EUROPEAN FRANCHISE REPORT
Transcription
EUROPEAN FRANCHISE REPORT
EUROPEAN FRANCHISE REPORT Published by the European Franchise Federation - EFF - 2012 Table of Contents Part IFranchising - what it is, how it contributes to the growth of the economy 1. Franchising: description 2 2. Franchising: factors of success 3 2.1 A dynamic & balanced division of tasks between franchisor and franchisee 2.2 Recruitment policy: a rigorous selection of motivated franchisees 2.3 Professionalism, internal training, learning to be entrepreneurs 2.4 Benchmarking and promoting best practice, better performance 2.5 The franchisor's support system 2.6 A strong value system shared by all in the network 3. Franchising: a vector for economic growth 6 3.1 Franchising promotes the creation of enterprises 3.2 Franchising promotes the creation of employment 3.3 Franchising generates turnover 3.4 Franchising contributes to a middle-level economic platform 3.5. Franchising preserves and transforms traditional independent trades 3.6 Franchising promotes the learning and spirit of entrepreneurship 3.7 Franchising is a formidable vector for cross-border trade and export 3.8 The transfer of franchising know-how as a means of "technology transfer" in developing markets Part II 21 Country Reports 12 Part III Statistical insight into the economic share of franchising (tables) 56 List of members of the European Franchise Federation Part I Franchising: what it is, how it contributes to the growth of the economy EFF • 1 1. Franchising: description A franchised business is one that is modelled • as a structured, replicable commercial system by a founder/conceiver company, "the franchisor" • which will be contractually sold to independent entrepreneurs, "the franchisees", with the purpose of them growing their business. They are legally, financially and fiscally independent of the franchisor. • the franchise network is made up of the franchisor and all of the franchisees. A franchise company may operate several channels of distribution in parallel: franchising (in brick and mortar outlets or mobile vehicles), company-owned outlets, direct selling,etc. E-commerce is developing as a channel that cuts across the others. Its potential needs to be integrated to a company's overall strategy. This report focuses on franchising only. To be recognised as a proper franchise, the system must be founded on the following essential and constitutive elements: • a brand name • knowhow developed by the franchisor and destined to be transferred to the franchisee as part of the transacted franchise package whose purpose it is to provide him with a business package with which he can start to operate more quickly and with facilities that a stand-alone start-up would not have. The franchisor must continue to develop the knowhow to maintain the brand & system's competitiveness on the market. The knowhow that the franchisor will develop is twofold: that needed for the internal business of the head company, and that which is designed to be transferred to the franchisees. • the initial and on-going assistance to the franchisees during the term of the contract. The notion of "system" is sometimes translated in franchise literature as "format", thus a "business format franchising" contract must include at least these 5 essential elements1: ✔ a brand name (registered as a brand name and/or a trademark, etc.) which serves as the umbrella sign for network, and a rallying sign for the consumer and public), ✔ a licence to the use the brand, granted to the franchisee by the franchisor, ✔ a business system – a business concept formatted into a duplicable value “package” founded on the franchisor’s tested knowhow as well as his continued assistance during the term of the agreement, 1 Martin Mendelsohn, “Franchising Law”, Kluwer, 2004. 2 • EFF ✔ payment by the franchisee of a financial consideration, either in a direct form, such as an entrance fee and/or continuing fee (“royalty”), and/or an indirect form such as a mark-up on supplied goods, ✔ the investment in, and ownership of, the assets of the franchised business by the franchisee. The franchise contract is between 2 independent entrepreneurs. This is a B-to-B relationship. For Competition law, the franchise agreement is founded on a vertical relationship between the parties, since each operates at a different level of production or distribution, seller and buyer respectively. Distribution or Service agreements may contain "restrictive clauses"2 (to competition) such as territorial exclusivities or other non-compete clauses. The conditions laid on such clauses are different according to whether the contractual agreement is vertical (ie. as between franchisor and franchisee) or horizontal (ie. as in cooperative agreements). 2. Franchising: essential factors of success The success of franchising, generally speaking, comes from the fact that it has developed as a technology for business development by essentially responding to and adapting itself to the ever-evolving needs of a given market and to the consumers who at all times, in all contexts, by virtue of their changing life-styles and consumer awareness, seek choice + a good quality/price ratio + convenience + service. Franchised businesses purport to deliver all of these elements. 2.1 A dynamic & balanced division of tasks between franchisor and franchisee Role and responsibility of the Franchisor: As the seller of the franchise, and developer of the network, his tasks are specific. These include: • to be the overall strategist; to keep the longer-term development in sight and to take the decisions that will keep the brand and its development abreast of competition as well as safeguard its appeal to the end-customer. • to develop, at the level of the head office, the commercial, technological, staffing and service platform that will efficiently support the network of franchisees during the term of each franchise contract. 2 Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices. EFF • 3 • to develop the interface between head office and each franchisee so as to steer & nourish the personal dynamics of the network. This includes implementing the dialogue structures with the franchisees, implementing internal conciliation or mediation services, and generally building up the spirit and quality of the network. • for each of the elements above, the franchisor must plan for and provide the level of investment that will be required to realise all of the above, as well as always seek to improve the level of professionalism that will safeguard the standards and appeal of the brand. Role and responsibility of the Franchisee: As buyer of the franchise, the task of each franchisee is to loyally operate the business as it is conceived and organised whilst developing sales, engaging customer satisfaction and brand loyalty. Customers are attracted to the franchise brand by virtue of its image, reputation and service. It is the franchisee's responsibility to sustain these expectations. The franchisee must also be a "team player" in the framework of the network. The franchisor will have a system that organises a systematic flow of commercial and financial information upstream from the franchisees to the head office. This data will serve to define performance benchmarks, set new objectives as well as put into place remedial strategies if need be. Each franchisee will contribute to this pooling of information. The respective roles and responsibilities of franchisor and franchisees in a franchise network are different and specific, each at their level of operation. Their relationship is constructed as a "synergy of collective intelligence"3. This in itself is a significant factor of success of the "franchise business model". 2.2 Recruitment policy: a rigorous selection of motivated franchisees Recruitment is key to the success of any business, but in particular to one based on a network of independent entrepreneurs. It is the responsibility of the franchisor to develop a rigorous and coherent recruitment policy. The qualities he will seek in a franchisee, amongst others, are the motivation to invest in and work as an independent entrepreneur in a context of the network he has chosen to invest in, to have a real interest for the sector of business, be customer-orientated, to have a team-player spirit, to be respectful of the franchisor's concept and of all the elements of the business format, to have the motivation to grow and adapt as the market and circumstances call for. 3 Expression coined by the French Franchise Federation (FFF)'s. 4 • EFF 2.3 Professionalism, internal training, learning to be entrepreneurs Franchising offers the opportunity "to be in business for yourself but not by yourself". This attracts to franchising people from a broad range of backgrounds of, many of whom have never run a business or who would not consider running one if they were to start from scratch4, alone. In order for a franchise to be able to meet the expectations of its future franchisees, it needs to be conceived, structured and delivered in a most professional way. Initial, on-going training and refresher sessions are typical of franchised businesses. They are for the most part internal to the company. They contribute to bettering the skills of those in training, but also to the forging of the "network spirit". In is in this framework that people with no experience of running a business learn to run one, "for themselves but not by themselves". Training classes exist not only for the franchisees, but often for the staff of franchisees. The incidence of employed staff in a franchise who eventually choose to become franchisees themselves is real. Franchise associations play a significant role in offering introductory courses for would-be franchisors or franchisees, or staff of franchise companies. This "context of learning" is one of the significant factors of success of the "franchise business model". 2.4 Benchmarking and promoting best practice, better performance Optimizing the management of a network composed of independent entrepreneurs relies on the head company (franchisor) installing an efficient reporting system (ITC system) that can gather all of the significant economic and financial data of each operation. This data will be treated so as to on the one hand (i) identify problems in any one operation and address them, and on the other hand (ii) compare results so as to set benchmarks with the view of promoting better performance of each operator, and to measure results by. This rationalisation, benchmarking and defining of targets is one of the success factors of franchising as opposed to the situation of many stand-alone independent entrepreneurs who do not have the elements of direct comparison necessary for a critical assessment. 4 Results of franchise exhibition visits reveal that the profile of would-be franchisees is very diverse. EFF • 5 2.5 The franchisor's support system In franchising, as already expressed, the support structure and transfer of knowhow is one of the essential contractual features of a franchise agreement. It must be there during the term of the contract. It justifies the fees (whatever their form) paid by the franchisee. Support, on an inter-personal level, also comes from the social life of the network. In times of economic hardship, related to the economy in general or to the life of a particular network, this double support structure helps to buoy up franchised enterprises to an extent that stand alone enterprises do not benefit from. An example in point is Spain currently, whose economy is severely hit by the world financial and economic crisis. A recent article5 states that the "buoyancy factor" of the franchise support structure in general has proved to be helpful to many Spanish franchise systems during this time (See section on Spain, Part II). 2.6 A strong value system shared by all in the network The relationship between collaborating independent entrepreneurs, franchisor and franchisee, who share a vision of sustained growth together, must necessarily be founded on the values of mutual recognition, respect and confidence. This is built upon a foundation of transparency, dialogue, loyalty and equity6. 3. Franchising: a vector for economic growth 3.1 Franchising promotes the creation of enterprises The creation of enterprises occurs as a result of new franchise concepts being created, each with its potential of creating a network of new franchised enterprises. In other words, there is the creation of new franchise brands/concepts, and within each brand, the development of its network of franchised businesses with independent franchisees. A franchise head company may develop several brands, as well as variations of one brand. It may also allow its network of franchisees to develop as single-unit franchisees only, or allow a franchisee to have more than one unit (multi-unit franchisees) or allow a franchisee to operate more than one brand (cross franchising). Combinations of the latter two options are also possible. 5 Article by Prudencion Martinez-Franco, Cabinet d’Avocats LELOUP, Sevilla, Spain, 12/7/2012. 6 See EFF publication 2012: The European Code of Ethics for Franchising & its national Extensions & Interpretations. 