HvA Kennisbank - Hogeschool van Amsterdam
Transcription
HvA Kennisbank - Hogeschool van Amsterdam
1 TITLE PAGE Name of author: Julia Assenmacher Full title: Franchise systems and its suitability for the German fashion retail Name of degree course: International Fashion Management Amsterdam Fashion Institute Hogeschool van Amsterdam Type of report: Coaches: Final Thesis 1st Henny Jordaan 2nd Joop Smit Place: Date: Cologne, Germany 21 May 2010 Declaration of Authorship: I hereby declare that I have written this thesis without any help from others and without the use of documents and aids other than those stated in this report. Further I declare that I have mentioned all used sources and that I have cited them correctly according to established academic citation rules. ________ Place/Date _______________ Signature 2 PREFACE Being at the end of my studies at AMFI, I am already planning the direction of my future career. Having thought about niches within the German fashion industry, in which demand for professionals is still high and future perspectives are positive, I encountered the fashion franchise sector. AMFI courses about successful distribution channels within the fashion industry and multiple articles about franchising from expertise magazines such as ―Textilwirtschaft‖ have been my primary input for getting curious about this topic. My personal goal for this thesis is to educate myself to an expertise in the franchise sector and therefore become a qualified young professional in this niche, improving my career possibilities. The current economical situation in the German fashion retail is making it increasingly difficult for organizations to establish themselves successfully in the German market. Many times, positive business concepts fail due to strong competitors, pricing pressure and lack of capital for implementing innovations. Franchising can be a solution for organizations, as it makes expansion with low capital possible, to benefit from the high motivation and the proximity to the end consumer of the franchisee at the same time. SUB QUESTIONS But is the franchise system also suitable for the special conditions of the German fashion retail market? Are other distribution forms easier to realize in the German retail, or is franchising rather recommendable for expansion into foreign markets? Due to limitations, not all aspects related to franchising can be treated, so a concentration on the most relevant aspects of franchising for the fashion industry has been applied. PROBLEM FORMULATION This thesis ―Franchise systems and its suitability for the German fashion retail‖ analyzes the current stage of franchise systems within the German fashion retail, taking country-specific economical circumstances, which influence the German fashion retail and expertise future expectations for franchising into consideration, with the outcome of a final evaluation of the suitability of franchising as a strategic business tool for the German fashion retail. 3 TABLE OF CONTENTS Title Page .................................................................................................................................................... 2 Preface ......................................................................................................................................................... 3 Sub Questions ............................................................................................................................................ 3 Problem formulation................................................................................................................................ 3 Table of Contents...................................................................................................................................... 4 Table of figures ......................................................................................................................................... 6 Table of figures ......................................................................................................................................... 6 Abbreviations ............................................................................................................................................. 7 Summary ..................................................................................................................................................... 8 1. Introduction ................................................................................................................................ 10 Method of research and structure ............................................................................................................. 11 2. Franchising in the context of the German fashion retail ................................................................. 12 2.1. Franchising as a mono-label-concept .............................................................................................. 12 2.2. German clothing retail market ........................................................................................................ 12 2.3. German clothing retail market in European comparison ................................................................ 13 2.4. Franchise development in the German fashion industry................................................................. 14 2.5. Impact of Financial Crisis on German Franchise sector ................................................................... 17 2.6. Chapter Summary............................................................................................................................ 18 3. The term franchise .................................................................................................................... 19 3.1. Strategic alliances- Loose versus contractual relationships ........................................ 19 3.2. Definition Franchising .............................................................................................................. 19 3.3. Comparative distribution forms within the fashion industry ....................................... 19 3.3.1. Shop-in-shop............................................................................................................................... 20 3.3.2. Corners ......................................................................................................................................... 20 3.3.3. Concessions ................................................................................................................................. 20 3.3.4. Store-in-Store systems ............................................................................................................ 20 3.3.5. Chain Store .................................................................................................................................. 21 3.3.6. Vertragshändlersystem “Dealer’s System”........................................................................ 21 3.3.7. License system ........................................................................................................................... 21 3.3.8. Buying Group .............................................................................................................................. 21 3.4. Franchise classifications.......................................................................................................... 