Why franchising is growing in Portugal

 In Companies, Events, Franchising, News

Franchising continues to grow in Portugal and consolidate its position as one of the essential drivers of the national economy. Essential Business went along to Expofranchise to discover more about this dynamic sector in Portugal.

Text and Photos: Chris Graeme

In 2023, Portugal’s burgeoning franchising sector accounted for 8.3% of Portugal’s Gross Domestic Product (GDP), a number significantly above the previous year when it was 7.23%.

Sectors such as services and retail stood out as crucial to increasing that increase. On October 18 and 19, some of the main companies in the sector gathered at the Pátio da Galé exhibition and events venue in Lisbon for the 27th edition of Expofranchise, the largest fair of its kind on the Iberian Peninsula.

“We’ve grown from 7.23% of GDP in Portugal in franchising to 8.3% so it is quite amazing how the business has grown in just 1 year,” says Cristina Matos, the President of the Portuguese Franchising Association. (APF – Associação Portuguesa de Franchising)

“We have a lot of new brands, and after the pedantic period in which the franchise business, like most others, really struggled, we’ve scaled up with a lot of people wanting to invest in the sector and it has really grown,” Cristina explains.

Cristina says that franchising is “taking off in Portugal” because the country’s economy is growing, particularly services in tourism.

“If the economy is growing then we grow too,” she says, adding that immigration too has boosted offers, as well as the number of entrepreneurs trying to buy new brands overseas and bring them to Portugal.

“We’ve also got examples of brands that were developed in Portugal that then decided to opt for a franchising model. We had a lot of Brazilian entrepreneurs that came here just before the pandemic, start up their own businesses, and decided to grow them through franchising,” Cristina explains.

A growth in financial services

One of the areas of franchising that has grown in recent years is financial services brokerage, with one company standing out in particular for having an unmistakable and rather novel look. The Doutor Finanças team were immediately recognisable for their white coats that initially give the impression of a private healthcare services company.

However, it’s not, and the only remedies they’ll be dishing out are the result of another quite different diagnosis – financial consulting, with a particular emphasis on mortgage and insurance brokerage, and supporting micro and small companies to improve their business models.

Francisco Tavares, Director of the Doutor Finanças network explains: “We’re healing a problem. You go to the doctor with an ailment, and you place your trust in the man in the white coat. Here we’re the doctors for financial matters that can help diagnose and find remedies for a broad range of issues,” he told Essential Business at Expofranchise.

Although the company can help in a wide range of areas such as getting the best mortgage deal, loan consolidation, finding the right insurance cover and finding the best interest rates on personal loans, he explains that the mortgage aspect of the company’s services is the strongest.

“Most people when they seek a mortgage, go to their bank and talk to someone there. But you don’t know if your bank is giving you the best deal in the market”, he says.

“So we are mortgage brokers, we talk with all the banks and we find the best deal to suit our client and deal with the whole process from start to finish, including all the paperwork, and get them the best insurance deal on the loan in the market,” he continues.

“It’s a win-win situation” he stresses, using the Portuguese phrase ‘negócio Chinês (A Chinese deal).

Now in its 10th year, the totally Portuguese company also offers a ‘financial literacy’ service.

“We saw there was a gap in digital financial literacy in Portugal – which is well known – as there were no blogs or websites giving advice.

“We set up a Doutor Finances YouTube channel and we also contribute to a TV programme called Contas Poupança (Savings Accounts) on SIC TV. We went from 1,000 leads per month to an astounding 15,000 leads,” Francisco continues. Now the Doutor Finanças website currently has 2 million visitors per month.

The company currently employs 2,015 directly and another 250 working within the franchise network, and has an ambition to open a physical store in every town in Portugal.

“Now we have 32 stores up and down the country, particularly in the north of Portugal, including stores in the Azores. Our goal is to have 1,050 stores by the end of next year,” he explains.

So how does one go about being a franchisee for Doutor Finanças? Francisco Tavares explains: “We have several models and are distinguished by the amount of credit that the franchisee is permitted negotiate with clients.”

In the basic model, the franchisee pays a €1,500 fee and 30% of royalties per year. In another the franchisee pays 20% royalties and a €7,500 fee every five years. With the third model, the franchisee pays 8% royalties and €12,500 in fees. “People make a good living out of this because they receive 1.5% on all the loans achieved”, concludes Francisco Tavares.

TAB – a growing business advisory

Essential also spoke to Rita Maria Nunes, Country Manager of TAB Portugal, an Alternative Advisory Board comprising a thriving community of forward-thinking CEOs, entrepreneurs, and leadership teams who share the knowledge and inspiration to radically improve companies.

Through a unique combination of mentoring and business coaching sessions, taking part in monthly meetings of a TAB Peer Board, strategic tools and workshops, among others, a business has at its disposal everything needed to boost business.

“We help business owners become really good entrepreneurs, ensuring that your company has a source of strength through tools, instead of being burdened down by problems that have to be solved,” says Rita.

“With our methodology as a peer advisory board and the coaching sessions we run, we help businesses owners to achieve the personal freedom that they want to have, instead of being in the business all of the time solving problems and having no time for the family or leisure.”

“We do mentoring, business coaching, business consultancy and training. In other words we do what the business owners need. We talk to the business owners, understand their challenges, and then we draw up a plan that helps them to succeed,” she explains.

And stresses that one person’s definition of success varies from one business owner to another, which is why they focus on the owner and what they want and need.”

