up and commission the franchise;
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the value of the initial contribution;
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estimated value of plant, equipment, initial stock and payment terms;
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clear information on the periodic fees and other amounts to be paid by the franchisee to the franchisor, detailing how each payment is calculated and the purpose of these payments (rental of equipment or business premises, advertising costs, insurance);
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a full list of all franchisees, sub-franchisees or sub-franchisors in the network, as well as those who have left in the last 24 months, with their names, addresses and telephone numbers;
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information on territorial exclusivity;
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information about the franchisee's duty to acquire any goods, services or inputs necessary for set-up, operation or administration of its franchise only from suppliers mentioned and approved by the franchisor, including a full list of its suppliers;
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the franchisor's obligations regarding support, network supervision, services, incorporation of technological innovations into franchises, and training of franchisees and their employees;
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information on the status of the franchised brand and the intellectual property rights associated with the franchise;
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the franchisee's situation after expiry of the franchise agreement;
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a template franchise agreement and, if applicable, a template pre-franchise agreement, including appendices, conditions and respective periods of validity;
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whether or not there are any transfer or inheritance rules;
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information on the situations in which penalties, fines or compensation are applied and the respective amounts;
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information on the existence of minimum purchase quotas by the franchisee from the franchisor, or from third parties designated by the franchisor, and the franchisor’s requirements regarding whether and how products or services may be refused;
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setting out of rules restricting competition for the duration of the contract, specifying the territorial scope and penalties for breach;
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contract duration and renewal terms, if applicable;
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place, day and time of meeting for receipt of documents.
The document must be delivered ten days before the signing of the franchise agreement, or the pre-franchise agreement, or the receipt of a payment made by the franchisee to the franchisor.
Incomplete or erroneous information may, at the franchisee's request, result in the cancellation of the contract, the return of all sums received by the franchisor and damages.
Trademarks
Trademark law is governed by the Brazilian Industrial Property Act of May 14, 1996[34].
The Brazilian trademark must be registered with the Brazilian NIIP.
Section 122 of Brazil's Industrial Property Act states that any visible sign with a distinctive character may be registered as a trademark, provided it is not prohibited by law.
The law distinguishes between different types of trademarks:
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Product or service trademarks: any trademark used to distinguish a product or service from an identical or similar product or service of different origin;
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certification trademarks: any trademark used to certify that the product or service meets technical standards or established specifications, particularly with regard to its quality, nature, materials used and methods employed;
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collective trademarks: any trademark used to identify products or services from members of a given entity.
Section 127 provides that a right of priority is granted to a person who has filed an application for registration of a trademark in a country with which Brazil has concluded an agreement, within the set time limits, or with an international organization producing the effects of a national filing.
A trademark may be revoked at the request of any interested party if it has not been used for five years (Section 143).
Trademark registration is valid for ten years and is renewable indefinitely (Section 133).
On October 2, 2019, Brazil joined the Madrid system[35], which enables companies to obtain trademark protection in up to 130 countries by filing a single international application, in a single language, with the World Intellectual Property Organization (WIPO). Under Article 6 of the Madrid Agreement, trademark registration is valid for 20 years.
To go further
In Brazil, trademark applications can be handled both nationally and through the WIPO (Madrid Protocol) system. Examination is required. Brazil allows only mono-class trademark registrations. Trademarks must be used within five years from the date of registration to avoid cancellation. To develop a franchise in this country, it is advisable to cover "Business assistance relating to franchising" in class 35 that will be accepted by the trademark office. "Retail services" are also accepted provided the goods related to the retail services are specified with acceptable wording such as “Retail services related to/in connection with…[goods of interest].” Recording a franchising agreement is only mandatory before the BPTO to make the agreement enforceable against third parties. There is no deadline for recording a Franchise Agreement. The recordal process before the BPTO takes approximately 60 days, provided no official actions are raised.
Contract perfomance
The franchise contract can be registered with the Brazilian National Institute of Industrial Property (NIIP), and is then enforceable against third parties.
Section 7 of the Brazilian Franchise Act specifies that franchise agreements are drafted in Portuguese and governed by Brazilian legislation if they produce effects only on Brazilian territory.
International franchise agreements will require a certified translation into Portuguese, at the franchisor's expense. Section 7 specifies that in such cases, the parties may opt for the jurisdiction of one of their countries of domicile.
