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As Trade And Travel Restrictions Lift, Franchisors Eye Cuba For Opportunity

Written by Ken Gaebler
Published: 8/19/2015

With relations between the U.S. and Cuba on the mend, franchisors are looking to Cuba as their next frontier for expansion and franchising business opportunities.

Previously, we covered how Dubai is becoming a hot market for franchising. Now, here's another market that is getting attention from franchisors, and it's one that might surprise you: Cuba.

Franchising in Cuba

Franchisors Are Havana Good Time in Cuba Now (Apologies for the Bad Pun!)

When the United States and Cuba reestablished diplomatic relations and eased a trade embargo that had been in place for more than 50 years, expansion-minded franchisors started setting their sights on new business opportunities.

It makes perfect sense. Cuba has long been a popular destination for tourists from Canada and Europe. Now that travel restrictions to the Caribbean island have been eased -- and might be lifted - the country expects the number of U.S. tourists to start rising in the coming years.

That opens the door for American franchises to begin selling units in Cuba, with the hopes of attracting U.S. and international tourists, as well as Cuban locals.

What Types of Franchises Can Succeed in Cuba?

It will be a few years before the U.S. completely permits franchises to start setting up shop in Cuba -- a number of sanctions and business restrictions need to be ironed out, and typical franchisor practices like training franchisees, ongoing franchise support, etc., are still considered illegal by the U.S. Office of Foreign Assets Control (OFAC). But once the remaining sanctions are lifted, it's expected that Cuban franchising opportunities will boom.

Since Cuba is an attractive vacation spot, industries that could find success include hospitality, fast-casual and quick-serve restaurants, as well as wellness services, like salons and spas.

Certain hotel franchises, like Hilton, have already expressed interest in expanding their services to Cuba.

"We welcome further opportunities to continue our rapid growth and deliver a warm welcome and exceptional experiences to guests in even more parts of the world, including Cuba if an agreement is reached in the U.S.," a Hilton worldwide spokesperson told Entrepreneur's Kate Taylor.

In addition to hotels, restaurant franchises will likely find traction in Cuba, just like they have in Cuba's Caribbean neighbor, the Dominican Republic.

"It has primarily been food and the hotel brands who have done best in [the Caribbean]," Scott Lehr, the senior vice president of the International Franchise Association told Taylor.

It appears that relations between the U.S. and Cuba are on a trajectory toward a total thaw in the coming years -- and franchisors will want to be prepared when they do.

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