Here are 10 of the best markets for your franchise brand on the European continent, so you can start planning your international expansion today.
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The franchise industry is something of an institution in the U.K., with many of the world’s leading brands, as well as domestic favorites, all competing for a slice of this incredibly lucrative market.
Franchising as a business model contributes more than £17.2bn to the U.K. economy, and employs upward of 710,000 individuals; with 93 per cent of franchisees in the country claiming profitability and less than one per cent closing per year due to commercial failure.
The U.K.’s franchise industry is also evolving into a diverse and welcoming landscape; especially to younger entrepreneurs who want to make a name for themselves, but with the support of an experienced franchisor. 18 per cent of franchisees in the U.K. are under 30 years of age, and more than half of all people employed in the industry are women.
The French franchise community is particularly optimistic for the years ahead, and has complete trust in the franchise model to help them persevere through tough times. Case in point: 67 per cent of French franchisees believed that they resisted the coronavirus better as franchisees rather than independent business owners, according to a study published by Banque Populaire in partnership with the French Franchise Federation.
By the numbers, France had 1,927 franchisors operating in the country in 2020, consisting of 78,032 franchisees and a total of 668,837 employees. By comparison, these figures sat at around 1,477 franchisors in 2010, and 58,351 franchisees – showcasing clear growth among not only the understanding of franchising in the country, but also the enthusiasm for entrepreneurs to get on board.
Germany lacks any kind of firm franchising law, which many in the country see as a positive: instead, its franchisors and franchisees operate on good faith principles, and self-regulate so that everybody benefits from the success of the business model.
It turns out that German franchise professionals are just as optimistic about the future as their French neighbors, too. In the latest Franchise Climate Index study conducted by the German Franchise Association, 93 per cent of respondents said that franchising is a particularly crisis-proof business model, while 43 per cent said that it would take them six months or less to make up for losses caused by the coronavirus pandemic. General mood around franchising is also up in the country, recording levels of 145 per cent when compared to previous years.
Spain has a relatively new franchise market, with the Spanish Franchise Association being founded in 1993. A total of 1,381 franchises operated in the market as of 2020, of which 81.9 per cent are of Spanish origin. The remaining 249 brands come from a total of 26 countries, with France, the U.S., and Italy making up the majority of overseas competition. Fashion is the leading franchise sector in Spain, with 242 franchises falling under this banner.
The latest recorded turnover for the Spanish franchise industry was at the end of 2019, at which time the figure was reported as €26.15bn – just slightly lower than in 2018, when the annual turnover sat at around €27.7bn. However, when it comes to employment, the Spanish franchise industry is growing: 294,231 people worked in franchising at the end of 2019, which was a 0.13 per cent increase on the previous year.
The Dutch franchise industry is among one of the largest in Europe, consisting of 903 individual franchise brands generating upward of €37.8bn every year. Like almost every country, the Netherlands took a hit during COVID-19, economically, but the pandemic’s effects were more minor than many may have expected: industry turnover fell by €400m in 2020, and there was an overall decline of just 14 franchise brands in operation.
Perhaps one of the most significant considerations for franchisors entering the Netherlands is the Dutch Franchise Act: a new law that was voted on last June, and came into force on January 1, 2021. The law introduces an official definition for franchising, and swings the balance of power between franchisors and franchisees back toward center – whereas it was previously seen to be largely in favor of franchise brands.
Italy is commonly regarded as the fourth largest franchise market in Europe, behind France, Germany, and Spain. The highest number of franchise networks in the country are in the wealthier North, primarily in city centers and shopping malls. In general, new franchise concepts in Italy tend to launch in larger cities, such as Rome or Milan.
That being said, franchises can also do well in smaller cities throughout Italy, thanks to the country’s relatively large middle class, who support sophisticated and established goods and services. In addition, many brands have found success by opening non-traditional sites in airports and train stations throughout the country.
While the Swedish franchise environment isn’t one of the largest in Europe, it’s still a key Scandinavian market which franchisors would be foolish to disregard.
In a study conducted by the Swedish Franchise Association, seven out of 10 franchisors operating in the country believed that turnover would improve in the next 12 months, compared with the corresponding period in the previous year. Over half believed that profitability would develop, also, with around half of respondents thinking that the number of employees involved in the industry would increase alongside these changes.
A third of all franchisors in Sweden operate in the hotels and restaurants category, but the market is rife with brands finding success in service trades, groceries, and a number of other niche sectors. Put simply: Sweden is welcoming of all kinds of concept, providing you have some pedigree overseas.
The Swiss are generally welcoming of all kinds of franchise systems, but the cultural and linguistic differences found throughout the country mean that brands should be tested in various environments before national expansion is undertaken. French is the primary language spoken in Geneva and Lausanne, for example, while those in Zurich speak German, and consumers in Lugano typically speak Italian. Switzerland may be best approached by European franchisors, but those from the States can still find success with the right plan in place.
As an overview, the Swiss Franchise Association (recently rebranded as ‘Swiss Distribution’) reported 250 to 300 franchisors operating in the country. Operators aren’t governed by any franchise-specific legislation, but instead provisions set out by the Swiss Civil Code (CC), as well as the United Nations Convention on Contracts for the International Sale of Goods.
Turkey is home to a young, educated labor force; with over half of the country’s population under the age of 30. Over 1,000 small, medium, and large U.S. firms have opened offices in the country, and the distribution of industries active in the country is relatively equal: 24 per cent in food, 27 per cent in merchandise, 16 per cent in services, and 33 per cent in clothing.
While Turkey may not have always been a consideration for international brands seeking a fresh, untapped market, it’s increasingly growing as an appealing destination for expansion. The GDP of the country tripled over the previous decade, and from 2013 to 2018, the number of franchisors operating in the country tripled, also.
Marriott International also targeted Turkey as a recent site for growth, with 10 new hotel locations planning for the country by the end of 2022.
Franchising first became a part of the Portuguese economy back in the 1980s, but the business model really came into its own in the 1990s when local brands began competing with large international businesses vying for consumer attention.
The Portuguese Franchise Association was founded during this period by Dr. Rogerio Tavares in 1987, and today, around 500 franchises operate in the country with the number of units estimated to be around 11,300.
Local franchisors represent the majority of the total market at 53 per cent, followed by Spanish brands at 17 per cent, and operations from the U.S. with nine per cent of the total market share.
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