6 • EFF Franchises may be imported or home-grown; in retail or in services, or a mix of both. They exist in all ranges of initial investment level for a unit franchise: from the very expensive (> 20mioE) to the less expensive (around 10,000E). Franchised businesses operate within the context of the general economy and therefore contribute to the sustaining of enterprises upstream and downstream of their own activity. To a significant extent, at its grass-roots level, that is at the level of each independent franchised unit, including the separate head company, franchised enterprises essentially fall in the category of Small and Medium-sized enterprises7. 3.2 Franchising promotes the creation of employment Direct employment: Employment is created at several levels in a franchised business: • at the level of the franchisor/head company/subsidiary office(s) with staff(s) of professionals, administration, etc. Many franchises operate a combination of franchise network as well as companyowned outlets, the latter contributing its share to employment. • at the level of each franchised unit. The unit can offer, as the case may be, employment to the owner who operates his unit(s) himself, to his family, to his employees. Indirect employment: Again, franchised businesses operate within the context of the general economy and therefore contribute to the employment in enterprises upstream and downstream of their own activity. 3.3 Franchising generates turnover Turnover is generated as a result of what is described in 3.1 & 3.2. A significant aspect is that the organistion & professionalism that accompanies the development of a franchise network contributes to integrating businesses from the informal sector into the formal & more transparent business sector. 7 SME's: definition of thresholds, European Commission 2003 Enterprise category Headcount Turnover (Euro) Balance sheet total (Euro) Medium-sized < 250 ≤ € 50 million ≤ € 43 million Small < 50 ≤ € 10 million ≤ € 10 million Micro < 10 ≤ € 2 million ≤ € 2 million EFF • 7 3.4 F ranchising contributes to a middle-level economic platform Franchising, in the "Distributive Trades8" (including Retail) and Services, contributes to the existence of a middle-level platform between the large distribution & service groups and the small stand-alone enterprises, and in doing so, safeguards & develops business competition and diversity. Globalization has favored the growth of very large distribution groups which operate with vast networks of multiple distribution channels, including large company-owned outlets. At the same time, a lot of small independent traders and businesses have disappeared because of lack of resources and/or knowhow to compete with this competition. By virtue of the success factors described above, a tested franchised business system offers small independent business owners the opportunity to exist i& develop n the face of such competition by virtue of being in the a network context with its support system. Thus, franchised businesses offer the adaptability, flexibility and resources to operate in competitive markets. The relevance of this middel platform spurs global players also adopt franchising as one of their development strategies, thus developing franchised daughterbrands aimed at middle-level and smaller, more targeted markets (niche markets). Franchising, with its development at SME level, contributes to safeguarding and even enhancing competition as well as promoting market diversity. 3.5. Franchising preserves and transforms traditional independent trades Many classic, traditional "high-street" independent trades and artisans (hairdressers, flower shops, small groceries, laundrettes, stationary/postal services, beauty parlours, specialised foods, hotel industry, restaurants, travel agencies,etc.) have already opted for or converted their development strategy to franchising. This strategy contributes to modernising their operations, image and appeal to customers, thereby dynamising a significant SME segment of the economy. This dynamism is an element which can influence and be transposed to countries where commerce and traditional trades are still largely prevalent, thus modernising and giving a "global-identity" flavour to local trade and services (see 3.8). 8 Eurostat: 2011, Key Figures on European Business with a special feature on SMEs. 8 • EFF 3.6 F ranchising promotes the learning and spirit of entrepreneurship The "context of learning/training" described in section 2.3 promotes entrepreneurship. It can turn a non-entrepreneur into an entrepreneur. It enhances professionalism. It can help give other family members, acquaintances, employees, etc. the idea and confidence to become entrepreneurs too, franchising being an option. Entrepreneurial training is key to develop the desire and confidence to become an entrepreneur. Franchise companies factor this dimension into their franchise package. 3.7 F ranchising is a formidable vector for cross-border trade and export Franchising is a formidable vector for export and cross-border trade. The replicable factor of franchising makes this business strategy particularly suited to territorial expansion, either within in national borders or cross-border as well as international. The international import/export of successful franchise brands finds its source in a world where consumer tastes and living habits are now "global" in reference, sustained by demographics and new spending power in emerging markets. To increase the chances of success in expansion and export, it is vital for a franchise system to be first piloted by the head company (or by means of another suitable & balanced arrangement between independent partners) in the relevant target market in order to test the adaptability of the system to the market. 3.8 The transfer of franchising knowhow as a means of "technology transfer" to developing markets The transfer of franchising knowhow that accompanies the export of franchises (by means of subsidiaries, joint-ventures, area development agreements, master franchising, direct franchising) contributes to modernizing and rationalizing segments of the economy, raiseing the level of local management, of labor efficiency & of levels of compensation. It also inspires local investors to create domestic brands which is why national franchise growth is now such a thriving segment of the economy in developing markets (see Table 1.B). EFF • 9 10 • EFF Part II 21 Country Reports EFF • 11 Austria - Franchise Review AUSTRIAN FRANCHISE ASSOCIATION ÖSTERREICHISCHER FRANCHISE-VERBAND (ÖFV) www.franchise.at Austria is an EU Member State since January 1, 1995. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising started in Austria in 1937 with a national brand by the name of PALMERS (lingerie), still very successful at home and abroad. 2007 In blue: cross-referenced in tables below 2008 Number of distinct franchise brands 2009 2010 400 420 2011 Number of franchised points of sale/business (not company-owned) Employment in the above points of sale/business (including self-employed) (estimated) Turnover for the above points of sale/business (in bn Euros) 7.200 8.000 64.000 61.000 7,4 7,9 Proportion of domestic brands (in %) 43,5% 46% Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2008-2010: 2008-2010: 2008-2010: 2008-2010: 2,5% 5,6% -2,3% 3,4% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 12 • EFF NACE Rev. 2 categories Association classification G 47 Retail trade except motor vehicles & motor cycles I 56 Food & Beverage service activities N 82 Office & business support activities P 85 Education # franchise brands/systems 2009 2010 G 47 180 I 56 170 N 82 45 P 85 25 TOTAL 420 2011 47.7 Fashion 85.1-5 Other than institutional # franchised POS/outlets 2009 2010 8.000 2011 # employees in Total 2009 2010 61.000 2011 Turnover in POS (bn €) 2009 2010 7,9 2011 0 50 100 km CZECH REPUBLIC GERMANY SLOVA. Vienna AUSTRIA LICHTEN. SWITZER. ITALY SLOVENIA HUNGARY Where do domestic brands expand to (list 5 countries from most to least) ? Germany (60%), CEE countries, Italy, Switzerland. Where do foreign brands come from (list 5 countries from most to least) : Germany, USA, Italy, UK, France. CROATIA Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. direct franchising, 2. subsidiary, 3. master franchising, 4. area development, 5. joint venture. Austrian Brands (5, by order of number of franchised outlets): Allianz, Raiffeisen-Unser Lagerhaus, OMV Viva, Palmers Self-Regulation: ÖFV members commit to respecting the European Code of Ethics for Franchising. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (ÖFV) Not-for-profit organization created in 1986 in Vienna. Main category of membership: franchise and master franchise companies. Number of members in 2012: 130 (80% franchisors) Sources of association income: membership fees (48%), exhibition/conferences (34%), Sponsoring (10%), marketing activities (7%) Composition of the Board of Directors: representatives of the head franchise company Chairman: Mr. Andreas SCHWERLA, McDonald´s Austria General Manager: Mrs. Susanne SEIFERT ÖFV assets: Well-established support programs for start-ups, including franchising, by Chambers of Commerce, Austrian Wirtschafts Service; some banks are familiar & supportive of franchised businesses, particularly Raiffeisenlandesbank Niederösterrieich-Wien; government support to the association under specific conditions: "Neugründungsförderung"; franchise media (Franchise-net, franchise portal, Franchise Erfolge), Vienna Franchise-Exhibition. EFF • 13 BELGIUM - Franchise Review BELGIAN FRANCHISE FEDERATION Fédération Belge de la Franchise (FBF) Belgische Franchise Federatie (BFF) www.fbf-bff.be Belgium is an EU Member State since January 1, 1958. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising was introduced in Belgium in 1930 with a national food-market brand, NOPRI. In blue: referenced in the tables below 2007 2008 2009 2010 2011 100 200 320 360 350 Number of distinct franchise brands Number of franchised points of sale/business (not company-owned) Employment in the above points of sale/business (including self-employed) (estimated) Turnover for the above points of sale/business (in bn Euros) 3.500 11.000 40.000 80.000 8,0 15,3 60% 60% Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2009-2011: 4,85% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # G NACE Rev. 2 NACE Rev. 2 categories Association classification 47 Retail trade except for motor vehicles/motorcycles Foods; DIY I 55/56 Accommodation & Food service activities Fast foods L 68 Real Estate activities N 79/82 Administrative & support service activities # franchise brands/systems 2009 2010 2011 320 360 350 # franchised POS/outlets 2009 2010 2011 # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 2010 2011 G 47 I 55/56 L 68 N 79/82 TOTAL 14 • EFF 11.000 80.000 15,3 North Sea Where do domestic brands expand to (list 5 countries from most to least) ? France, Luxembourg, Netherlands, China, Morocco. NETHERLANDS Brussels GERMANY BELGIUM FRANCE 0 50 100 km LUXEMBOURG Where do foreign brands come from (list 5 countries from most to least) : France, Netherlands, USA, UK, Italy. Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. direct franchising, 2. master franchising, 3. subsidiary, 4. joint venture. Belgian (5 first ones): Mister Minit, hubo, Aveve, Café Leffe/Belgian Beer Cafe, Leonidas Self-Regulation: FBF-BFF members commit to respecting the European Code of Ethics for Franchising; internal literature refers to "authentic and ethical franchising". National Legislation: Law on Pre-contractual disclosure for commercial partnership agreements (which includes franchising), 19 December 2005; each year the Federal Parliament receives two evaluation reports assessing the proper implementation of the law, one by the government and one by an Arbitration Committee composed equally of franchise representatives, franchisors and franchisees; the FBF-BFF is represented at the Arbitration Committee which puts the FBF-BFF at the forefront of the defense of the interests of franchising in Belgium. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (FBF-BFF) Not-for-profit organization founded in 1992 in Brussels. Main categories of membership: franchisors, junior & starter, associated members (professionals). Number of franchise system members in 2012: 98 (75% franchisors) Sources of association income: membership fees (75%), franchise exhibition/ conferences (4.7%), training/seminars (2.4%), exhibition (4.7%),sale of books (1.5%), sponsorships (12%). Composition of the Board of Directors: franchisors, master franchises, franchisees (since 2008) Chairman: Mr. Didier DEPREAY, Point Chaud s.a Managing Director: Mr. Gilbert LARDINOIS FBF-BFF assets: Franchisor & franchisee-led Committee work, accreditation scheme for of all member categories; website/newsletter, 2 franchise exhibitions (Brussels, Gent); service to members includes a professional insurance for franchisors to specifically protect their franchise activity in general (not the business activity). EFF • 15 CROATIA - Franchise Review CROATIAN FRANCHISE ASSOCIATION Hrvatska udruga za franšizno poslovanje (FIP) www.fip.com.hr Croatia is a Candidate to the EU. Member of: Currency: Croatian Kuna (HRK); 1 E ~ HRK 7.5 FRANCHISE MARKET INFORMATION: Franchising was introduced in Croatia in 1969 with the American DINERS Credit Card system. 