What the sector pays
Brazil acquired US$ 421.9 million in franchise contracts from abroad from 2014 to 2018, 87% from the United States
Acquisitions of franchise contracts from residents abroad recorded in Siscoserv from 2014 to 2018, NBS code 1.1110.30.00
See the full table (8 rows)
| Year | Acquisitions (US$ million) | Countries (US$ million) | Operators | Sales (US$ million) | INPI certificates, licensor abroad | Share of Central Bank IP expenses |
|---|---|---|---|---|---|---|
| 2014 | 108.9 | United States 82.2; Switzerland 24.6; confidential 2.1 | 111 | 1.0 | 235 | 1.8% |
| 2015 | 112.1 | United States 91.9; Germany 0.3; confidential 19.9 | 69 | up to 3.1 | 90 | 2.0% |
| 2016 | 54.5 | United States 52.3; confidential 2.1 | 30 | 3.2 | 78 | 1.0% |
| 2017 | 21.1 | United States 19.2; confidential 2.0 | 33 | up to 4.8 | 84 | 0.4% |
| 2018 | 125.3 | United States 122.6; confidential 2.7 | 22 | up to 3.8 | 84 | 2.4% |
| 2019, code 1.1110.30.00 | 14.6 | United States 11.7; confidential 2.9 | 15 | up to 0.01 | 80 | 0.3% |
| 2019, code 1.1110.00.00 | 128.6 | Japan 88.9; United States 31.1; France 7.5; Germany 0.7; confidential 0.4 | 38 | 4.6 | not applicable | not applicable |
| 2014 to 2018 | 421.9 | United States 368.2; others 53.7 | not additive | up to 15.9 | 571 | 1.5% |
Series break in 2019* In 2019, NBS 2.0 turned heading 1.1110, previously dedicated to technology transfer, into "Franchise", so the year is kept separate and the chart series diverge only in that year. The simultaneous drop in Japan's technology subitems indicates that code 1.1110.00.00 received payments of that nature.
| NBS code | Country | Acquisitions (US$ million) | Operators | Share of the code |
|---|---|---|---|---|
| 1.1110.30.00 | United States | 11.7 | 11 | 80.4% |
| 1.1110.30.00 | Other countries, confidential | 2.9 | 19.6% | |
| 1.1110.30.00 | Code total | 14.6 | 15 | 100.0% |
| 1.1110.00.00 | Japan | 88.9 | 7 | 69.1% |
| 1.1110.00.00 | United States | 31.1 | 13 | 24.2% |
| 1.1110.00.00 | France | 7.5 | 7 | 5.8% |
| 1.1110.00.00 | Germany | 0.7 | 5 | 0.6% |
| 1.1110.00.00 | Other countries, confidential | 0.4 | 0.3% | |
| 1.1110.00.00 | Code total | 128.6 | 38 | 100.0% |
Acquisitions from the United States by yearCode 1.1110.30.00. From 2014 to 2018, operators with origin in the United States go from 100 to 16, and the value from US$ 82.2 million to US$ 122.6 million.
| Year | Acquisitions (US$ million) | United States (US$ million) | Share | Operators, United States | Operators, all countries |
|---|---|---|---|---|---|
| 2014 | 108.9 | 82.2 | 75.5% | 100 | 111 |
| 2015 | 112.1 | 91.9 | 82.0% | 60 | 69 |
| 2016 | 54.5 | 52.3 | 96.1% | 22 | 30 |
| 2017 | 21.1 | 19.2 | 90.7% | 23 | 33 |
| 2018 | 125.3 | 122.6 | 97.8% | 16 | 22 |
| 2019* | 14.6 | 11.7 | 80.4% | 11 | 15 |
Until it was shut down, Siscoserv (the federal system for registering foreign trade in services and intangibles) recorded transactions in services and intangibles between residents in Brazil and abroad, and its statistics break down franchise trade by code of the Nomenclatura Brasileira de Serviços (Brazilian Nomenclature of Services, NBS) and by country. The published series runs from 2014 to 2019 and is closed, because the system was shut down by Joint Ordinance No. 22.091, dated October 8, 2020. The indicator is therefore a historical record of the period, and the observatory has not found another open official source with a specific value for franchising in transactions with other countries.
From 2014 to 2018, residents in Brazil acquired US$ 421.9 million in franchise contracts from abroad. The annual value fluctuated between US$ 21.1 million in 2017 and US$ 125.3 million in 2018, with no defined trend, and the United States accounted for 87.3% of the total. In the other direction, sales add up to at most US$ 15.9 million, so Brazil acquired at least 26 times what it sold. Among the other countries, Switzerland appears with US$ 24.6 million in 2014 and Germany with US$ 0.29 million in 2015, and the other origins remain confidential.
The year 2019 is presented separately. NBS 2.0 turned heading 1.1110, previously dedicated to technology transfer, into "Franchise", and the file for that year shows US$ 14.6 million under the old code and US$ 128.6 million under the new one. Of this second amount, 69.1% has Japan as its origin, a country with no franchise cell published from 2014 to 2018 and with no licensor in any of the 1,467 franchise filings at INPI (the national industrial property institute). In the same year, Japan's technology subitems fell from US$ 239.4 million to US$ 14.3 million, which indicates that the new code received technology payments. Without Japan, 2019 adds up to US$ 54.3 million, a reference value and not a measurement.