Section 7 defines an international franchise as one which has links with more than one legal system, depending on the acts relating to how it is entered into or performed, the parties’ status in terms of nationality or domicile, or where the corporate entity is located.
Jurisdiction and applicable law
On June 7, 2022, Brazil ratified the New York Convention[33] facilitating the recognition and enforcement of foreign arbitral awards.
II. Legal information
A. Legal information directly related to the franchising
[32] Law n°13.966 du 26 décembre 2019
[33] Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958
[34] Law n°9.279 du 14 mai 1996 (loi sur la propriété industrielle, telle que modifiée par la loi n° 14.200 du 2 septembre 2021)
Competition law
In Brazil, competition is protected by the Brazilian System for the Defense of Competition (BSDC), created in 1994. The system is structured around a number of different bodies.
On the one hand, the Administrative Council for Economic Defense (Cade) handles administrative procedures for investigating breaches of the economic order, as well as procedures for analyzing acts of concentration. The Administrative Tribunal for Economic Defense is a component of Cade.
Secondly, the Secretariat for Economic Monitoring ("Secretaria de Acompanhamento Econômico" SEAE), which promotes competition law among government bodies and companies.
Law no. 12.529/2011 regulates competition law in Brazil. Thus, infringements of the economic order are defined as any act having the purpose or effect of limiting, distorting or harming free competition or freedom of enterprise, dominating the relevant market for goods or services, arbitrarily increasing profits or abusively exercising a dominant position (Section 36).
The non-exhaustive list of prohibited activities includes the following:
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agreements between competitors on prices and other commercial terms;
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market sharing;
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arriers to entry;
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resale prices charged to distributors and retailers;
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discriminatory practices against buyers;
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tied sales;
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resale at a loss;
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partial or total cessation of the company's activities without cause.
A company that violates the economic order may be fined up to 20% of its gross sales (Section 37).
In the event of a repeat offence, penalties are doubled.
Personal data
Brazil has enacted a law to protect the personal data of individuals. This is the General Data Protection Law (LGPD), which came into force on September 18, 2020.
Article 5 of the General Data Protection Law defines personal data as information relating to an identified or identifiable natural person.
The data controller must establish a specific purpose for data processing. Data processing must be appropriate and necessary to achieve the defined purpose. The data controller must implement a security system to ensure the protection of personal data.
The data subject must have access to their personal data. Personal data must be accurate, clear, and up to date.
Article 7 of the General Data Protection Law lists the legal grounds for processing personal data. Data processing can be carried out with the consent of the data subject; if it results from a legal obligation; for research purposes by a research organization, ensuring, as far as possible, the anonymization of personal data; to allow the execution of a contract; to exercise rights within the context of judicial, administrative, or arbitral proceedings; when there is a vital emergency concerning the data subject or a third party; or when it is necessary to preserve the legitimate interests of the data controller.
The National Data Protection Authority oversees compliance with the General Data Protection Law and can impose penalties of up to 2% of the annual revenue of private legal entities (Article 52 of the General Data Protection Law).
Main websites
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Personal data: https://www.gov.br/anpd/pt-br;
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Conseil administratif de défense économique: https://www.gov.br/cade/pt-br;
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Secretariat for economic monitoring: https ://www.gov.br/participamaisbrasil/me-seae;
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Intellectual property: www.inpi.gov.br;
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Brazilian Franchise Association: https://www.abf.com.br/;
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Brazilian Institute of Geography and Statistics: https://www.ibge.gov.br/;
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Brazilian Central Bank: https://www.bcb.gov.br/acessoinformacao/sumoc;
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World Bank: https://www.banquemondiale.org/fr/home.
Foreign investment law is governed by the Foreign Capital Act.[37]
Foreign investment is free in Brazil. To acquire a stake in a Brazilian company, contributions must be made to a bank authorized to carry out foreign exchange transactions.
Section 2 of the Foreign Capital Act specifies that foreign capital invested in the country will enjoy the same legal treatment as that accorded to domestic capital.
Under Section 3 of the Foreign Capital Act, sums invested in Brazil must be registered with the Central Bank of Brazil (Bacen). Capital is registered in the currency of the country of origin (Section 4).
Special provisions for foreign investments
B. Peripheral legal data
[35] Madrid Agreement concerning the International Registration of Marks
[36] Law n°13.709
[37] Law n°4.131