2007 In blue: referenced in the tables below 2008 2009 2010 2011 150 168 175 Number of distinct franchise brands 125 Number of franchised POS/business (not company-owned) 900 900 1000 Employment in the above POS/business (including self-employed) 15.974 16.500 16.000 Turnover for the above POS/business (in bn Euros) 1,8 Proportion of domestic brands (in %) 20% Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 30% 2007-2011: 6,6% 2007-2011: 2,8% 2007-2011: 0,0% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 Association classification NACE Rev. 2 categories G 47 Retail trade except for motor vehicles & motorcycles I 55 Accommodation I 56 Food &beverage service activities Q 86 Human health & social work activities M 70 Management, consultancy, PR P 85 Education # franchise brands/systems 2009 2010 2011 150 168 175 # franchised POS/outlets 2009 2010 2011 900 1000 Fitness # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 2010 G 47 I 55 I 56 Q 86 M 70 P 85 TOTAL 16 • EFF 16.500 16.000 7,9 2011 AUSTRIA IT. SLOVENIA Zagreb HUNGARY CROATIA SERBIA Where do foreign brands come from (list 5 countries from most to least) : Italy, Germany, UK, France, Hungary, USA. BOSNIA AND HERZEGOVINA Adriatic Sea ITALY 0 50 100 km Where do domestic brands expand to (list 5 countries from most to least) ? Bosnia & Herzegovina, Serbia, Slovenia, Hungary, Scandinavia, Poland, USA. MONTEN. Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. direct franchising, 2. joint-venture, 3. area developer, 4.master franchising. Croatian Brands (by order of number of franchised outlets): Velpro partner, Diona,Di Caprio, Varteks, AMDS jeans, Surf’ n fries, Chill frozen yogurt, Body Creator, Rejuvenation, Moving Board, San Francisco Coffee house, Mini Cards, Scandal, Centar Energije, GA franšiza, Centar Mihaela, Putovanja za dvoje, ASF franšiza, Bubble Bee smoothie, Total Body coach Self-Regulation: FIP members commit to respecting the European Code of Ethics for Franchising. EU Legislation of relevance to Franchise contracts: as a candidate to EU membership, will transpose EU legislation, including REGULATION No 330/2010 on Vertical Agreements. ASSOCIATION INFORMATION (FIP) Not-for-profit organization created in 2002 in Zagreb, Croatia. Main category of membership: franchise and master franchise companies. Number of members in 2012: 15 Sources of association income: membership fees (60%), activities (20%), donations (20%) Composition of the Board of Directors: representatives of the head franchise company Chairman: Dr. Ljiljana KUKEC, founder of Body Creator Secretary General: Ms. Gordana CORIC FIP assets: FIP is very actively involved in higher education programs about franchising and in educational/business publications (Franchise Center Osijek, now a franchisee of the Franchise Center of Univ. of El Paso, Texas, USA); FIP teaching at the Faculties of Economics & of Entrepreneurship; franchise portal: www.fransiza.fr; from 2013, government grant program (133.333 €) to create, convert and buy franchised businesses (Ministry of Entrepreneurship & Crafts); Franchise Forum & Exhibition. EFF • 17 Czech Republic - Franchise Review CZECH FRANCHISE ASSOCIATION Česká asociace franchisingu (CAF) www.czech-franchise.cz The Czech Republic is an EU Member State since May 1, 2004. Member of: Currency: Czech crown (CZK); 1 E ~ 24,9 CZK FRANCHISE MARKET INFORMATION: Franchising was introduced in the Czech Republic in 1990 with a national brand, HUDY SPORT. In blue: cross-referenced in tables below 2007 2008 2009 2010 2011 131 137 150 168 190 3.476 4.366 Number of distinct franchise brands Number of franchised points of sale/business (not company-owned) Employment in the above points of sale/business (including self-employed) 30.000 Turnover for the above points of sale/business (in Euros) Proportion of domestic brands (in %) 49% Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 55% 2008-2012: 9,8% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 NACE Rev. 2 categories Association classification I 56 Food & beverage service activities L 68 Real estate activities N 79 Travel agency, tourism services S 96 Other personal service activities Beauty, fitness G 47 Retail trade except motor vehicles & motorcycles Fashion, cosmetics, health, DIY # franchise brands/systems 2009 2010 2011 137 150 168 # franchised POS/outlets 2009 2010 2011 3.476 4.366 Gastronomy # employees in Total 2009 2010 I 56 L 68 N 79 S 96 G 47 18 • EFF TOTAL 30.000 2011 Turnover in POS (bn €) 2009 2010 2011 0 GERMANY 50 100 km POLAND Where do foreign brands come from (list 5 countries from most to least) : USA, Germany, France, Great Britain, Spain, Poland, Hungary and other. Prague CZECH-REPUBLIC AUSTRIA Slovakia, Austria, Germany, France, Poland. SLOVAKIA Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) No data available. Czech Brands (5, by order of number of franchised outlets): Švejk Restaurant U Karla, eXpreska, Svet zdravi, RK Evropa, CrossCafe Self-Regulation: CAF members commit to respecting the European Code of Ethics for Franchising. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (CAF) Not-for-profit organization created in 1993 in Prague. Main category of membership: franchise and master franchise companies. Number of members in 2012: 37 (67,5 % franchisors) Sources of association income: membership fees (73%), fair/conferences (22%), marketing activities (5%) Composition of the Board of Directors: franchisors, professionals Chairman: Mr. Ivo LAMICH, McDonald´s Czech Republic General Manager: Mrs. Petra RITSCHELOVA CAF assets: Focus building CAF to be the one-stop single reference for "Franchising Quality" in the Czech Rep.; annual franchise exhibition in Brnö; franchise media: Vlastni firma Franchising, web sites: www.podnikani-start.cz, www.franchisinginfo.cz. EFF • 19 Denmark - Franchise Review Franchise & Chains Denmark Danske Kæder www.dk-franchise.dk Denmark is an EU Member State since January 1, 1973. Member of: Currency: Danish Krone (DKK); 1 E ~ 7.4 DKK. FRANCHISE MARKET INFORMATION: Franchising was introduced in Denmark in 1984 by an American brand, ChemDry. In blue: cross-referenced in tables below 2007 2008 180 185 Number of distinct franchise brands 2009 2010 2011 188 Number of franchised points of sale/business (not company-owned) 7.500 Employment in the above points of sale/business (including self-employed) (estimated) 32.800 Turnover for the above points of sale/business (in bn Euros) 82% Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 1,5% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 Association classification NACE Rev. 2 categories G 47 Retail trade except motor vehicles & motorcycles Fashion, decoration I 56 Food & beverage service activities Restaurants P 85 Education R 93 Sport & amusement act. (fitness, etc.) S 96 Other personal service activities N 81 Services to buildings, landscape etc. # franchise brands/systems 2009 2010 2011 # franchised POS/outlets 2009 2010 2011 Property services # employees in Total 2009 2010 G 47 I 56 P 85 R 93 S 96 N 81 20 • EFF TOTAL 188 4.000 32.800 2011 Turnover in POS (bn €) 2009 2010 2011 SWEDEN North Sea 0 50 100 km Where do domestic brands expand to (list 5 countries from most to least) ? Scandinavia, EU, China. Where do foreign brands come from (list 5 countries from most to least) : USA, Norway, France, Sweden. DENMARK Copenhagen Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) GERMANY 1. subsidiary, 2. master franchising, 3. direct franchising, 4. area development, 5. joint venture. Danish Brands (5, by order of number of franchised outlets): IC Companys, Noa Noa, ecco, Bianco Footwear, JYSK, BoConcept Self-Regulation: FFA members commit to respecting the European Code of Ethics for Franchising. The association recommends to its members to refer to the Swedish Franchise Disclosure Law (2006). EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (DK/DFA) Not-for-profit organization founded in 1984 in Copenhagen. Main categories of membership: franchisors, master franchises, franchisees, professionals. Number of members in 2012: 135 (41 franchisors & 42 franchisees) Sources of association income: membership fees (93%), fair/conferences (3%), training courses (2%), marketing (2%) Composition of the Board of Directors: franchisors, franchisee representation Chairman: Mr. Viggo Mølholm, Chairman BoConcept Managing Director: Mr. Toke ALLENTOFT DK's assets: is negotiating to get a government growth fund for start-ups to include franchise start-ups. EFF • 21 Finland - Franchise Review FINNISH FRANCHISING ASSOCIATION (FFA) Suomen Franchising-Yhdistys ry (SFY) www.franchising.fi Finland is an EU Member State since January 1, 1995. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising started in Finland in 1970, with a national brand by the name of Seppälä. 2007 2008 2009 2010 2011 220 255 265 270 270 Number of franchised points of sale/business (not company-owned) 3.500 4.200 4.400 4.500 4.500 Employment in the above points of sale/business (including self-employed) (estimated) 35.700 43.000 45000 46.000 46.000 Turnover for the above points of sale/business (in bn Euros) 43,0 50,0 50,0 51,0 54,5 Proportion of domestic brands (in %) 75% 74% 74% 74% 74% In blue: croos-referenced in tables below Number of distinct franchise brands Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 5,4% 2007-2011: 6,8% 2007-2011: 6,8% 2007-2011: 6,3% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # 22 • EFF Association classification G 47 Retail trade except motor vehicles & motorcycles Retail (36%) I 56 Food & beverage service activities Fast food, rest., cafés (16%) I 56 Services to buildings, landscaping etc. I 56 Sport, fitness, recreational activities N 82 Real estate activities P 85 Human health activities/social work X NACE Rev. 2 NACE Rev. 2 categories Services (48%) Other (unspecified) # franchise brands/systems 2009 2010 # franchised POS/outlets 2011 G 47 82 I 56 28 I 56 17 I 56 10 N 82 8 P 85 7 X 118 TOTAL 270 2009 2010 2011 4.500 # employees in Total 2009 2010 2011 46.000 Turnover in POS (bn €) 2009 2010 2011 54,5 Barents Where doSeadomestic brands expand to (list 5 countries from most to least) ? Sweden, Russia, Estonia, Denmark, Norway. NORWAY Where do foreign brands come from (list 5 countries from most to least) : Sweden, Denmark, Norway, US, UK. Modes of entry of foreign franchises: SWEDEN 0 50 100 km RUSSIA FINLAND Gulf of Bothnia (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. area development, 3. direct franchising, 4. subsidiary, 5. joint Venture. Finnish Brands (5, by order of number of franchised outlets): Helsinki ESTONIA Baltic Sea Kotipizza, R-kioski, Laatutakuu, Kiinteistömaailma Self-Regulation: FFA members commit to respect the European Code of Ethics for Franchising. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (SFY/FFA) Not-for-profit organization founded in 1988 in Helsinki. Main category of membership: franchise and master franchise companies. Number of franchise system members in 2012: 122 (72% = franchise systems) Sources of association income 2011: membership fees (83%), Franny Awards Gala (5%), publications (10%), other (2%) Composition of the Board of Directors: franchisors: Chairman:Mr. Henri HÄYRINEN, CEO of Suomen Laatutakuu Palvelut Oy (facility services) CEO: Mr. Juha VASTAMÄKI FFA assets: Association membership covers significant portion of franchise systems in Finland; annual Franchise Report ('Franchising Suomessa 2012'); Franchise Business College (http://www.fbc.fi). EFF • 23 France - Franchise Review FRENCH FRANCHISE FEDERATION (FFF) Fédération française de la Franchise (FFF) www.franchise-fff.com France is an EU Member State since January 1, 1958. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising was introduced in France in 1929 with the French brands PIGIER and Pingouin®. In blue: cross-referenced in tables below 2007 2008 2009 2010 2011 Number of distinct franchise brands 1.137 1.229 1.396 1.477 1.569 Number of franchised points of sale/business (not company-owned) 47.291 50.127 53.101 58.351 62.041 Employment in the above points of sale/business (including self-employed) (estimated) 315.715 330.991 327.773 42,0 45,0 47,7 47,9 49,2 85% 85,2% Turnover for the above points of sale/business (in bn Euros) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 8,5% 2007-2011: 7,1% 2007-2009: 1,9% despite neg. growth in 2009 2007-2011: 5,2% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 Association classification NACE Rev. 2 categories G 45 Repair motor vehicles & motorcycles Sale motor accessories G 47 Retail except motor vehicles/cycles Personal/household goods I 55 Accommodation Hotels Food I 56 Food & beverage services S 95 Repair of computers & personal & household goods S 96 Other personal service activities N 79 Travel agency/tour operator reservation services etc. # franchise brands/systems # franchised POS/outlets Personal services , beauty # employees in Total 2009 2010 2011 2009 2010 2011 2009 1.396 1.477 1.569 53.101 58.351 62.041 327.773 2010 2011 Turnover in POS (bn €) 2009 2010 2011 47,7 47,9 49,2 G 45 G 47 I 55 I 56 S 95 S 96 N 79 24 • EFF TOTAL NETHER. GREATBRITAIN BELGIUM LUX. GERMANY Paris AUSTRIA SWITZERLAND 0 100 ITALY 200 km Where do domestic brands expand to (list 5 countries from most to least) ? 305 French brands export everywhere and in particular to Europe, North Africa & the Middle East. FRANCE SPAIN French Brands (5 first ones): Where do foreign brands come from (list 5 countries from most to least) : USA, Italy, Spain, UK, Canada. Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. subsidiary which develops the franchise network, 3. joint venture. VIVAL (food), Guy Hoquet (real estate), Gamm vert (garden products), YVES ROCHER (Beauty products), ALAIN AFFLELOU (eye ware). Self-Regulation: FFF members commit to respecting the European Code of Ethics for Franchising as well as to the FFF's national extensions to this Code. National Legislation: Law + Decree on Pre-contractual disclosure (applicable to franchising): Code of Commerce, article L 330-3 which replaces the Loi Doubin of 31 December 1989, article 1, referred to as the "Loi Doubin"; Decree n° 91-337 of April 4 1991. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (FFF) Not-for-profit organization founded in 1971, in Paris. Main categories of membership: franchisors, master franchises, professionals. Number of franchise system members in 2012: 160 (78% franchisors) Sources of association income: membership fees (50%), fair/conferences (40%), training (10%) Composition of the Board of Directors: franchisors, master franchises, representatives of franchisees Chairman: Mr. Rene PREVOST, Speedy Délégué Generale: Mrs. Chantal ZIMMER FFF's assets: services to members; multiple conferences, seminars including annual Legal conf.; legal database; 2 FFF-owned franchise exhibitions (Paris & Marseille); 2 franchise award schemes; FFF's Franchise Academy; co-created university masters in franchising; annual scientific research (available on the FFF site); FFF publications: (Newsletter (REZO)), annual Report/Directory ("Toute la Franchise"); publication of books; close cooperation with UBIFRANCE (export); close collaboration with major banks to finance franchises; FFF's Mediation Committee; cooperation with the Arbitration Chamber of Paris (CAP); Commission of Mediation Franchise-Consumers (MFC); annual Franchise Awareness Week; collaboration with the Chambers of Commerce & Industry; collaboration with vibrant franchise media (printed, on-line). EFF • 25 Germany - Franchise Review GERMAN FRANCHISE ASSOCIATION Deutscher Franchise-Verband e.V (DFV) www.franchiseverband.com Germany is an EU Member State since January 1, 1958. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising was introduced in Germany in 1971 with a national brand OBI and an American brand McDonald's. 2000 2007 2008 2009 2010 2011 735 910 950 980 980 990 37.000 55.000 57.000 61.000 65.500 66.900 346.500 441.000 450.000 459.000 463.000 496.000 22,0 41,0 47,0 44,0 55,0 64,4 80% 80% 80% In blue: cross-referenced in tables below Number of distinct franchise brands Number of franchised points of sale/business (not company-owned) Employment in the above POS/business (including self-employed) estimated Turnover for the above POS/business (in bn Euros) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of POS: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 2007-2011: 2007-2011: 2007-2011: 2,2% 5,0% 7,5% 12,6% 2000-2011: 2,9% 2000-2011: 6,7% 2000-2011: 3,6% 2000-2011: 16,1% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Div. # Association classification S 96 Other personal service activities G 47 Retail trade except motor vehicles/motorcycles I 55 Accommodation I 56 Food & beverage service activities X NACE Rev. 2 NACE Rev. 2 categories Incl. mainly Services- trades,crafts (ie. N 81 services to buildings & landscapes) Other (unspecified) # franchise brands/systems 2009 2010 2011 S 96 455 (46%) G 47 317 (32%) I 55 149 (15%) # franchised POS/outlets 2009 2010 61.000 65.500 2011 # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 2010 2011 44,0 55,0 64,4 I 56 X 26 • EFF TOTAL 69 (7%) 980 980 990 66.900 459.000 463.000 496.000 Baltic Sea North Sea 0 75 150 km NETH. Where do domestic brands expand to (list 5 countries from most to least) ? Austria, Switzerland, the Netherlands, France, Poland. POL. Berlin Where do foreign brands come from (list 5 countries from most to least) : USA, Austria, Switzerland, the Netherlands, France. GERMANY CZECH REPUBLIC FRANCE AUSTRIA SWIT. Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. direct franchising, 2. subsidiary, 3. master franchising, 4. area development, 5. joint venture. German Brands (5 first ones): OBI, Fressnapf, Engel & Völkers, BackWerk, VAPIANO Self-Regulation: DFV members commit to respecting the European Code of Ethics for Franchising; DFV-System-Check, a franchise accreditation scheme available to all franchises established in Germany, and mandatory for DFV members. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (DFV) Not-for-profit organization founded in 1978, in Munich, now established in Berlin. Main categories of membership: franchisors, master franchises, professionals. Number of members in 2012: 273 (franchisors, master franchises, professionals) Sources of association income: membership fees (100%) Composition of the Board of Directors: franchisors & master franchisees Chairman: Dr. h.c. Dieter FRÖHLICH, Musikschule Fröhlich Managing Director: Mr. Torben L. BRODERSEN DFV's assets: Accreditation: DFV-System-Check; education: Deutsches Franchise-Institut GmbH (DFI), rich website with different tools for users (e.g. System locator), franchise award scheme, annual Franchise Forum (conference), cooperation with Center for Franchising & Cooperation of the University of Munster; higher education: CCI training for Franchise-Manager, WKS School for Business (franchise business program), publications: DFV-Newsletter, Franchise-Ratgeber (annual Guidebook), Franchise-Despesche (political dispatch); Verzeichnis der FranchiseWirtschaft (catalogue), Franchise-Erfolge (magazine); portals: franchiseportal.de, franchisenet.de; annual franchise exhibition: Start Messe; DFV-based Legal database (laws and case law); Franchise Law Newsletter; Bank support in the form of public guarantees for franchise start-ups: Bürgschaftsbanken, KfW Mittelstandsbank; Deutsche Bank, Sparkassen appreciate franchise clients that abide by the DFV-System-Check. EFF • 27 Greece - Franchise Review GREEK FRANCHISE ASSOCIATION (GFA) Hellas Franchise www.franchising.gr Greece is an EU Member State since January 1, 1981. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising started in Greece in 1980 with a national brand by the name of neoset group. 2007 In blue: cross-referenced in tables below 2008 Number of distinct franchise brands Number of franchised points of sale/business (not company-owned) 11.650 12.796 2009 2010 2011 563 450 456 12.048 12.084 11.113 Employment in the above points of sale/business (including self-employed) (estimated) Turnover for the above points of sale/business (in bn Euros) Proportion of domestic brands (in %) 69,8% Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2009-2011: -9,4% 2007-2011: -1,2% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # G 47 Retail trade except for motor vehicles and motorcycles Clothing (29%), misc.(15%) I 56 Food and beverage service activities Food & restaurants (11%) P 85 Education 10,3% G 45 retail trade, repair of motor vehicles and motorcycles L 68 Real estate activities M 69, 70, 74 Professional scientific and technical activities Q 86 Human health activities S 94 Activities of membership organisations S 96 Other personal services activities NACE Rev. 2 28 • EFF Association classification NACE Rev. 2 categories # franchise brands/systems # franchised POS/outlets 2009 2010 2011 2009 2010 2011 G 47 288 241 233 5898 5845 5174 I 56 93 63 75 2691 2656 2599 P85 52 48 43 1980 2065 1929 G45,L68, M 85 62 68 1087 1087 1019 Q86, S94, S96 45 36 37 392 431 392 TOTAL 563 450 456 12.048 12.084 11.113 Especially Services: 34,7% # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 2010 2011 BULGARIA MACEDONIA TURKEY ALBANIA GREECE TURKEY Athens Aegean Sea Ionian Sea Where do domestic brands expand to (list 5 countries from most to least) ? 15 national brands to Eastern Europe, Balkans, Cyprus, Middle East, Russia, Turkey, Germany. Where do foreign brands come from (list 5 countries from most to least) : Italy, US, Germany, France. Modes of entry of foreign franchises: 0 50 100 km Mediterranean Sea Greek Brands (5 first ones): (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. area development, 3. subsidiary, 4. direct franchising, 5. joint venture. AXON, Gregory's, EVROGNOSI Self-Regulation: GFA members commit to respect the European Code of Ethics for Franchising). EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (GFA) Not-for-profit organization founded in 1996 in Athens. Main categories of membership: franchisors, master franchises, professionals Number of franchise system members in 2012: 75 (60% franchise systems) Sources of association income 2011: membership fees (80%), fair & conferences (20%) Composition of the Board of Directors: franchisors, professionals Chairman: Mr. Petros PETRIDIS, AXON Language School Managing Director: Mr. Sotiris YANAKAKIS GFA assets: Lobbing with the government and other business associations; collaboration with other franchise associations and chambers of commerce worldwide; providing mediation services to all franchisors ,members of the GFA or not; newsletters; conferences; endorse the annual franchise exhibition organized by KEM S.A in Athens; diverse franchise media. EFF • 29 Hungary - Franchise Review HUNGARIAN FRANCHISE ASSOCIATION Magyar franchise szövetség (mfsz) www.franchise.hu Hungary is an EU Member State since May 1, 2004. Currency: Forint; 1 E ~ 283 HUF Member of: FRANCHISE MARKET INFORMATION: Franchising was introduced in Hungary in 1987 with the American brand McDonald’s. 2007 In blue: cross-referenced in tables below 2008 2009 2010 2011 330 350 350 361 361 Number of franchised points of sale/business outlets 17.000 18.000 19.000 20.000 20.000 Employment in the above POS/business outlets (including self-employed) 92.000 100.000 100.000 100.000 100.000 55% 55% 60% 70% 70% Number of distinct franchise brands Turnover for the above points of sale/business (in bn Euros) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 2,3% 2007-2011: 4,2% 2007-2011: 2,2% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 NACE Rev. 2 categories Association classification I 56 Food & beverage service activities Fast food G 47 Retail trade except motor vehicles & motorcycles Clothing, fashion S 96 Other personal service activities Q 86 Human health activities H 52 Warehousing & support activities for transportation # franchise brands/systems 2009 2010 I 56 180 G 47 170 S 96 45 2011 Fitness, beauty # franchised POS/outlets 2009 2010 2011 # employees in Total 2009 2010 2011 Q 86 H 52 TOTAL 30 • EFF 25 350 361 361 19.000 20.000 20.000 100.000 100.000 100.000 Turnover in POS (bn €) 2009 2010 2011 UKRAINE SLOVAKIA AUSTRIA Budapest ROMANIA HUNGARY 0 CROATIA 50 YUGOSLAVIA 100 km Where do domestic brands expand to (list 5 countries from most to least) ? Romania, Poland, Slovakia, Croatia, Czech Republic. Where do foreign brands come from (list 5 countries from most to least) : USA, Germany, Spain, France, Italy. Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. direct franchising, 2. master franchising, 3. joint-venture, 4. subsidiary. Hungarian Brands (by order of number of franchised outlets): FORNETTI, DIEGO, MOL, CO-OP, T-COM Self-Regulation: HFA members commit to respecting the European Code of Ethics for Franchising as well as the HFA's Pre-contractual Disclosure requirements. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices; national competition laws for specific industries. ASSOCIATION INFORMATION (MFSZ) Not-for-profit organization created in 1991 in Budapest, Hungary. Main category of membership: franchise companies, both franchisor and franchisee companies (1 franchisee company in 2012). Number of members in 2012: 50 (70% franchise systems) Sources of association income: membership fees (85%), conferences/seminars ; (10%), publications (5%) Composition of the Board of Directors: franchisors only Chairman Mr. László MURÁNYI, COOP Hungary Zrt CEO Dr. Katalin MANDEL MFSZ assets: The Hungarian government adopted in 2011 its New Széchenyi Plan and Growth & Stability Program aimed at growing the economy. Franchise networks that abide by the European Code of Ethics are eligible to tender for EU/government financial support programs. MFSZ: focused on government lobbying, communication: website, social media, publications, etc. EFF • 31 Italy - Franchise Review Italian Franchise Association Associazione Italiana del Franchising (AIF) www.assofranchising.it Italy is an EU Member State since January 1, 1958. