It may be small in size, but Costa Rica is home to this region’s second-largest franchise market.
Words by Kieran McLoone, deputy editor for Global Franchise
COSTA RICA IN NUMBERS
• Population: 5.09 million
• Capital city: San Jose
• GDP: $58.5bn
• Language: Spanish
• Area: 51,100 square kilometers
• Currency: Costa Rican colón
Known as the land bridge that connects South, Central, and North America, Costa Rica is a naturally attractive market for franchisors looking to invest in thriving regions. The country is also surrounded by the Pacific and Caribbean oceans on either side which, coupled with Costa Rica’s established ports, makes for streamlined logistic solutions.
It’s this natural proclivity toward international business that has resulted in Costa Rica becoming Central America’s second-largest franchise market, despite the country’s relatively small landmass. As of 2016, there were 321 unique franchises in the country, with 76 per cent being of international origin.
Surprisingly, fashion retail makes up the majority of the franchise market within Costa Rica, at 32 per cent. Lots of competition can still be found in the food and beverage segment, however, which accounts for just under one-quarter of the country’s franchising landscape. Following behind this, at just 14 per cent, are hotels.
“San Jose’s solid infrastructure means that many international flights come and go from the city; strengthening the country’s global presence”
As would be expected with the likes of fashion retail and fast-casual offerings, many franchises within Costa Rica establish themselves in malls and other commercial centers. This has led to further mall construction toward the east of San Jose, the country’s capital city. And despite the pandemic, San Jose’s solid infrastructure means that many international flights come and go from the city; strengthening the country’s global presence.
Costa Rica’s population isn’t just familiar with franchising, it’s also highly educated in general, and in 1869, the country was the first in the world to make primary school education both free and compulsory. To this day the government of Costa Rica still invests around 20 per cent of its GDP on universal access to education, healthcare, clean water, sanitation, and electricity. As a result, the country has the most literate population in all of Central America, at around 95 per cent.
Costa Rica has also created several Free Trade Zones, and businesses established in these areas can enjoy tax exemption on the export of goods and numerous types of tax.
There are, of course, challenges that franchisors will encounter in Costa Rica – it would be wrong to conclude that it’s a carefree tropical paradise. More than 40 per cent of the population hold informal jobs, which can lead to low disposable income. This means that finding franchise investors with adequate capital can be a slow and arduous process and that investors will only be willing to partner with brands showcasing proven success. Also, even though literacy is very high within Costa Rica, both Spanish and English versions of business cards and promo materials will need to be made to appeal to local talent.
