Franchising in Europe
Europe has one of the most developed franchise industries in the world. Since 1972 the industry has been supported and promoted by the European Franchise Federation (EFF), and the European Commission acknowledges franchising as a legitimate method of expanding a brand throughout the European Union (EU).
According to statistics published by the EFF, in 2009 there were over 11,700 brands franchising in Europe. Many of these brands originated from countries outside Europe, with those based in the US having the most notable impact on the market. Companies based within Europe have also established franchise networks across the continent, including Tecnocasa, an Italian-based real estate franchise that has over 3,000 units in eight countries; Jean Louis David, a hair and beauty salon franchise that is based in France and has more than 1,000 salons across Europe; and Fornetti, a Hungary-based food distributor that has 655 centres and more than 5,000 outlets in Europe and the Middle East.
The fact that Europe is predominantly composed of countries with developed, thriving economies that have large populations with disposable incomes is one of the main factors that has lead to franchising being so successful. Even in recent years, with financial headlines dominated by failing European economies, a number of countries within Europe remain world economic leaders and five of the eight countries that make up the G8 are European: France, Germany, the UK, Russia and Italy.
As well as this the 2011 Wealth Report, published by Knight Frank and Citi Private Bank – Scorpio Partnership, placed Russia third in the world in terms of number of billionaires it has as residents, behind only China and the US.
In Western Europe, the German economy has remained strong and, according to The Economist article Strong core, pain on the periphery published in May 2011, has expanded by almost five per cent in the year to the first quarter of 2011. This year also saw the appointment of French citizen, Christine Lagarde, as Managing Director of the International Monetary Fund (IMF).
Over the last 50 years trading across European boards has become easier, mainly due to efforts by the EU (which was founded in 1951 and currently incorporates 27 countries including Germany, France and the UK), which has helped to unify trade regulations across its member states and, therefore, making it easier for business owners to expand their brands across the EU.
Despite this, different languages, laws and cultures means that although Europe has huge market potential, it also represents challenges for franchisors looking to expand their concepts across the continent.
Many franchisors successful expand their brands across Europe by recruiting Regional or Master Franchise Owners for separate territories and countries. Even by doing this, the vast differences between one European country and another means that Europe can still seem to be a difficult market to penetrate successfully.
Many franchisors that have developed franchise networks across the continent have used the services of a Europe-based franchise consultancy company. As the franchise industry is so well established in Europe there are many franchise consultant companies that have years of experience in helping business owners to franchise their concepts.
One such company is UK-based Franchise Development Services (FDS), which was founded in 1981 and over the years has helped numerous business owners to successfully franchise their concept, as well as publishing a range franchise publications including this website. FDS has not only helped other companies to franchise their brands, but has also become a franchisor itself and has offices located worldwide, including one in Spain.
Franchisors often turn to Europe-based franchise consultancy companies to help them expand their brands, as these companies have detailed knowledge of the European franchise industry, including which media to target for recruitment campaigns; knowledge of different regulations and laws; and experience of which concepts appeal to Europeans and those that will not.
Not all franchise concepts are suitable for franchising in Europe, and a good franchise consultant should be able to say if a brand won’t work in the market or if it needs adapting. Yet the diversity and market potential of Europe, together with trade agreements established by the EU, has resulted in the continent being one of the most franchise friendly regions in the world.