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising was started in Italy in 1970, with the Italian brand GAMMA d.i. 2007 2008 2009 2010 2011 817 852 869 883 885 Number of franchised POS/business outlets 52.725 53.434 53.313 54.013 54.096 Employment in the above POS/business outlets (including self-employed) (estimated) 182.908 182.215 180.525 186.409 188.222 Turnover for the above points of sale/business (in bn Euros) 18,2 21,4 21,8 22,2 22,3 Proportion of domestic brands (in %) 90% 90% 90% 89,5% 85% In blue: cross-referenced in tables below Number of distinct franchise brands Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 2007-2011: 2007-2011: 2007-2011: 2,0% 0,7% 0,8% 9,7% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # Association classification I 56 food & beverage services Food distribution:26% N 79 Travel agency/tour operator reservation services etc. 9% L 68 Real Estate services 6% K 64 Financial service activities (credit) S G NACE Rev. 2 NACE Rev. 2 categories 47 Services Spec. prod/health/legal: 9% Retail trade except motor vehicles & motorcycles Clothing, fashion: 7% # franchise brands/systems 2009 2010 2011 869 883 885 # franchised POS/outlets 2009 2010 2011 # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 2010 2011 21,8 22,2 22,3 I 56 N 79 L 68 K 64 S G 47 32 • EFF TOTAL 53.313 54.013 54.096 180.525 186.409 188.222 LICHT. SWITZERLAND AUSTRIA SLOVENIA ITALY HUNGARY CROATIA BOSNIA AND HERZEGOVIA SAN MAR. FRANCE Adriatic Sea Roma ALGERIA TUNISIA Where do foreign brands come from (list 5 countries from most to least) : USA, France, Spain. Modes of entry of foreign franchises: Tyrrhenian Sea SARDEGNA Mediterranean Sea Where do domestic brands expand to (list 5 countries from most to least) ? Spain, France, Germany, UK, USA. (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) SICILIA 0 50 100 km MALTA 1. master franchising, 2. direct franchising. Italian Brands (5 , by order of number of franchised outlets): Tecnocasa, Domotecnica, Calzedonia, Punto 187, Segafredo, Intimissimi, Mail Boxes Etc (MBE) Self-Regulation: AIF members commit to respecting the European Code of Ethics for Franchising as well as to an AIF Code of Ethics wich makes reference to the Franchise law (see below). National Legislation: Law + Decree on Pre-contractual disclosure for networks of commercial affiliated partners (which includes franchising): Legge 6 maggio 2004 no. 129 : Norme per la disciplina dell’affiliazione commercial; Decreto 2 settembre 2005, N° 204; Regolamento Recante Norme per la Disciplina Dell’Affiliazione commerciale du cui all’articolo 4,comma 2, della legge 6 maggio 2004, N° 129. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (AIF) Not-for-profit organization founded in 1971in Milano. Main categories of membership: franchisors, master franchises, professionals. Number of franchise system members in 2012: 213 (70% franchise systems) Sources of association income: membership fees (70%), fair/conferences/marketing (29%), training (1%-free for members) Composition of the Board of Directors: franchisors, master franchises Chairman: Mr. Graziano FIORELLI, Mail Boxes Etc. (MBE) Secretary General: Mr. Italo BUSSOLI AIF assets: AIF's assets: own on-line franchise exhibition (www.webfranchisingexpo.it); long-term annual franchise surveys; many services to members; annual conferences; Financing of franchises: AIF Blue Stamp accreditation system for members in relation with BNL-BNP Paribas; collaboration with UBI Banca-Centrobanca; access to regional financing; Franchising Yearbook; recruitment Road Show; Franchise press: www.azfranchising.it; www.infofranchising.it; www.betheboss.it; www.annuariodelfranchising.it; www.cliccafranchising.it; Governmentsupport program for unemployed who wish to become franchisees: INVITALIA. EFF • 33 the Netherlands - Franchise Review Netherlands Franchise Association Nederlandse Franchise Vereniging (NFV) www.nfv.nl The Netherlands is an EU Member State since January 1, 1958. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising started in the Netherlands in 1948 with a Dutch book-store brand, bruna. 2000 2007 2008 2009 2010 2011 395 676 687 692 714 739 Number of franchised points of sale/business (not company-owned) 15.200 28.219 28.466 29.021 29.509 29.781 Employment in the above POS/business (including self-employed) 150.500 245.576 255.201 258.808 257.361 270.300 11,6 29,7 30,3 29,7 30,2 31,3 85% 85% In blue: cross-referenced in tables below Number of distinct franchise brands Turnover for the above points of sale/business (in bn Euros) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 2007-2011: 2007-2011: 2007-2011: 2,3% 1,4% 2,5% 1,8% 2000-2011: 17,0% 2000-2011: 96,0% 2000-2011: 80,0% 2000-2011:170,0% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID NACE Rev. 2 categories Association classification G 47 Retail trade except mot. veh. & motorcycles Food & non food: 39% I 55 Accommodation Hospitality: 11,5% I 56 food & beverage service activities H,J,K,L,M Services Business services: 41% P,Q, R,S Services Education, health, fitness, senior care: 8,5% NACE Rev. 2 34 • EFF Div. # # franchise brands/systems # franchised POS/outlets 2009 2010 2011 2009 2010 G 47 280 277 287 16.302 16.068 2011 # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 2010 2011 15.997 178.262 171.809 182.800 22.118 22.367 23.110 I 55,56 82 86 85 2.137 2.160 2.305 32.800 34.534 34.700 1.470 1.663 1.770 H,J,K,L,M, P,Q,R,S Services 270 286 304 8.130 8.736 8.888 35.045 37.500 3.849 3.833 4.007 Other 60 65 63 2.452 2.545 2.591 12.700 13.443 15.300 2.233 2.317 2.368 TOTAL 692 714 739 29.021 29.509 29.781 258.808 257.362 270.300 29,6 30,2 31,2 37.576 0 Where do domestic brands expand to (list 5 countries from most to least) ? Germany, Belgium, France. 25 50 km North Sea Where do foreign brands come from (list 5 countries from most to least) : Germany, Belgium, France, UK and USA. Amsterdam NETHERLANDS GERMANY Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. direct franchising, 3. joint Venture, 4. area development, 5. subsidiary. BELGIUM Dutch Brands (5 first ones): hunkemöller, PEARLE, HEMA, the alwaysbemobile company, BLOKKER Self-Regulation: NFV members commit to respect the European Code of Ethics for Franchising. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (NFV) Not-for-profit organization founded 1972. Main categories of membership: franchisors, master franchises, professionals. Number of franchise system members in 2012: 259 (77% franchisors, master franchises) Sources of association income 2011: membership fees (83%), marketing (6%), sale of NFV publications (5%), other (6%) Composition of the Board of Directors: franchisors, master franchises, professionals Chairman: Mr. Will van den HOOGEN Managing Director: Mr. Jos BURGERS NFV assets: NFV System Check; every 5 years, re-accreditation check of the franchise agreements of the NFV members; NFV pre-contractual disclosure checklist, franchise contract checklist, franchise master classes, in-house publications: franchise booklets, NFV Bulletin; specialized press: "Franchise +"; annual franchise exhibition: "onderneem't"; Government guarantee schemes for start-up enterprises, including franchising. EFF • 35 Poland - Franchise Review Polish Franchise Organisation (PFO) Polska Organizacja Franczyzodawców (POF) http://franchise.org.pl Poland is an EU Member State since May 1, 2004. Member of: Currency: Polish Zloty (PLN); 1 E ~ 4.19 PLN FRANCHISE MARKET INFORMATION: Franchising started in Poland in 1989, with the French brand YVES ROCHER. 2007 2008 2009 2010 2011 2012 387 491 584 697 746 820 Number of franchised POS/business (not company-owned) 22.450 26.781 32.589 37.218 42.522 47.750 Employment in the above POS/business (including self-employed) (estimated) 157.000 187.500 212.000 259.000 301.000 338.000 Turnover for the above points of sale/ business (in bn Euros) 18,2 20,4 22,7 24,5 25,7 28,1 Proportion of domestic brands (in %) 71% 69% 72% 74% 74% 74% In blue: cross-referenced in tables below Number of distinct franchise brands Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 2007-2011: 2007-2011: 2007-2011: 5,6% 5,9% 6,0% 6,9% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # I NACE Rev. 2 36 • EFF Association classification NACE Rev. 2 categories 55,56 Accommodation & Food service activities G 45 Retail/repairs motor vehicles & motorcycles G 47 Retail trade except motor vehicles & motorcycles S 96 Other personal services N 81 Services to buildings & landscapes N 82 Office/business support services # franchise brands/systems # franchised POS/outlets Food & beverage # employees in Total Turnover in POS (bn €) 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 I 55/56 79 90 117 1.678 1.699 1.883 13.745 16.762 20.878 0,65 0,75 0,72 G 45/47 378 456 440 26.852 30.651 33.951 183.074 223.261 260.226 21,56 23,01 24,18 S 96 94 116 144 3.692 4.454 6.103 14.124 17.224 17.930 0,48 0,70 0,69 N 81/82 33 35 45 367 414 585 1.150 1.403 1.976 0,04 0,06 0,08 TOTAL 584 697 746 22,73 24,52 25,67 32.589 37.218 42.522 212.100 258.650 301.000 RUSSIA LITHUANIA POLAND BELAR. Warsaw GERMANY UKR. 0 50 100 km CZECH-REPUBLIC Where do domestic brands expand to (list 5 countries from most to least) ? Czech Rep., Slovakia, Lithuania, Ukraine, Russia. (note: 72 Polish brands have developed abroad) Polish Brands operating abroad : INDECO, INGLOT, ATLANTIC, Vacu Fit,RESERVED Where do foreign brands come from (list 5 countries from most to least) : Italy, Germany, France, USA, Great Britain, Spain. SLOVAKIA Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising (49,2%), 2. subsidiary (35,4%), 3. direct franchising (7,9%), 4. area development (5,8%), 5. joint venture (1,6%). Polish Brands (5, by order of number of franchised outlets): ABC SKLEPY, LEWIATAN, Nasz Sklep, eLDe, GROSZEK Self-Regulation: PFO members commit to respecting the European Code of Ethics for Franchising. EU Legislation of relevance to Franchising: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (PFO) Not-for-profit organization created in May 2000 in Warsaw. Main categories of membership: franchise and master franchise companies. Number of members in 2012: 35 (franchise systems only) Sources of association income: membership fees (95 %), fair/conferences (5%). Composition of the Board of Directors: franchisors, master franchises, 1 professional. Chairman: Mrs. Monika DABROWSKA, McDonald´s, Poland Secretary General: Mr. Michal SKUBISZEWSKI PFO assets: Poland has not suffered as badly as the rest of the EU from the financial and economic crisis; franchising is developing very well; commercial banks that lend to franchise businesses: FM Bank, Deutsche Bank; specialized franchise press: Wlasny Biznes Franchising; annual Franchise expo (franchiseexpo.pl). EFF • 37 Portugal - Franchise Review PORTUGUESE FRANCHISE ASSOCIATION Associação Portuguesa da Franchise (APF) www.apf.org.pt Portugal is an EU Member State since January 1, 1986. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: 2007 2008 2009 2010 2011 501 521 524 570 578 Number of franchised points of sale/business (not company-owned) 11.271 12.206 13.000 12.016 11.760 Employment in the above POS /business (including self-employed) (estimated) 66.860 68.960 69.536 73.143 70.151 Turnover for the above points of sale/business (in bn Euros) 4,8 5,0 5,0 7,8 5,3 Proportion of domestic brands (in %) 51% 53% 59% 59% 62% In blue: referenced in the tables below Number of distinct franchise brands Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 4,5% 2007-2011: 2,4% 2007-2011: 3,0% 2007-2011: 7,0% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # 38 • EFF Association classification NACE Rev. 2 categories NACE Rev. 2 Section ID, Division # 2009 2010 2011 TOTAL 524 570 578 # franchise brands/systems # franchised POS/outlets 2009 2010 2011 13.000 12.016 11.760 # employees in Total Turnover in POS (bn €) 2009 2010 2011 2009 2010 2011 69.536 73.143 70.151 5,0 7,8 5,3 Where do domestic brands expand to (list 5 countries from most to least) ? Spain, Europe, PALOP (Portuguese speaking African countries), Middle East, Latin America. Where do foreign brands come from (list 5 countries from most to least) : Spain, USA, France, Italy, UK, Latin America. PORTUGAL SPAIN Lisboa Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. direct franchising, 3. area development, 4. subsidiary, 5. license agreements. Portuguese Brands (5 first ones): OPTIVISÃO, VALORES, OURINVEST, NÃO+PÊLO, PARFOIS 0 50 100 km Self-Regulation: APF members commit to respect the European Code of Ethics for Franchising. EU Legislation of relevance to Franchising: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (APF) Not-for-profit organization founded in March 1988 in Lisbon by international franchisors. Categories of membership: franchisors, master franchises, professionals Number of franchise system members in 2012: 24 (30% franchisors) Sources of association income 2011: membership fees 100% Composition of the Board of Directors: franchisors, master franchises, Chairman: Mr. Mr. Paulo ANTUNES, LDC, S.A. Vice-president and Executive Director: Mrs Cristina Matos, BRODHEIM Grupo, S.A. Vice-president: Mr. Ricardo Sousa, Century21, Lda AFP assets: Export missions to Spanish and Portuguese speaking markets in the frame of FIAF, the Ibero-American Franchise Federation; focus on the Brazilian market; working with support of BES – Bank Espirito Santo. EFF • 39 Serbia - Franchise Review SERBIAN FRANCHISING DEVELOP. ASSOC. Srpsko udruženje za razvoj franšizinga www.franchiseserbia.rs Candidate to the EU. Member of: Currency: Serbian Dinar (RSD); 1 E ~ 112.34 RSD FRANCHISE MARKET INFORMATION: Franchising was introduced in Serbia in 1969 with the US brand, DINERS Credit Card. 2007 In blue: cross-referenced in tables below 2008 2009 2010 2011 106 Number of distinct franchise brands Number of franchised points of sale/business (not company-owned) Employment in the above POS /business (including self-employed) No info. available Turnover for the above points of sale/business (in bn Euros) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # Association classification NACE Rev. 2 categories No info. available NACE Rev. 2 Section ID, Division # TOTAL 40 • EFF # franchise brands/systems 2009 2010 2011 106 # franchised POS/outlets 2009 2010 2011 # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 2010 2011 HUNGARY 0 50 100 km ROMANIA CROATIA Where do foreign brands come from (list 5 countries from most to least) : USA, UK, Italy, Germany, Slovenia. Belgrade BOSNIA AND HERZEGOVINA Modes of entry of foreign franchises: SERBIA (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) MONTENEGRO Adriatic Sea ALBANIA Where do domestic brands expand to (list 5 countries from most to least) ? Bosnia and