Sure! Here’s the translation into American English:
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A recent report from Tormo Franquicias Consulting has highlighted a growing concern in the franchise sector in Spain: many brands that were once established under this model have had to halt their expansion processes but are still open to bringing in new franchisees. This phenomenon, though complex, is due to a series of challenges these companies face.
Among the main causes are poor financial results, often generated by insufficient investment in brand promotion and the hiring of key resources. According to data from Tormo Franquicias, more than 20% of brands registered as franchises go through prolonged periods of inactivity. These companies have not disappeared; rather, they are in a state of waiting, maintaining their operational model and identity as franchises, with an eye on a potential recovery.
Despite their inactivity, these brands continue to appear in specialized directories and maintain their online presence. This helps them retain visibility with potential investors without needing to launch a full marketing campaign.
Entering a “latent” phase does not necessarily imply the extinction of the franchise. Many opt for a pause or a restructuring, ensuring they preserve their know-how and brand ownership, even if they lack operational franchise units. The reasons behind this transition vary and include everything from lack of structure and budget to changes in management or the need to adjust margins.
Brands in “latent” mode can range from those with only one company-owned unit seeking a new partner to those deciding to halt their expansion to redefine their business model. Others may modify their structure to direct management models while maintaining their franchise identity.
Latency, although not widely accepted, appears as an intermediate phase between active expansion and potential disappearance. Many of these franchises have the capacity to be reborn, adapting to new trends and formats, which allows them to maintain their structure and the know-how necessary for eventual reactivation.
Andrés Álvarez, head of expansion at Tormo Franquicias, has pointed out the troubling normalization of latency in the sector and the concern over its acceptance. The consultancy also reaffirms its commitment to avoiding the incorporation of inactive networks, emphasizing that the success of the franchising system relies on continuous growth and the active motivation of all its participants.
Tormo Franquicias Consulting has established itself as one of the most influential consulting firms in the franchise sector in Spain, offering a wide range of services to new businesses and entrepreneurs looking to expand within this system.
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Source: MiMub in Spanish
