International Business Idea #1: A Franchise

A franchise can be an easy way to hit the ground running with a business model, strategy, branding, marketing, and support already in place. An already proven successful business can give you a leg up.

One franchise business opportunity in Panama crossed my desk recently. The regional manager for the Mailboxes Etc. franchise was looking to expand.

Mailboxes Etc. was already well established in Panama (with 18 stores at the time—today there are 40 or so), and, based on the success to date, was interested last year in growing the group to include a new store to service the Playa Blanca area near Rio Hato. This is the heart of the popular beach area about an hour-and-a-half outside Panama City, where many expats are settling.

You may be interested in neither Panama nor the Mailboxes Etc. business. However, I’d like to walk you through some numbers here, for your general reference.

The total start-up cost for a Mailboxes Etc. is US$60,000 to US$70,000. You don’t have to speak Spanish to open one of these operations, as most of your customers will be expats like you. Several non-Spanish-speaking franchisees already run stores in Panama and Costa Rica.

Another plus is that a Mailboxes Etc. does not require much staff. A typical store can be run with three local employees. Your staff overheads are controlled, therefore, both because you don’t need much and also because salaries in this country are very reasonable. The quality and the cost of labor are two of the biggest doing-business appeals for would-be entrepreneurs in Panama.

Mailboxes Etc., like any franchise, provides training and operational support leading up to and during the opening of a new store and then, as well, ongoing support as long as you need it.

What kind of return could you expect? The franchise manager explained to me that stores in this part of the world typically reach a point of monthly profitability after six to eight months of operation. Earnings are typically US$3,500 to US$5,000 per month the second year and US$6,000 per month thereafter (“assuming achieving normal sales goals, which depends in large part on the store owner’s level of enthusiasm”).

Lief and I have often considered investing in a franchise operation. If we did, Panama would be the location, not only because we’re currently residing here, but also because this is a fast-growing marketplace where the expanding middle class is eager for all kinds of new products and services that a franchise could be the turn-key way to address.

More on Panama as a doing-business jurisdiction tomorrow.