Herzegovina, Montenegro, FYRO Macedonia, Romania, Bulgaria. BULGARIA MACEDONIA 1. direct franchising, 2. master franchising, 3. area development, 4. subsidiary, 5. joint venture. Serbian Brands: MINI PANI, RAKIA BAR, ADORE CHOCOLATE ,FLY FLY TRAVEL, KONTIKI, FILIP TRAVEL, Dve Šmizle (City Fashion), LUNA, PS FASHION, Arcus Club Fit&Relax, JP PTT Saobraćaj, EXTREME INTIMO, OFFICE 1 SUPERSTORE, MEGALINE. Self-Regulation: SURF members commit to respecting the European Code of Ethics for Franchising. National franchise-specific regulation: None EU Legislation of relevance to Franchising: As a candidate to EU membership, Serbia will transpose EU legislation, including REGULATION No 330/2010 on Vertical Agreements. ASSOCIATION INFORMATION (SURF) Not-for-profit organization created in 2009 in Belgrade, Serbia. Main category of membership: franchise and master franchise companies. Number of members in 2012: 7 (45% of franchise systems in relation to turnover) Sources of association income: membership (85%), exhibition (5%), other services (10%) Composition of the Board of Directors: representatives of the head franchise company Chairman Board of Directors: Mr. Goran KARIC, DELTA SPORT President of Executive Board: Mr. Dusan SIKIMIC, DINERS Manager: Mrs. Katarina BLAZIC SURF assets: functions in close collaboration with the Franchise Centre of the Serbian Chamber of Commerce in Belgrade and benefits from strong government support.. EFF • 41 Slovenia - Franchise Review SLOVENIAN FRANCHISE ASSOCIATION (SFA) Sekcija za franšizing www.franchise-slovenia.net Member of the EU since May 1, 2004. Member of: Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising was introduced in Slovenia in 1988 by the American brand HERTZ, soon followed by domestic brands in retailing. In blue: cross-referenced in tables below Number of distinct franchise brands Number of franchised points of sale/business (not company-owned) 2007 2008 2009 2010 2011 103 106 107 103 106 1.213 1.525 1.527 1.532 1.540 47% 52% 51% 50% 48% Employment in the above points of sale/business (including self-employed) Turnover for the above points of sale/business (in bn Euros) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 0,75% 2007-2011: 0,89% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 NACE Rev. 2 categories Association classification G 47 Retail trade except motor vehicles & motorcycles Food, DIY R 93 Sports/Amusement/Recreation activities Fitness I 56 Food & beverage service activities N 79 Travel agency, tour operator reservation service, etc. S 96 Other personal services activities # franchise brands/systems 2009 2010 2011 # franchised POS/outlets 2009 2010 2011 # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 G 47 R 93 No reliable information. I 56 N 79 S 96 42 • EFF 107 103 106 1.527 1.532 1.540 No information 2010 2011 0 50 100 km AUSTRIA ITALY HUN. Ljubljana SLOVENIA CROATIA Adriatic Sea BOSNIA AND HERZEGOVINA Where do domestic brands expand to (list 5 countries from most to least) ? Croatia, Serbia, Bosnia & Herzegovina, Austria, Italy. Where do foreign brands come from (list 5 countries from most to least) : SERBIA Italy, Croatia, Austria, Hungary, France, USA. Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) No information. Slovenian Brands (5, by order of number of franchised outlets): MERCATOR, TUŠ, MITJA Hair Team, SIMPLE, LINEA SNELLA Self-Regulation: SFA members commit to respecting the European Code of Ethics for Franchising. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (SFA) Not-for-profit organization created in 1998 in Ljubljana, Slovenia. Main category of membership: franchise and master franchise companies. Number of members in 2012: 25 (50% franchise systems) Sources of association income: membership fees (60%), conferences/seminars (10%), unpaid volunteer work (30%). Composition of the Board of Directors: representatives of the head franchise company Chairman: Mrs. Barbara HUMAR GERBEC, LINEA SNELLA Co.d.o.o Secretary General: Mr. Igor PAVLIN SFA assets: Very focused on educational programs for present and future franchisors and franchisees; involved in entrepreneurial programs for college-level students; organizes conferences & seminars on franchising; active with EU-subsidized projects; association housed at the Slovenian Chamber of Commerce (Trgovinska Zbornica Slovenije). EFF • 43 Spain - Franchise Review Spanish Franchising Association Asociación española de franquiciadores (aef) www.franquiciadores.com www.calidadenfranquicia.com www.abogadosdefranquicia.com Member of: Spain is an EU Member State since January 1, 1986. Currency: Euro (E) FRANCHISE MARKET INFORMATION: Franchising was introduced in Spain in 1957 by the French brand RODIER. In blue: cross-referenced in tables below Number of distinct franchise brands Number of franchised points of sale/business (not company-owned) Employment in the above points of sale/business (including self-employed) (estimated) Turnover for the above POS/business (in bn Euros) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007 2008 2009 2010 2011 850 875 919 934 947 59.182 58.305 57.139 56.444 58.279 234.415 235.929 235.075 231.603 240.713 29,0 29,7 26,8 26,3 27,8 81,2% 81,8% 81,3% 81% 81% 2007-2011: 10,1% 2007-2011: -1,5% 2007-2011: 14,0% 2007-2011: 20,7% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 categories 2011 - # brands/position G 45 Retail/repair motor vehicles & motorcycles 3 (41 brands) G 47 Retail trade except motor vehicles & motorcycles 1 (613 brands) H 49 Transport & storage 9 (10 brands) I 56 Food & Beverage service activities 2 (154 brands) L 68 Real estate activities 7 (25 brands) M 74 Other prof., scientif., tech., services 4 (28 brands) N 79 Travel agencies 8 (20 brands) P 85 education 5 (28 brands) R 93 Arts, Entertainment, Recreation (Sports) 6 (28 brands) 947 NACE Rev. 2 44 • EFF # franchise brands/systems # franchised POS/outlets # employees in POS Turnover in POS (bn €) 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 G 45 41 40 41 2.293 2.173 2.209 6.880 6.349 6.367 702,3 655,1 632,8 G 47 588 603 626 31.035 31.060 33.414 126.913 123.652 138.428 12.814,9 13.989,9 15.738,0 H 49 10 11 10 2.547 2.481 2.429 13.614 13.652 12.255 1.522,4 1.572,6 1.449,2 I 56 149 153 154 10.559 10.590 10.325 59.503 60.779 57.715 5.230,4 5.301,1 5.471,5 204,4 L 68 26 25 25 1.330 1.461 1.272 4.698 4.829 3.843 1.192,3 243,0 M 74 26 25 28 2.052 2.048 2.099 3.994 4.194 4.797 320,0 312,7 318,5 N 79 25 23 20 4.976 4.196 4.117 12.065 10.623 9.647 2.263,8 1.637,1 1.587,2 P 85 27 28 28 1.176 1.245 1.161 3.909 4.055 3.991 267,9 272,2 265,8 R 93 27 26 15 1.171 1.190 1.253 3.499 3.470 3.670 385,5 667,7 684,4 TOTAL 919 934 947 57.139 56.444 58.279 26,8 26,3 27,8 235.075 231.603 240.713 FRANCE Atlantic Ocean PORTUGAL Where do foreign brands come from (list 5 countries from most to least) : France, United States, Italy, Portugal, UK. Madrid SPAIN Mediterranean Sea 0 Where do domestic brands expand to (list 5 countries from most to least) ? Portugal, México, Andorra, France, Italy, UK, Saudi Arabia, UAE, Romania, Morrocco. 100 200 km MOROCCO ALGERIA Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. area development, 3. direct franchising, 4. subsidiary, 5. joint venture. Spanish Brands (5, by order of turnover): DAY (food retail), FALCON Travel (travel agency), SPAR (food retail), MRW (courier), TELEPIZZA (food service) Self-Regulation: Reference: the European Code of Ethics for Franchising. National Regulation: - Law 7/1996, de 15 de enero, de Ordenación del Comercio Minorista, Boletín Oficial del Estado, 15 del 17 gennaio 1996: Regulates Retail Trading including franchising; requires disclosure obligations which targets trade and commercial enterprises and networks; -R oyal Decree N° 201/2010 of 26th February 2010: regulates the exercise of commercial franchising and requires that all franchises operating in Spain (foreign & national) register in a franchise registry. (Note: this registration contribute to having very complete franchise statistics.) EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (AEF) Not-for-profit organization founded in 1993 in Valencia, Spain with offices in Madrid & Barcelona. Main categories of membership: franchise companies, master franchise companies, collaborating partners, institutional members & honorary members. Number of franchise system members in 2012: 182 (70% franchisors) Sources of association income: membership fees (91%), sales 7%), grants (2%) Composition of the Board of Directors: franchisors Chairman: Mr. Xavier VALLHONRAT LLURBA - Il Caffe di Roma CEO: Mr. Eduardo ABADÍA GONZÁLEZ AEF assets: Actively involved in supporting the international development of their franchise members; AEF presence at many franchise fairs; publications, including excellent statistics (available on-line); Co-founder of FIAF. EFF • 45 Sweden - Franchise Review Swedish Franchise Association Svensk Franchise - Svenska Franchiseföreningen www.svenskfranchise.se Sweden is an EU Member State since January 1, 1995. Member of: Currency: Swedish Krona SWK; 1 E ~ 8.4 SWK FRANCHISE MARKET INFORMATION: Franchising started in Sweden in 1932 with the Swedish brand Anticimex (pest control). 2007 2008 2009 2010 2011 350 400 550 640 700 Number of franchised points of sale/business 10.000 15.000 18.000 24.000 26.000 Employment in the above POS/business (including self-employed) estimated 67.000 75.000 102.000 102.000 110.000 10,0 13,0 15,0 19,0 21,0 90% 80% 80% 80% In blue: cross-referenced in tables below Number of distinct franchise brands Turnover for the above points of sale/business (in bn Euros) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 19,4% 2007-2011: 28,0% 2007-2011: 14,0% 2007-2011: 20,7% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 46 • EFF NACE Rev. 2 categories Association classification G 47 Retail trade except motor vehicles & motorcycles I 56 Food & Beverage service activities Fast food N 81 Services to buildings, landscaping, etc. Construction M 70 Business & management consulting Consulting H 49 Land and pipeline transport Transport # franchise brands/systems 2009 2010 2011 # franchised POS/outlets 2009 2010 2011 # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 G 47 287 9.800 42.000 7,8 I 56 126 4.200 18.000 3,4 N 81 49 1.400 15.000 1,3 M 70 44 1.350 12.000 1,3 H 49 44 1.250 15.000 1,2 TOTAL 550 640 700 18.000 24.000 26.000 102.000 102.000 110.000 15,0 2010 2011 19,0 21,0 Where do domestic brands expand to (list 5 countries from most to least) ? Denmark, Norway, Finland, Germany, Netherlands, US. 0 50 100 km Norwegian Sea Where do foreign brands come from (list 5 countries from most to least) : US, UK, Denmark, Norway, Germany. SWEDEN NORWAY FINLAND Gulf of Bothnia (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. direct franchising, 3. Subsidiary, 4. area development, 5. joint venture. Vä tt er n e r n Stockholm V ä r n Modes of entry of foreign franchises: ESTONIA DEN. BalticSea LATVIA LITUANIA Austrian Brands (5, by order of number of franchised outlets): Pressbyrån, Svenska Turistföreningen, Sibylla, TEAM SPORTIA, Electrolux Self-Regulation: SF members commit to respecting the European Code of Ethics for Franchising; SF-defined Pre-contractual checklist of information that the franchisor must provide a prospective franchisee before signature of the contract; Quality Standard SF-defined Accreditation system for franchise and professional members. National Regulation: Law on the Duty of a Franchisor to provide information (24 May 2006, Law N° 2006:484); governement-created Committee of Ethics reserved to SF members; decisions published on SF website. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (SFV) Not-for-profit organization founded in 1972 in Gothenburg. Main categories of membership: franchisors, master franchises, franchisees, professionals. Number of franchise system members & franchisees in 2012: 120 (80% franchisors) Composition of the Board of Directors: franchisors, franchisees, 1 professional Sources of association income: membership fees (90%), events/sponsoring (10%) Chairman: Mr. Jonas IDESTRÖM, FranchiseArchitect Managing Director: Mr. Anders SVENSSON SF/SFA assets: SF/SFA strongly promotes brands though SF "members-only" website, award schemes; media, annual franchise report, conferences focused on exchange of experience & good practice, publications. EFF • 47 Switzerland - Franchise Review SWISS FRANCHISE ASSOCIATION Schweizer Franchise Verband (SFV) www.franchiseverband.ch Member of: Switzerland is not a Member State of the European Union. Currency: Swiss Franc: 1 E ~ 1.2 CHF FRANCHISE MARKET INFORMATION: Franchising was introduced in Switzerland in the 70ies (through activities by university professors) but took off as a serious marketing strategy in the mid 90ies. We do not have any serious market surveys, but rather estimates as regards the numbers of franchise brands in Switzerland. Our estimate lies between 250 – 300 brands associated with Franchising in Switzerland. 2007 In blue: cross-referenced in tables below 2008 Number of distinct franchise brands (estimate) 2009 2010 2011 250–300 250–300 250–300 Number of franchised points of sale/business (not company-owned) Employment in the above points of sale/business (including self-employed) (estimated) No serious market surveys Turnover for the above points of sale/business (in bn Euros) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # NACE Rev. 2 TOTAL 48 • EFF NACE Rev. 2 categories # franchise brands/systems 2009 2010 2011 # franchised POS/outlets 2009 2010 2011 Association classification # employees in Total 2009 2010 2011 Turnover in POS (bn €) 2009 2010 2011 0 50 100 km GERMANY AUSTRIA FRANCE Bern SWITZERLAND ITALY Where do domestic brands expand to (list 5 countries from most to least) ? Germany, France & Italy due to the proximity of languages and culture (test markets), Asian markets, USA. Where do foreign brands come from (list 5 countries from most to least) : US (fast foods), France, Germany, Italy (fashion). Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. direct franchising, 3. area development, 4. subsidiary, 5. joint venture. Swiss Brands (principle ones): Swatch, MONTREUX JAZZ CAFE, Lindt Chocolate, Tally Weijl, AMAVITA Apotheken, Valora, INTERSPORT, Kieser Training, oprandi & partner, ParaMediForm Self-Regulation: SFV members commit to respect the European Code of Ethics for Franchising. EU Legislation of relevance to Franchise contracts: Applicable when a Swiss franchisor expands into EU markets: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices, ASSOCIATION INFORMATION (SFV) Not-for-profit organization founded in the 70s. 2 offices: Zürich (German-speaking community), Morges (French-speaking community). Main categories of membership: franchisors, master franchises, professionals Number of franchise system members in 2012: 43 franchisors, 11 sponsoring members. Sources of association income 2011: membership fees (almost 100 %) and some banner advertisement on our website (members only). Composition of the Board of Directors: franchisors Chairman: Mr. Theodor KEIFER, RE/MAX Switzerland Managing Director: Dr. Christoph WILDHABER EFF • 49 Turkey - Franchise Review TURKISH NATIONAL FRANCHISE ASSOCIATION Franchise Dernegi - UFRAD www.ufrad.org.tr Turkey is a candidate to membership of the European Union. Member of: Currency: Turkish Lire (TRY); 1 E ~ 2.21 TRY FRANCHISE MARKET INFORMATION: Franchising started in Turkey in 1991 with the US brand McDonald’s. 2007 In blue: referenced in the tables below 2008 2009 Number of distinct franchise brands 2010 2011 1669 1708 73% 81% 2012 Number of franchised points of sale/business (not company-owned) Employment in the above points of sale/business (including self-employed) (estimated) Turnover for the above points of sale/business (in bn Euros) Proportion of domestic brands (in %) (average of categ. G-S) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007-2011: 2,3% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # # franchise brands/systems 2010 % domestic 2010 2011 % domestic 2011 47 Retail/repair motor vehicles & motorcycles 951 68% 956 68% I 55,56 Accommodation & Food Service Activities 467 81% 493 81% L 68 Real Estate activities 31 74% 33 74% M 70,73,74 Professional, scientific & technical activities 72 69% 71 69% N 77-82 Admin./business & support activities 16 94% 16 94% P 85 Education 35 86% 35 86% Q 86,87 Human health & social work activities 40 65% 41 66% R 90,93 Arts, entertainment & recreation 29 93% 32 94% S 94-96 Other service activities 28 31% 31 97% 1669 Av.=73% 1708 Av.=81% G TOTAL 50 • EFF NACE Rev. 2 categories BULGARIA 0 50 100 km RUSSIA Black Sea GEORGIA GREECE Ankara ARMENIA IRAN TURKEY Mediterranean Sea CYPRUS SYRIA Where do domestic brands expand to (list 5 countries from most to least) ? Germany, Saudi Arabia, Iraq, Azerbaijan, Netherlands. IRAQ Where do foreign brands come from (list 5 countries from most to least) : USA, France, UK, Italy. Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. joint venture, 3. direct franchising, 4. subsidiary, 5. area development. Turkish Brands (5 first ones): · SIMIT SARAYI, ÇILEK, ALTINBAŞ, ISTIKBAL, KOTON Self-Regulation: UFRAD members commit to respect the EFF's European Code of Ethics for Franchising. EU Legislation of relevance to Franchise contracts: no. ASSOCIATION INFORMATION (UFRAD) Not-for-profit organization founded in 1991 in Istanbul. Main categories of membership: franchisors, master franchises, suppliers as supporting members Sources of association income 2011: membership fees (60%), Exhibition (30%), Franchise Academy (10%) Number of franchise system members in 2012: 98 (75 % franchise systems) Composition of the Board of Directors: franchisors Chairman:Dr. Mustafa AYDIN, Bil Holding, Istanbul Aydın Üniversitesi, UFRAD Managing Director: Ms. Irem ARMAN UFRAD assets: Very focused on education, Franchise Academy, media presence, government relations, international expansion, exhibition, TV Program and Quarterly Franchise Magazine; Note: Average annual growth of employment in franchising 2007-2011: 14% Comment: The government supports the employment of new graduates and university students which increases employment. EFF • 51 United Kingdom - Franchise Review BRITISH FRANCHISE ASSOCIATION (thebfa) www.thebfa.org The UK is an EU Member State since January 1, 1973. Member of: Currency: GBP ; 1 E ~ 0.78 GBP FRANCHISE MARKET INFORMATION: Franchising started in the United Kingdom in the early 1960s, with Dyno-Rod, a domestic brand, and SERVICE MASTER, a master franchise from the USA. In blue: cross-referenced in tables below Number of distinct franchise brands Number of franchised points of sale POS /business (not company-owned) Employment in the above points of sale POS /business (including self-employed) (estimated) Turnover for the above points of sale/business (in bn GBP) Proportion of domestic brands (in %) Average annual growth of franchise brands: Average annual growth of points of sale: Average annual growth of employment: Average annual growth of turnover: 2007 2008 2009 2010 2011 809 838 845 900 929 36.200 36.600 36.500 38.600 40.100 480.000 467.000 465.000 521.000 594.000 12,4 11,4 11,8 12.4 13,4 80% 80% 80% 80% 80% 2007-2011: 2007-2011: 2007-2011: 2007-2011: 3,6% 2,6% 5,7% d espite neg. growth in '08/'09 2,0% Franchise sectors: according to the NACE Rev. 2 classification system. List the first 5 franchise sectors from largest in numbers of franchise systems to smallest. Section ID Division # N 52 • EFF Office /business support services N 81 Services to buildings, landscapes G 47 Retail trade except motor vehicles & motorcycles I 56 Food & beverage service activities S 96 Other personal services Other (unspecified) # franchise brands/systems 2009 2010 2011 # franchised POS/outlets 2009 2010 2011 N 82 161 3.900 N 81 160 4.300 G 47 123 6.400 I 56 121 8.100 S 96 109 3.900 X 255 13.500 TOTAL Association classification 82 X NACE Rev. 2 NACE Rev. 2 categories 845 900 929 36.500 38.600 40.100 # employees in Total 2009 2010 2011 465.000 521.000 594.000 Turnover in POS (bn €) 2009 2010 2011 11,8 12,4 13,4 North Sea IRELAND UNITED KINGDOM London LUXEMBOURG 0 50 100 km FRANCE Where do domestic brands expand to (list 5 countries from most to least) ? About 250 UK brands export to Ireland, Scandinavia, the rest of Europe, North America & the Commonwealth. Where do foreign brands come from (list 5 countries from most to least) : USA, Canada, Australia, New Zealand, Italy. Modes of entry of foreign franchises: (listed by order of preference from the following modes: direct franchising, subsidiary, area development, master franchising, joint venture) 1. master franchising, 2. subsidiary, 3. joint venture, 4. area development, 5. direct franchising. UK Brands (5 first ones, not in order of size of network): Clarks ™, COSTA Coffee, Thorntons, Dairy Crest, TONI&GUY Self-Regulation: BFA members (all categories) commit to respect the European Code of Ethics for Franchising which is incorporated in the BFA's Code of Ethical Conduct which includes the BFA's Extensions & Interpretations of the European Code of Ethics. EU Legislation of relevance to Franchise contracts: EU REGULATION No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the EU to categories of vertical agreements and concerted practices. ASSOCIATION INFORMATION (BFA) Not-for-profit organization founded in 1977 in England Main categories of membership: Franchisors (Full Membership, Associate Membership, Provisionally Listed Companies) Affiliated Members (franchise lawyers-consultants etc.), Franchisees (of Franchisor members only) Number of franchise system members in 2012: 270 franchisors (plus 110 Affiliate professional advisors) Composition of the Board of Directors: franchisors, professionals, franchisees Chairman: Mr. Mr. Michael EYRE, BLAZES Heating Solutions Director General: Mr. Brian Smart Sources of association income 2011: membership fees (85%), marketing & events (10%), training (5%) BFA assets: Membership accreditation system aimed at promoting proper & ethical franchising for all categories of members, including the professional affiliates; bfa website: information for all & recruitment tool for members; 2 Awards schemes; several bfa accredited franchise expos (London (2), Birmingham, Manchester); Mediation & Arbitration schemes; 4 major banks are BFA members; each have a dedicated franchise dept.; 70% of all franchisees and 75% of all franchisors bank with these 4 banks; Government guarantee scheme: EFG- Enterprise Finance Guarantee scheme open to franchising. EFF • 53 54 • EFF Part III Statistical insight into the economic share of franchising Sources: For the EU: • 2012/4, EC/Eurostat-Business economy by sector NACE Rev. 2 • http://epp.eurostat.ec.europa.eu /statistics_explained/ For franchising: the 21 national franchise associations of the countries represented in this Report EFF • 55 The 5 Tables that follow show figures for the Franchise industry in Europe by country. The numbers are provided by the national franchise associations of these countries. The tables allow country comparisons, but are not correlated with Eurostat figures. This will follow in Tables 6-11. Table 1.A: Number of distinct franchise brands/systems per country + average annual growth 2007-2011 Country # of distinct FRANCHISE BRANDS/Systems Average 2007 2008 2009 2011 est. annual growth 420 420 2,5% 2010 1 AT-AUSTRIA 2 BE-BELGIUM 100 200 320 360 350 4,8% 3 UK-BRITAIN 809 838 845 900 929 3,6% 4 HR-CROATIA 125 150 168 175 6,6% 5 CZ-CZECH Rep. 131 137 150 168 190 9,8% 6 DK-DENMARK 180 185 188 188 1,5% 7 FI-FINLAND 220 255 265 270 270 5,4% 8 FR-France 1.137 1.229 1.396 1.477 1.569 8,5% 9 DE-GERMANY 910 950 980 980 990 2,2% 10 EL-GREECE 563 450 456 -9,4% 11 HU-HUNGARY 330 350 350 361 361 2,3% 12 IT-ITALY 817 852 869 883 885 2,0% 13 NL-NETHERLANDS 676 687 692 714 739 2,3% 14 PL-POLAND 387 491 584 697 746 4,5% 15 PT-Portugal 501 521 524 570 578 4,5% 16 RS-SERBIA 17 SI-SLOVENIA 103 106 107 103 106 0,8% 18 ES-SPAIN 850 875 919 934 947 10,1% 19 SE-SWEDEN 350 400 550 640 700 19,4% 20 CH-SWITZ. 275 275 275 21 TR-TURKEY 400 7.901 8.751 9.539 275 1.669 1.708 11.952 12.582 4,5% In the 21 countries of this survey, one can estimate at least 12.600 distinct franchise brands (rounded figure). Table 1.B: Number of franchise brands of other major regions/ countries of the world, 08/2012 USA 3.000 Brazil Canada 1.200 Mexico Argentina 2.031 China 4.000 Australia 1.025 S. Africa 1.100 Korea 2.400 Egypt 400 300 India 1.800 Morocco 315 Philippines 1.300 Japan 56 • EFF 1.233 551 Table 2: Number of franchised points of sale/enterprises + average annual growth 2007-2011 Note: the assumption for this table is that the majority of points of sale correspond to single-unit franchisees. This is a reality for much of franchising in Europe. Country # of FRANCHISED POINTS of SALE (enterprises) 2007 2008 2009 2010 8.000 5,6% 11.000 54,0% 38.600 40.100 2,6% 900 1.000 2,8% CZ-CZECH Rep. 3.476 4.366 6 DK-DENMARK 7.500 7.500 7 FI-FINLAND 3.500 4.200 4.400 4.500 4.500 6,8% 8 FR-France 47.291 50.127 53.101 58.351 62.041 8,5% 9 DE-GERMANY 55.000 57.000 61.000 65.500 66.900 5,0% 10 EL-GREECE 11.650 12.796 12.048 12.084 11.113 -1,2% 11 HU-HUNGARY 17.000 18.000 19.000 20.000 20.000 4,2% 12 IT-ITALY 52.725 53.434 53.313 54.013 54.096 0,7% 13 NL-NETHERLANDS 28.219 28.466 29.021 29.509 29.781 1,4% 14 PL-POLAND 22.450 26.781 32.589 37.218 42.522 4,4% 15 PT-Portugal 11.271 12.206 13.000 12.016 11.760 2,4% 16 RS-SERBIA 17 SI-SLOVENIA 1.213 1.525 1.527 1.532 1.540 0,9% 18 ES-SPAIN 59.182 58.305 57.139 56.444 58.279 -1,5% 19 SE-SWEDEN 10.000 15.000 18.000 24.000 26.000 28,0% 20 CH-SWITZ. 21 TR-TURKEY 433.643 460.498 7,8% est. 500.000 1 AT-AUSTRIA 2 BE-BELGIUM 3.500 3 UK-BRITAIN 36.200 4 HR-CROATIA 900 5 8.000 2011 est. Average annual growth 7.200 36.600 36.500 From this table, one can estimate the number of POS/franchised enterprises to be at least 500.000. The estimated total average annual growth rate of 7,8% is high considering the figures span the 2008-2011 crisis years. EFF • 57 Table 3: Franchise Employment + average annual growth 2007-2011 EMPLOYMENT (self and employees) Country 2007 2008 2009 Average annual growth 2010 2011 61.000 61.000 -2,3% 80.000 25,0% 521.000 594.000 5,7% 16.500 16.000 0,0% 1 AT-AUSTRIA 2 BE-BELGIUM 40.000 3 UK-BRITAIN 480.000 4 HR-CROATIA 15.974 5 CZ-CZECH Rep. 30.000 30.000 6 DK-DENMARK 32.800 32.800 7 FI-FINLAND 35.700 43.000 45.000 46.000 46.000 6,8% 8 FR-France 315.715 330.991 327.773 330.991 1,9% 9 DE-GERMANY 441.000 450.000 459.000 463.000 496.000 7,5% 10 EL-GREECE 11 HU-HUNGARY 92.000 100.000 100.000 100.000 100.000 2,2% 12 IT-ITALY 182.908 182.215 180.525 186.408 188.222 0,8% 13 NL-NETHERLANDS 245.576 255.201 258.808 257.361 270.300 2,5% 14 PL-POLAND 157.000 187.500 212.000 259.000 301.000 4,5% 15 PT-Portugal 66.860 68.960 69.536 73.143 70.151 3,0% 16 RS-SERBIA 17 SI-SLOVENIA 18 ES-SPAIN 234.415 235.929 235.075 231.603 204.713 2,7% 19 SE-SWEDEN 67.000 75.000 102.000 102.000 110.000 14,0% 20 CH-SWITZ. 