Currently, TAB Portugal has just four franchisees and facilitators, but Rita Maria Nunes stresses that the company is very young in Portugal, but around the world it has over 800 franchisees and facilitators.

The company is based in Denver in the United States with presences in 25 countries across all continents including New Zealand, Australia, South Africa, Canada, Mexico and all over Europe.

“Basically we’re business angels but we don’t give venture capital investment”, says Rita Maria Nunes who has been operating in Portugal using the TAB methodology for 3 years.

She admits that the first year of operations was rough, because it was the setup period. The second year was easier as Rita managed to assemble some teams and secure some franchisees and facilitators.

“Now in our third year we already have more facilitators and franchisees, with more interest from people wanting to join us. I think 2025 will be a great year for us,” she says confidently.

The requirements to be a facilitator or mentor are to have had a successful career in business or finance, such as a CEO (particularly useful for former CEOs, MDs and senior operations managers that have retired but want to pass on the benefit of their experience to new businesses and help them grow).

“Instead of building up a consultancy from scratch they can join TAB and have our methodology and marketing machine behind them, have a shorter induction process, and get clients relatively easily”, Rita remarks.

The mentors invest in the franchise, typically starting at €7,500, and up to €55,000 depending on the area and the size of business that they want.

And they get good revenue because 80% of the income stream is theirs minus the royalties. “We work with small businesses in Portugal (not startups), including SMEs across different sectors and industries, so we have people with a mix of experiences from different sectors that creates a really good board,” concludes Rita Maria Nunes, Country Manager of TAB Portugal.

Flying high

Travel and tourism is another burgeoning area for the franchise sector in Portugal, a case in point being Bestravel, as Nuno Almeida, the Expansion Coordinator for Bestravel Lisbon, explains.

With 21 years in Portugal, Bestravel was created as a franchise by franchisers for franchisees and is 100% Portuguese.

Founded in 2003, Bestravel was later integrated within a larger master franchise travel group called Gecontur, part of Newtour .

Today it is the largest chain of franchised travel agents in Portugal, with its latest agency opening in September this year on the Azores island of Graçiosa – the third one to be opened in the autonomous region.

In August this year, Bestravel won 2nd place as the Best Advanced Franchiser of the Year (For brands of 50 agencies or over) attributed by the Portuguese Association of Franchising (APF). It currently has 48 agencies in its network.

Bestravel has been particularly innovative, such as joining forces with companies such as the airline group IAG (International Airlines Group) with which it organised a sushi workshop with the aim of informing the public about IAG’s long-haul routes, and teach the techniques of sushi- making alongside representatives of British Airways, Aer Lingus and Iberia.

“We are the franchise that has been created for micro entrepreneurs who can run their own travel agency business under our brand Bestravel. We have 48 physical shops (we don’t have online- only stores)”, explains Nuno, adding that the franchise has shops in Saldanha and Parc das Nações in Lisbon.

Entrepreneurs who want to join the business are not provided with the premises, but are given three weeks training and two weeks work experience in another store, the know-how and support services from lawyers to accountants, and must hire a professional that knows how to operate Galileo booking systems, which they also teach.

“The main advantage is the service and accompaniment that our franchisees give their customers” says Nuno, adding that each of the 48 stores employ around 2-3 travel professionals on average, or 150-200 employees all told.

Although Bestravel does not offer a turnkey solution, it does offer all the advice and guidance, but the franchisee has to locate a premises and undertake all the works and pay the shop fitters and suppliers.

In addition, the franchising fee is around €28,000, and a further €300 per month towards the national marketing campaigns, €160 for administration costs and maintenance and operation of the Galileo and admin systems which are the most advanced in the travel agency business.

As for royalties, Bestravel has a sharing system so that if 75% of holiday packages are purchased from its list of partner suppliers (hotels, airlines and tour operators) they pay nothing. Moreover, over 65% of its agencies have been operating for 10 year or more, showing the viability of the business model.

Hassle-free refurbishments

Finally, we interviewed Paulo Neto Leite, the Master Franchiser of the interiors refurbishment and decor franchise AQUI Master Franchise.

AQUI was founded in Spain in 2019 as a digital home renovation service using software tools, and is currently present in six countries: Spain, Mexico, Italy, France, Colombia, and Portugal, which is now also the master franchisor for Brazil.

Since 2019, AQUI has moved into retail models with stores that provide services from architects and designers to design a project. It also can provide a credit facility if required.

“The most important factor in home renovations around the world is trust. On the one hand you can get a lot of cowboys in the market, but on the other hand there are many customers too who find problems in order to avoid paying for the services.

“We help you deal with the bank in the case of a home improvements loan. We have a network of builders and decorators, many of them are our franchisees, but are not in-store but work online.

The customer can visit AQUI stores (both digital and physical) with the company opening its first physical store on November 17 in Lisbon in the Colombo Shopping Centre. (It has 300 stores around the world)

“For our franchisee builders and decorators, architects and designers, we offer them a software to manage their interactions with their clients. We offer access to credit up to €40,000 and with better repayment terms.

“We also establish the contacts for the clients, the estimates, deal with the works contracts (with penalties for work schedule delays)”, adds Paulo.

So far, AQUI has a list of 65 tried and trusted building contractors in the Greater Lisbon Area with plans to expand the physical shops to the Algarve, Porto and elsewhere in Portugal in future.