Croatia is a small country in the Mediterranean with the Adriatic Sea on its South side. It has a very good geostrategic position and a high-quality, good educated workforce. Its excellent geographic position serves as a doorway to the regional market of more than 30 million people.
From Zagreb, its capital, it takes less than two hours to drive to Italy, Austria, Hungary, Serbia, Montenegro, Slovenia, Bosnia, Herzegovina, and to the Adriatic coast. Croatia has excellent roads, and good ICT infrastructure.
It has a very developed tourism sector which is the main pillar of the Croatian economy. Croatia also has very good accommodation facilities, very interesting gastronomy, and important historical and cultural heritage It is also rich in natural and cultural diversity and has more than 1.200 islands, eight national parks, and seven cultural, historical, and natural resources enrolled as UNESCO World Heritage Sites.
This is a destination with strong nautical, health, congressional, enological, and gastronomical offerings. Croatia is a safe country with a mild climate, a good quality of life, and well-preserved nature. Since 2013, Croatia has been a member of the European Union and a part of a single internal market of the EU.
The origins of franchising in Croatia
Franchising in Croatia started in the mid-nineties with arrival of McDonald’s but it has its roots in ex-Yugoslavia with franchises like Diners, American Express, Intercontinental, Holiday Inn, or renta- car brands like Budget and National.
It is estimated that more than 220 franchise brands operate on the market today with a constantly growing share of international franchises (more than 80 per cent), creating a unique situation in Europe.
This figure shows the openness of the market to foreign brands and the willingness of local entrepreneurs to invest in a good foreign franchise concept. All big franchise fast-food names are present in the country and known hotel chains franchise widely as well. Most fashion brands are here but if we look at the average investment power of national investors, they are mainly small investors and for that reason are attracted more to a micro franchise concept.
“Croatia also has very good accommodation facilities, very interesting gastronomy, and important historical and cultural heritage”
A growing market segment
Croatia would like to develop more national franchise brands and thus contribute more to the national economy and export. Research conducted in 2019 showed that there is great franchise potential between Croatian business concepts but there is a shortage of knowledge about franchising and trust in the slow Croatian legal system.
Despite this, Croatia recorded an unexpected growth rate (20 per cent) of national franchise concepts in 2020. Although the share of national franchise brands is still small it is important to note that some of them are internationally present, such as Surf’n’Fries (QSR), Carwiz (rent-a-car), Direct Booker (platform for private accommodation), Tinker Labs (child’s education), Friendly Fire (esports arena franchise), and Body Creator (weight management). A few domestic brands even gained international acclaim, like Museum of Illusion.
Croatia has very good connections with its regional franchise concepts due to the fact that some other countries in the region do not have franchise association or institutional support; although, they have a normal foreign franchise presence in their territories. Croatia, on the contrary, has a very good franchise ecosystem established with the Croatian Franchise Association FIP as its main body. FIP has been a member of the European Franchise Federation and World Franchise Council since 2006 and contributes to the development of ethical franchising in the country and the region.
The Croatian Franchise Association FIP is the leading institution for the promotion and popularization of franchising in the region. Established in 2002, the Association has organized nine international franchise expos, 15 international franchise forums, and numerous workshops and lectures.
Its merit is that franchising courses are taught at several universities in Zagreb. Besides the Association, there is a Center for Franchising in Osijek, the eastern part of the country formed in 2003 that is working on promoting franchising as well.
One of the challenges for entering this market is the fact that there are no franchise brokers, magazines, or web portals where the brands can search for potential investors, except through the Croatian Franchise Association which is helping foreign brands conquer the market and national brands to develop their franchise business model and expand.
Croatia is also the only country in the region and among those rare in Europe to have grants for self-employment through franchising by National Employment Agency. This contributes a lot to the development of the franchise business sector in the country.
Reasons to franchise in Croatia
- Member of the EU
- Doorway to 30 million people
- Excellent geostrategic position
- Regional franchise leader
- Strong national franchise association since 2002
- Very good infrastructure
- Very good ICT structure
- Developed tourism sector
- 220 franchise brands already present in the market
- 80 per cent share of international brands
- Many prestigious international brands already present
The author
Dr. Ljiljana Kukec, Ph.D. is president of the Croatian Franchise Association, and also founded the Body Creator franchise brand
