Located in the heart of Europe, the Swiss franchise market is ideal for businesses dipping their toes into European expansion.
Words by Kieran McLoone, deputy editor for Global Franchise
SWITZERLAND IN NUMBERS
• Population: 8.57 million
• Size: 41,290 sq. kilometers
• GDP: $369.9bn
• GDP per capita: $46,200
Switzerland is one of the handful of European countries that is completely landlocked, being surrounded by Italy, France, Germany, Austria, and Liechtenstein. While the lack of ports may appear a challenge from a distribution standpoint, the unique positioning of the Swiss market actually makes it one of the most appealing for international franchisors that want to trial their concept in a multitude of environments, with relatively little distance in-between.
The modest Swiss population of 8.57 million people speak four main languages: German, French, Italian, and Romansch. Of those four, German is the most widely spoken, and this is reflected in the country’s market, with German brands performing particularly well among Swiss consumers.
Coffee or caffè?
That being said, a variety of products could succeed in any one of Switzerland’s divided regions; it all depends on whether a business has done its research.
“Depending on where you are in Switzerland, you get your coffee differently. In Zurich, in German-speaking Switzerland, you may want a ‘Kafi Creem’. In Lausanne, in French-speaking Switzerland, you take a ‘Café américain’ or a ‘Café double’ and in Lugano, in Ticino, in Italian-speaking Switzerland, you order a ‘Caffè espresso’ or simply ‘Caffè’,” says Thomas Matla, partner at Bellone Franchise Consulting GmbH.
“Due to the multilingualism and the associated different cultural characteristics and demands, franchise concepts in Switzerland can be tested on the one hand for their quality, presentation, and internationality, and on the other hand for their very specific ability to expand abroad. All that, on a limited budget and in a small space; all three language regions can be easily reached by train or car within one day.”
Caution is advised
Despite the useful multiculturalism of Switzerland, and the fact the country has one of the highest GDP per capita in the world at $46,200, franchisors shouldn’t ignore the potential challenges that can impede immediate growth.
For example, the need for translation between Switzerland’s various languages can drive up costs, and even lead to misunderstandings or discrepancies between consumers and a brand, or even franchise partners and a master franchisee. In the case of a disagreement, Swiss courts also tend to favor the weaker party, which is often the franchisee.
“Looking at Switzerland from abroad often makes it look like an easy-to-control cliché,” says Veronika Bellone, a partner at Bellone Franchise Consulting GmbH. “However, this is not the case. Switzerland, like all European countries, is a competitive market. That is why international franchise systems that want to expand from here should definitely look for partners with market knowledge.”
If overcome, these challenges appear negligible next to the opportunity the Swiss market presents. There may be fewer people spread across the country’s surface, but the higher GDP per capita outweighs the downsides of marketing and communication- related costs.
