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One year ago, Puerto Rico was hit by Hurricane Maria and suffered immense damage. When it came to small business in particular, at least 5,000 small businesses closed in Puerto Rico in the couple of months after the hurricane according to El Nuevo Dia, Puerto Rico’s largest newspaper.
Getting back to normal on the US territory with a population of approximately 3.7 million has taken time—100% power restoration was declared about 11 months after landfall on August 14, 2018. However, for many months officials have been not shy to say that the island is open for business—and franchises have been a part of the commercial infrastructure rebuilding of Puerto Rico.
Opening after the storm
“Puerto Rico has served as an example to the world in its will to overcome the devastation of Hurricane Maria and show incredible resiliency,” remarked Marco’s Pizza President Tony Libardi in April shortly after the 900th Marco’s Pizza franchise location opened in the city of Bayamόn. “This market merits investment because of the amazing spirit of its people to persevere under the toughest conditions.” The pizza franchise expects to open nine more locations by the end of the year bringing its total on the island to 20.
“No one is immune from natural disasters, but the lessons learned along the way generate momentum for long-term operational success,” says franchisee Edgardo Santiago, co-owner of the Bayamόn Marco’s Pizza location. “Despite the catastrophe, and the huge impact to our personal lives, we prevailed and worked with Marco’s national team to open our store in reasonable time after the September storm. All along, we strived to maintain a ‘can-do’ attitude and resiliency.”
Another franchise that opened in the long shadow of the storm is Pita Pit, which made its debut on the island in April 2018. Franchisee Valeria Quinones started making plans to open the food franchise in her native Puerto Rico following a trip to Lebanon a couple years prior.
“I was looking for something unique and healthy,” Quinones said in an interview with FastCasual about her franchise ambitions. “Coincidentally, Pita Pit offers Lebanese style pita. It was a sign that this was the one.”
The hurricane provided a major and unexpected obstacle, but Quinones persevered—a fact not lost on her franchisor, who sees a bright future for Puerto Rican franchise development.
“San Juan is a bustling city filled with both locals and tourists, and we are so excited to have this mark our first location in Puerto Rico with more locations opening in the future. We were devastated when Hurricane Maria left so many without power for months, including our franchisee Valeria and her family,” said Pita Pit Digital Marketing Manager Jordy Patano. “Now Pita Pit has the opportunity to be a part of the community as San Juan rebuilds and as businesses get back up and running after the storm. Pita Pit is committed to hiring locals in the market as the brand grows its presence throughout Puerto Rico.”
The franchising landscape in Puerto Rico
To aid in rebuilding efforts, Mercy Corps, an international humanitarian aid organization, is partnering with Google and the Hispanic Federation to provide grants to small businesses, fund development training and revamp tourism.
Christy Delafield, a spokeswoman for Mercy Corps, says of the organization’s mission: “We’re not just interested in rebuilding to the pre-hurricane state; we want Puerto Rico to build back better.”
According to industry professionals, despite the damage done by Hurricane Maria, Puerto Rico is still an “incredible opportunity” and a “ripe venue” for businesses. In fact, spa franchise Seva Beauty ended up moving its headquarters from the Chicago area to Puerto Rico even with the impact of the hurricane.
The International Franchise Association backs this positive outlook stating, “Duty-free access and generally low tax rates with tax incentives have encouraged US companies to invest heavily in Puerto Rico and the tax benefits make it an attractive region for other foreign investment.” The most notable of these incentives is Act 20, which provides tax exemptions and tax credits to businesses engaged in eligible activities in Puerto Rico.
As an US territory, franchises in Puerto Rico are subject to the Franchise Rule of the Federal Trade Commission (FTC). This means that prior to offering and selling franchises, franchisors must have a prepared and updated franchise disclosure document (FDD) and comply with the other provisions mandated by the rule.
Other than the FTC Franchise Rule, there are no other franchise-specific regulations. However, Puerto Rico bound franchises must adhere to the island's business laws. The most relevant of which, according to Robert Fleming—an attorney in Puerto Rico, is Puerto Rico Dealers Act Law 75. Law 75 regulates the commercial relationship between principals and distributors.
For franchises accepting inquiries from prospective franchisees, please see our US Franchises Available in Puerto Rico page.