Forget soccer, Brazil’s amazing franchise sector is the real story this World Cup

On the day that Australians collectively mourn the Socceroos’ final run in the World Cup, it is worth noting that there is more to Brazil than soccer.

For example, the largest country in South America also features a thriving franchise sector to rival that of the United States and Australia (and as the largest coffee producing nation in the world, provides the raw ingredients essential to many international coffee franchises).

There are more than 2700 franchise brands operating in Brazil, placing it behind only the United States with 3000 franchise brands as the nation with the most franchisors in the world. By comparison, Australia has just 1180 franchise brands but to be fair, Australia’s population is nearly 10 times less than Brazil’s and nearly 15 times less than the United States.

Per capita income is low at under $A12,000, but unemployment is also low at just 5.4%, a figure similar to Australia’s unemployment level. Growth in the franchise sector year on year sits at 12%.

What the statistics don’t show, however, is the entrepreneurial spirit of the Brazilians. While much has been written about the slum areas of Brazil, known as favelas, few articles explore beyond the crime with which slum living is synonomous.

However, the favelas themselves are an insight into the entrepreneurial nature of Brazil’s population. Developed organically, without council planning or building approvals, favela homes are often made of bricks and mortar, have electricity and running water, and are even built in such a manner that an extra storey or two can be added on top (although usually this airspace is rented to another resident, who builds their own home but must still pay rent to the “landlord” who owns the ground floor).

Even in the tourist spots, Brazil’s entrepreneurial spirit shines through. At Copacabana or Ipanema in Rio, a beach-loving tourist need never go hungry, thirsty or cold with a constant procession of beachside traders walking past with food, drinks, clothes and other holiday essentials for sale. Even deckchairs, lounges and umbrellas can be hired along the beach from a countless number of vendors.

Perhaps the best example of Brazil’s entreprenurial spirit is chocolate manufacturing and retail franchise Cacau Show, started in 1988 by then 17-year-old Alexandre Tadeu da Costa who is today akin to a modern Willy Wonka.

With ambitions of being a rock star, the guitar-playing da Costa started his chocolate empire by selling pre-orders for Easter eggs, only to find that his supplier did not stock the sizes of eggs da Costa had promised his customers.

Undeterred, da Costa borrowed $US500 from a relative to buy the ingredients and moulds to make his own chocolate, and progressively grew his business to a manufacturing and retail giant that today has more than 1600 franchise stores throughout Brazil, supplied by a massive factory outside Sao Paulo turning over almost $1 billion each year.

Unlike Australia’s Darrell Lea chocolate franchise, which has a 100-year history as a manufacturer and retailer but lost its retail mojo and was placed in administration several years ago, Cacau Show only commenced franchising in the year 2000, and is already the largest retail franchise in Brazil.

Part of its success is due to the company’s outstanding culture, based around the leadership of da Costa who maintains 100% ownership and is involved in all aspects of the business.

The company’s development and policy that its products must “transform ordinary moments into extraordinary moments” has been the subject of two books and seen da Costa lauded by professional chocolate makers around the world.

However, da Costa’s humble origins still keep him grounded. While the business now operates a fleet of trucks to ship its products throughout Brazil (and da Costa himself may fly to and from meetings in Sao Paulo by helicopter to avoid the city’s shocking traffic jams), the company still owns its very first delivery vehicle, an old Volkswagen Beetle that takes pride of place in the executive car park.

Each Monday morning, da Costa assembles his department heads for a regular update across the business with each meeting kicked-off by a management singalong of the official Cacau Show company song, with none other than da Costa playing lead guitar.

Da Costa also meets with different groups of staff members from all levels of the organisation on a monthly basis, so every employee has the opportunity to meet the “boss” and understand the direction and future of the business.

Franchisees are recognised and rewarded regularly, with a select group of 44 franchisees each year taken on an all-expenses-paid trip to Belgium to tour chocolate factories and retail stores. Never one to waste money, da Costa takes 44 franchisees because that is the exact number of people that can fit into a bus for local transport in Belgium.

Cacau Show’s busiest time of the year is the lead-up to Easter, so the factory actually stays open on Good Friday and Easter Saturday to ensure that all last-minute orders and stock requirements from stores can be fulfilled.

Every year, the final box of chocolate products to be delivered out of the factory on Easter Saturday is ceremonially passed from hand to hand by all the 200 or so staff members in the factory in a long line before being loaded into the last truck to depart the plant. Da Costa then rewards the staff with a large lunch that he helps prepare himself by working in the factory’s staff kitchen.

In addition to celebrating the work of staff and franchisees, Cacau Show also do random giveaways of cash totalling around $A750,000 to customers each Easter. The winner of the single largest prize is collected by helicopter and brought to the company’s factory headquarters for the prize presentation, often without knowing in advance that they have even been entered in the competition.

Touring Cacau Show’s massive and gleaming factory on the outskirts of Sao Paulo is what one would imagine a visit to Willy Wonka’s factory would be like. From the reception hall featuring chocolate bicycles and trees to the honour wall featuring a name plaque for every franchisee in the group, to the visitor’s centre that looks more like a Disney-themed experience complete with a secret doorway concealed in a book case, Cacau Show excels at making chocolate an extraordinary experience.

And all of this in a brand that has no market presence outside of Brazil.

So irrespective of who wins the World Cup in Brazil, the real story is the dynamic entrepreneurial spirit and culture of its franchise sector.

Jason Gehrke recently travelled to Brazil to represent Australia at a meeting of the World Franchise Council, an association of international franchise associations. He is the director of the Franchise Advisory Centreand has been involved in franchising for 20 years at franchisee, franchisor and advisor level.