Comparison with the other databases places the order of magnitude. INPI issued 571 franchise certificates with a licensor abroad from 2014 to 2018, a period in which recording was still a condition for remittance, and 84.2% of them had a licensor in the United States, a share close to that of the value. Year by year, however, certificates and dollars do not move together, because a certificate records an act and not the amount paid. Against the Central Bank of Brazil aggregate for intellectual property services, of US$ 27.5 billion in expenses over the same period, franchise acquisitions are equivalent to 1.5%.
How we calculate
We read, year by year, the files of services sold and acquired and of trading partners published by MDIC (the ministry responsible for foreign trade) and extracted subitem 1.1110.30.00, "Franchise contracts", in the acquisition and sales modules, and subitem 1.1110.00.00, "Franchise", which exists only in 2019. Checking the codes against the text of NBS 2.0 and the Explanatory Notes excluded the entire heading 1.1110, which until 2018 groups technology transfer, and codes 1.1409.50.00 and 1.1412.00.00, for trademark and franchise registration services. The value by country is the published one, and the difference from the subitem total is presented as other countries under confidentiality.
When a year's sales are confidential, the ceiling is the residual between heading 1.1110 and the published subitems, which may include subitems other than franchising. The values are those of the commercial flow, with the value of each transaction spread over its term, according to the Methodological Notes. From INPI, we counted certificates by year of issue and filings by year of filing, in the FRA modality, with a licensor in another country. From the Central Bank, we added up the twelve months of expenses on intellectual property services (SGS 22778). We publish only aggregates. The MDIC page declares the Creative Commons Attribution-NoDerivatives 3.0 license, the same as INPI's, and the Central Bank declares the ODbL.
What this figure does not show
- The series ended in 2019 and will not be updated. The files are snapshots of extractions made on different dates, and the system allowed corrections and late registration.
- Registration under chapter 11 of the NBS began in July 2013, and 2014 is the first full year published. That year has 111 operators under the franchise code, the highest number in the series, with a value close to that of 2015 (US$ 108.9 million and US$ 112.1 million), and it was kept.
- The data are the declared value of acquisitions and sales, and not the payment made. Siscoserv payment records are not published, and the source is not linked to foreign exchange transactions.
- Code 1.1110.00.00 of 2019 is not comparable with previous years. The sum from 2014 to 2019 ranges from US$ 436.5 million with the old code to US$ 565.1 million with the entire new one, passing through US$ 476.2 million without Japan. The removal of Japan is an inference, and the files do not cross country with state by service. Four operators from Amazonas account for US$ 56.3 million of the new code, a state with no franchise value published in 2014 or from 2016 to 2018 and with technology payments in those years. The 2015 file by state has misaligned columns and was not used.
- The generic code of chapter 11 (1.1100.00.00), with US$ 113.9 million in acquisitions in 2019, may contain franchising and was not added.
- A few declarants move the total. In 2018, 22 operators added up to US$ 125.3 million, an average of US$ 5.7 million per operator, compared with US$ 0.64 million in 2017. The files do not identify declarants and do not make it possible to verify the cause of the jump.
- The count of operators does not form a series. The total number of acquirers of all services reported by the source goes from 7,094 in 2014 to 16,097 in 2015 and from 20,448 in 2018 to 14,700 in 2019, with a change in the field name between files. Operators also cannot be added across years, countries or codes.
- There is no registration obligation for companies under Simples Nacional (simplified tax regime for small companies), for MEI (individual microentrepreneur regime) or for individuals below US$ 30,000 per month, which leaves out the contracts of these companies. The acquisition module does not cover commercial presence.
- Countries and subitems with up to three residents are not disclosed. The share of the United States is a floor, and the absence of a country does not mean an absence of transactions.
- The Methodological Notes state that Siscoserv is not fully comparable with the balance of payments. The share of the Central Bank aggregate indicates an order of magnitude. The aggregate does not break out franchising, and an INPI certificate may result from an amendment or extension.
Frequently asked questions
How much does Brazil pay abroad for franchises?
The specific official data end in 2019. From 2014 to 2018, Siscoserv (the federal system for registering foreign trade in services and intangibles) recorded US$ 421.9 million in acquisitions of franchise contracts from abroad, an average of US$ 84.4 million per year. The value is that of declared transactions, and not of payments, and the Central Bank of Brazil's balance of payments does not break out franchising within intellectual property.
Which countries do the foreign franchises operating in Brazil come from?
The United States accounted for 87.3% of the acquisitions of franchise contracts recorded in Siscoserv (the federal system for registering foreign trade in services and intangibles) from 2014 to 2018, and for 84.2% of the certificates of INPI (the national industrial property institute) with a licensor abroad in the same period. Other countries appear little because the source does not disclose categories with up to three residents in Brazil.
How much does Brazil earn from selling franchises abroad?
From 2014 to 2018, sales of franchise contracts abroad add up to at most US$ 15.9 million in Siscoserv (the federal system for registering foreign trade in services and intangibles), with a value published only in 2014 (US$ 1.04 million) and 2016 (US$ 3.21 million). In the other years the subitem is confidential, and the ceiling comes from the residual of the heading.
Why does Siscoserv have no franchise data after 2019?
The system was shut down by Joint Ordinance No. 22.091, dated October 8, 2020, and MDIC (the ministry responsible for foreign trade) ended publication with data up to 2019. The franchise code of 2019 changed with NBS 2.0 (Brazilian Nomenclature of Services) and received technology payments, so the reliable comparison runs from 2014 to 2018.
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