Of all the European countries, France’s franchise community is among the most optimistic for the future
France’s franchise industry has exploded over the previous decade, as more French entrepreneurs recognize the benefits of the business model – and more international franchisors bring their brands to this country’s diverse and exciting shores.
In 2010, for example, 1,477 franchisors operated in the country, comprised of 58,351 franchisees. Just 10 years later, these figures have grown to 1,927 franchisors and a total of 78,032 individual franchise owners. Collectively, these franchisees employ almost 670,000 individuals across a variety of in-demand sectors.
“In Europe, France is one of the more effective countries when it comes to franchising,” says Jean-Paul Zeitline, the Paris contact for global consultancy Progressium. “We have very strong organizations in France to assist franchising, including Franchise Expo Paris, which is one of the strongest franchise events in the world.”
Evolution propelled by the pandemic
The coronavirus pandemic accelerated many elements of business development and operations, and it wouldn’t be inaccurate to say that several silver linings could be found from the previous year when examining the effects that COVID-19 had on the business landscape.
These positives could be felt throughout French franchising, with the industry as a whole experiencing something of a digital transformation as a result of lockdowns and challenges. In a study published by Banque Populaire in partnership with the French Franchise Federation, for example, 70 per cent of franchisees reported that they were equipped with digital tools that allowed them to seamlessly exchange information with their peers; 24 per cent of which were installed or reinforced during the pandemic.
In fact, just under half of all franchisees in the country reported that the support and resources made available through the franchise model were primary reasons as to why they got into franchising in the first place. Not only this, but 67 per cent of all franchisees in France believe that they resisted the coronavirus crisis better as franchisees than if they were to operate an independent business.
“The government is very in favor of franchising,” says Zeitline. “In general, all of the authorities are favorable to franchising, because they know that it’s a great model to help people build businesses.”
Perfecting your market entry
The majority of franchises within France are located in the South-East (27 per cent), followed by the West (25 per cent). And despite the country being considerably smaller than somewhere like the U.S. – at around 643,801 square kilometers – many incoming franchisors tend to divide its markets into five or six segments when planning for future expansion.
“In our experience, master franchising is generally the most popular form of expansion for international brands,” explains Zeitline. “Sometimes, as it can be a risk for both parties, we divide France into five or six areas and give the master franchisee the North of France, for example, so that it’s not as big a risk for both parties. If they’re good and perform as expected, then they can expand and buy another area in the country.
“That’s generally the easiest way. We also have some franchisors that use direct franchising. A franchisor from the Netherlands or Spain could look directly for franchisees in France. That’s not as straightforward as master franchising, however.”
Due to France’s familiarity with the franchising model, it won’t be too challenging to find a handful of prospects for your France-based master franchisee. Zeitline cautions, though, that completing a market study is an essential first step if you plan on sticking around for long.
“We’d recommend doing a market study of France. If we are talking about food, then the French aren’t eating like the Americans, for example, so we’d prefer that the franchisor tries to understand the key figures and business plans that they’d need for French franchisees.
“Generally, it’s very difficult to explain this to American franchisors. The Europeans are more open to doing a franchise market study and understand its importance. Americans are very confident in their concepts and think that we have to adapt to them.”
Lack of regulation
One of the biggest draws for franchisors coming to France is that franchising isn’t regulated under French law, with the business model instead being governed by elements such as the French Commercial Code.
The only registration requirement in France is that a franchisor must deposit and register its trademark that will be granted to franchisees.
Under the French Commercial Code, franchisors must also provide franchisees with a pre-contractual information document, at least 20 days prior to signing a franchise contract. This is very straightforward, and doesn’t differ hugely from disclosure laws elsewhere in the world.
“There is the need for disclosure between franchisors and franchisees,” says Zeitline. “They need to provide a dossier to franchisees three weeks before a contract is signed, which contains a lot of information about the brand. You have to provide a market study, your balance sheet, and around 15 other pieces of information to present exactly who you are to the franchisee. It’s not very difficult to fulfil, however.”
This level of transparency between the franchisor and its franchisees is very important for entrepreneurs in France, and is something that should be considered by all brands looking to enter the country. In fact, according to the Banque Populaire study, ‘network ethics’ is one of the first pieces of information that franchisees seek out when joining a franchise brand; with this figure sitting at 82 per cent for retail franchisees inquiring about joining a new network.
Key event: Franchise Expo Paris
Taking place at the end of March, Franchise Expo Paris is one of Europe’s leading events bringing together the entire franchising community.
What: Franchise Expo Paris 2021
When: March 20 – 23, 2022
Where: Paris, Porte de Versailles