21 TR-TURKEY 2.374.148 2.459.796 2.454.717 2.379.815 2.931.177 5,3% 64.000 467.000 465.000 est. minimum 3.000.000 It is difficult to develop conclusions about the exact contribution of franchising to employment from this table, other than to say that a minimum estimate, which includes self employment + employees of franchised enterprise, is of the order of at least 3 million in these 21 countries. 58 • EFF Table 4: Turnover + average annual growth 2007-2011 TURNOVER of franchised POS Country 2007 1 AT-AUSTRIA 2 BE-BELGIUM 8,0 3 UK-BRITAIN 12,4 4 HR-CROATIA 1,8 5 CZ-CZECH Rep. 6 DK-DENMARK 7 FI-FINLAND 8 2008 2009 2010 7,4 Average annual growth 2011 7,9 3,4% 15,3 22,8% 11,4 11,8 12,4 13,4 2,0% 43,0 50,0 50,0 51,0 54,5 6,3% FR-France 42,0 45,0 47,7 47,9 49,2 5,2% 9 DE-GERMANY 41,0 47,0 44,0 55,0 64,4 0,1 10 EL-GREECE 11 HU-HUNGARY 12 IT-ITALY 18,2 21,4 21,8 22,2 22,3 9,7% 13 NL-NETHERLANDS 29,7 30,3 29,7 30,2 31,3 1,8% 14 PL-POLAND 18,2 20,4 22,7 24,5 25,7 9,1% 15 PT-Portugal 4,8 5,0 5,0 7,8 5,3 7,0% 16 RS-SERBIA 17 SI-SLOVENIA 18 ES-SPAIN 29,0 29,7 26,8 26,3 27,8 6,1% 19 SE-SWEDEN 10,0 13,0 15,0 19,0 21,0 20,7% 20 CH-SWITZ. 21 TR-TURKEY Table 5: Proportion of domestic franchise brands, in % FR IT NL DK ES TR DE SE UK FI PL EL HU PT BE CZ SI AT HR RS CH 85 85 85 74 74 48 46 82 81 81 80 80 80 70 70 62 60 55 30 - - Comment: high proportions of domestic brands are found in countries in which franchising has been long-established as well as in countries whose economies have rapidly modernized and grown in the last 25 years. In the Central & East European countries, the ratio of domestic/foreign is constantly increasing. A country like Austria, however, where franchising is long established, has by virtue of geographic and cultural proximity to Germany, the particularity of having a lesser % of national brands and a high % of German brands. EFF • 59 TABLE 6: Economic sectors in which franchising exists in thase 21 countries, classified according to EUROSTAT's NACE (Rev. 2) Economic Sector classification system NACE REV.2 Codes Section Div. Group G 45 45.2 45.3 47 H 49 52 53 47.1-9 I 55 56 J K 64 68 M 73 74 N 77 78 79 81 82 85 85.4-6 Q 86 87 88 R 90 93 S 94 95 96 X 60 • EFF Sale of motor vehicle parts & accessories RETAIL TRADE (except for motor vehicles & motorcycles) Transportation and storage Land transport & transport via pipelines (incl. Freight by road & removal serv.) Warehousing & support activites for transportation Postal & courrier activities (public & private activities) Accomodation & Food Service Activities Accomodation FOOD & BEVERAGE SERVICE ACTIVITIES Professional, scientific & technical activities Legal & accounting (bookkeeping, auditing, tax consultancy) Activities of head offices, management consultancy activities, public relations, business manangement Advertising & market research, public opinion polling Other professional, scientific & technical activities Administrative & support service activities Rental & Leasing activities Employpment activities Travel agency, tour operator reservation service & related activities Services to buildings & landscape activities Office administrative, office support & other business support activities 69 70 P Wholesale & retail Trade; repair of motor vehicles and motorcycles Divisions 45-47 - also referred to as "Distributive trades" Maintenance & repair of motor vehicles Information & Communication Publishing activities Information services activities (data processing, web portals, news agencies Financial & Insurance activities Financial service activities except insurance & pension funding Real Estate activities 58 63 L Details of the Group 94.1 & 94.9 Education Human Health & Social Work activities Human Health activities Residential care activities Social work activities without accomodation Arts, entertainment & recreation Creative, arts & entertainment activities Sports activities, amusement & recreational activities Other service activities Activities of membership organisations Repair of computers & personal & household goods Other personal service activities Anything that does not fit under the above categories Note: f or a view of the full NACE (Rev. 2) Economic Sector classification system, go to http://epp.eurostat.ec.europa.eu/portal/page/portal/nace_rev2/introduction Comments related to Franchising All retail in specialised or non-specialised stores, via stalls, markets, mail order,internet Note: The EFF considers the sales of motor vehicles in Europe as coming under a concession contract and not a franchise contract. Hence, they do not fall under the statistics for franchising as, for example, in the US. Countries where franchises are significant in this sector France Greece Poland Spain All 21 countries Netherl. Spain Sweden Netherl. Hungary Netherl. Italy Fast & slow food; mobile; catering; beverages; other food service activites Belgium Croatia France Germany Netherl. Poland Turkey All 21 countries Incl. book & software publishing Netherlands Netherlands Italy Incl. credit granting Incl. real estate agencies, RE management Netherl. Italy Belgium Czech R. Finland Greece Italy Netherl. Portugal Spain Turkey Greece Netherl. Croatia Greece Netherl. Sweden Turkey Incl. photography, design, translation/interpretation Netherl. Turkey Greece Netherl. Spain Turkey Incl. motor vehicles, videos Incl. placement ag., temporary employm. ag., HR, Turkey Nertherl. Belgium Czech R. France Italy Slovenia Spain Turkey All cleaning activities Britain Denmark Finland Poland Sweden Turkey Photocopying, organisation of conventions/trade shows, Austria Belium Britain Poland Turkey other business support act. Especially language, computing & educational support Austria Croatia Denmark Greece Netherl. Spain Turkey activities Incl. medical, dental & other human health act? Incl. nursing, special needs, elderly, disabled,etc. Incl. elderly, disabled, child-care, etc. Croatia Greece Hungary Netherl. Sweden Turkey Netherl. Turkey Finland Incl. sports, fitness, amusement & recreation act. Turkey Denmark Finland Netherl. Slovenia Spain Turkey Incl. Textiles/furs:washing & drycleaning, hairdressing, beauty, funeral, physical well-being Greece Italy Netherl. Turkey France Netherl. Turkey Britain Czeck R. Denmark France Germany Greece Hungary Italy Netherl. Poland Slovenia Turkey # of franchise brands in these sectors (est.) # enterprises in these sectors (est.) # employment in these sectors (est.) 12.600 500.500 3.300.000 EFF • 61 Tables 7-11 aim at showing the share of franchising in relation to statistics provided by Eurostat. source: http://epp.eurostat.ec.europa.eu /statistics_explained/ The objective is to show, in relation to the NACE (Rev. 2) Economic Sector classification system:  in which sectors franchised businesses are found  the share of franchising in terms of number of enterprises The results are partial due to the lack of statistics from the franchise sources, as well as to the difficulties that lie in using some of the Eurostat data. For instance, Eurostat regroups a portion of the NACE economic sectors into a subgroup called "non financial business economy NFBE". This subgroup includes sectors in which franchising exists (i.e. Distributive Trades, Admin. & Support services, Transportation & storage, Accommodation & Food services, Real Estate), but excludes others. At the same time, Franchising is also found in Education (i.e. support activities), Human Health activities (i.e. non medical help for the elderly, young, etc.), and many Services, sectors in which franchised concepts are developing significantly. Correlating the figures between franchise data and Eurostat data is not possible in all instances. However, this Report does set out to make comparisons where meaning can be drawn. Table 7: Three major NACE* economic sectors in which franchising exists in all 21 countries NACE REV.2 Codes Sections Division G 47 Section/ Division/ Group EU-27 # enterprises RETAIL 3,554,000 TRADE (except %* 17.1% employment EFF %* EFF countries in study 18,542,000 13.8% All 21 countries motor veh.& ycles) I 55/56 L 68 Accomod. & 1,753,000 Food/Bev. Services 8,4% 9,949,000 7,4% All 21 countries Real Estate activities 5,3% 2,600,000 1,9% 1,097,700 * These 3 sectors fall into the "non-financial business economy". 62 • EFF Table 8: RETAIL - % of franchised enterprises in Section G 47 / total # of G 47 enterprises/ country Section G 47 (Retail:"Distributive Trades") Eurostat Franchised % # enterprises i ES-Spain FI-Finl. NL-Neth. PL-Pol. SE-Swed. UK ii 498.000 22.800 77.900 319.000 58.500 187.900 ii/i 33.233 82 16.068 30.651 4.200 6.400 6,7% 0,4% 20,6% 9,6% 7,2% 3,4% Comment Section G 47: A high share of franchising is found in Retail & repair of motor vehicles/cycles. In Retail, e-commerce is increasing & forcing a shift in developmental strategy. The Distributive Trades are essentially local in nature with the consequence that in the EU, this sector has the highest share of number of enterprises and related employment (in the "non-financial business economy", NFBE). For 2009, this share was respectively 29,1% (number of enterprises) & 24,9% (employment). Of this, 58,8% of the enterprises were in Retailing; 12,7% for the motor trades. In Retail, there is a high incidence of part-time employment. Table 9: ACCOMODATION & FOOD SERVICES - % of franchised enterprises in Section I 55/56 / total # of I 55/56 enterprises / country Section I 55/56 (Accomod. & Food services) Eurostat Franchised % # enterprises i ES-Spain NL-Neth. PL-Pol. SE-Swed. UK 283.900 38.500 57.700 27.500 129.100 ii ii/i 10.590 2.160 1.699 4.200 8.100 3,7% 5,6% 2,9% 15,3% 6,3% Comment Section I 55/56: A significant share of this sector is developed as franchising in the world. EFF • 63 Table 10: TRANSPORTS & STORAGE - % of franchised enterprises in Section H 49, 52, 53 / total # of H 49, 52, 53 enterprises / country Section H 49, 52, 53 (Transports & Storage) Eurostat Franchised % # enterprises i ES-Spain NL-Neth. SE-Swed. ii 220.800 26.100 28.900 ii/i 2.481 971 1.250 1,1% 3,7% 4,3% Table 11: REAL ESTATE - % of franchised enterprises in Section L 68 / total # of L 68 enterprises / country Section L 68 (Real Estate) Eurostat Franchised % # enterprises i FI-Finl. EL-Greece NL-Neth. ii 17.000 na 19.700 ii/i 8 23 971 0,1% 4,9% Comment L 68: This Section does not include facilities management (see M). In 2009, in the EU-27's non-financial business economy, around 1/20 enterprises operated in this section, accounting for over 1 million enterprises. It is a capital-intensive sector with high levels of tangible investment. The largest subsector in L is 68, renting & operating of real estate, accounting for 60,1% of the total number of enterprises. 64 • EFF The European Franchise Federation (EFF), founded in 1972, is a not-for-profit professional organization that represents the franchise industry in Europe. It has its seat in Brussels. It currently has as members 20 franchise associations from 169 EU Member States and 410 non-EU States. Its aims are to promote, protect and contribute to the development of franchising in Europe and to speak with one voice for franchising to all levels of authority. www.eff-franchise.com Contact: Carol Chopra, Executive Director, info@eff-franchise.com List of EFF Members (update: October 2012) Austria, Austrian Franchise Association (ÖFV) oefv@franchise.at www.franchise.at info@fbf-bff.be Belgium, Belgian Franchise Federation (FBF/BFF) www.fbf-bff.be bsmart@thebfa.org Britain, British Franchise Association (BFA) www.thebfa.org lkukec@inet.hr Croatia, Croatian Franchise Association (FIP) www.fip.com.hr caf@czech-franchise.cz Czech Republic, Czech Franchise Association (CAF) www.czech-franchise.cz toke@franchise-consult.dk Denmark, Danish Franchise Association (DFA) www.danskekaeder.dk office@franchising.fi Finland, Finnish Franchise Association (FFA) www.franchising.fi c.zimmer@franchise-fff.com France, French Franchise Federation (FFF) www.franchise-fff.com info@franchiseverband.com Germany, German Franchise Association (DFV) www.franchiseverband.com soyanlaw@ath.forthnet.gr Greece, Greek Franchise Association (GFA) www.franchising.gr ceo@franchise.hu Hungary, Hungarian Franchise Association (MFSZ) www.franchise.hu assofranchising@assofranchising.it Italy, Italian Franchise Association (AIF) www.assofranchising.it Netherlands, Netherlands Franchise Association (NFV) franchise@nfv.nl www.nfv.nl pfo@franchise.org.pl Poland, Polish Franchise Association (POF) www.franchise.org.pl geral@apf.org.pt Portugal, Portuguese Franchise Association (APF) www.apfranchise.org dusan.sikimic@sfa.rs Serbia, Serbian Franchise Association (SURF) www.sfa.rs / www.franchiseserbia.rs igor.pavlin@franchise-slovenia.net Slovenia, Slovenian Franchise Association (SFA) www.franchise-slovenia.net info@svenskfranchise.se Sweden, Swedish Franchise Association (SF) www.franchiseforeningen.se barbara.kehl@streichenberg.ch Switzerland, Swiss Franchise Association (SFV) www.franchiseverband.ch iremarman@aydin.edu.tr Turkey, Turkish Franchise Association (UFRAD) www.ufrad.org.tr 9 Austria, Belgium, Czech Rep., Denmark, Finland, France, Germany, Greece, Hungary, Italy, Netherlands, Poland, Portugal, Slovenia, Switzerland, UK 10 Croatia, Serbia, Switzerland, Turkey Graphic Design: Cécile Daniel EUROPEAN FRANCHISE FEDERATION Av. Louise, 179/14 • B – 1050 Brussels • Belgium Tel. 32 (0) 2 520 16 07 • Fax 32 (0) 2 520 17 35 info@eff-franchise.com • www.eff-franchise.com