21 3.5. The History of Franchising ...................................................................................................... 23 3.6. Chapter summary ...................................................................................................................... 25 4.0 The structure of franchising in the German fashion industry ...................................... 26 4.1 Mono-brand concepts .............................................................................................................. 26 4.2 The franchise contract ............................................................................................................. 26 4.3 Obligations of franchisors ....................................................................................................... 27 4.4 Types of franchisor ................................................................................................................... 28 4.5 Obligations of franchisees ...................................................................................................... 28 4.6 Success Potential of franchisees .......................................................................................... 28 4.7 Visual Merchandising ............................................................................................................... 29 4.8 Initial Fees versus runnung expenses ................................................................................ 29 4.9 Costs for store construction ................................................................................................... 30 4.10 Assortment composition in Franchise Systems ................................................................ 31 4.11 Sales planning in franchise systems .................................................................................... 32 4.12 Electronic Data Interchange .................................................................................................. 32 4.13 Managerial aspects of franchising ....................................................................................... 33 4.13.1 Corporate Identity .................................................................................................................... 33 4 4.13.2 The franchise relationship ............................................................................................................... 34 4.13.3 The franchisors and franchisees perception of franchising.......................................... 35 4.13.4 The perception of self-employment in Germany ............................................................. 36 4.14 Chapter summary ...................................................................................................................... 37 5.1. SWOT- Franchising in German Fashion Retail .................................................................. 38 5.2. Chapter summary ...................................................................................................................... 39 Conclusion ................................................................................................................................................ 40 The Future of Franchising in Germany ............................................................................................. 41 Reflection on the research................................................................................................................... 43 6. Appendices .................................................................................................................................. 44 6.1. Country facts: Germany........................................................................................................... 44 6.2. German retail in comparison to European countries ...................................................... 45 6.3. Franchise definition set up by the European Franchise Federation ........................... 46 6.4. Example franchise contract .............................................................................................................. 47 6.5. Franchise stores compared to directly operated retails (GY 2009) ........................... 57 6.6. Qualitative Interviews ............................................................................................................. 58 6.6.1. Transcribed telephone interview with Wellensteyn ....................................................... 58 6.6.2. Transcribed face-to-face interview with Lerros Moden GmbH- part I ............................................. 61 6.6.2.1. Transcribed telephone interview with Lerros -part II........................................... 64 6.6.3. Transcribed telephone interview with Ulla Popken GmbH ........................................... 67 6.6.4. Transcribed telephone interview with Oska Moden GmbH .......................................... 69 6.6.5. Transcribed Telephone Interview with Elégance Rolf Offergelt GmbH .................... 72 6.7. Data evaluation of qualitative survey ................................................................................. 74 7. Literature ..................................................................................................................................... 79 8. Reference List ............................................................................................................................. 83 5 TABLE OF FIGURES Figure 1 Top 10 retail turnover in the European clothing sector Figure 2 Industry classification of German franchise systems in % (2006) Figure 3 Sub- Segments of the German retail in % (2006) Figure 4 Development tendencies of distribution channels of clothing in Europe Figure 5 Development of franchise systems in Germany Figure 6 Turnover of franchise-systems in Germany in bn. € Figure 7 Mono-brand concepts Figure 8 Estimated costs for franchise store interior per m² Figure 9 Real retail turnovers of Spain, France, Italy, Germany Figure 10 Saving ratio of Italy, Spain, France, Germany in % of available income, 2000-2007 Figure 11 Franchise- and own retail systems in the German Fashion retail 2009 13 14 14 16 23 24 26 31 45 46 57 6 ABBREVIATIONS Bn. Billion BTE Bundesverband des Deutschen Textileinzelhandels eV DFV Deutscher Franchise Verband EDI Electronic data interchange EFF European Franchise Federation ERP Enterprise resource planning KPMG A global network of professional firms providing Audit, Tax and Advisory services NOS Never out of stock POS Point of Sales SIS Shop-in-shop SWOT Strengths, Weaknesses, Opportunities and Threats analysis of a business or an environment TW Textilwirtschaft VAT Value added taxes 7 SUMMARY This report was commissioned to examine the suitability of franchise systems for the German fashion retail and to recommend ways of increasing the potential of success of franchising in Germany. The research draws attention to franchising, as a contractual relationship of franchisor and franchisee that allows the franchisee to produce or distribute the franchisor’s brand products or services. The most common form is business format franchising. The advantages of franchising from the franchisor’s point of view are a strong corporate identity, global market presence, high duplication potential, relatively low investment and risk transfer onto franchisees. Disadvantages are lack of direct customer contact, difficulty of franchisee control, and little sanction power. In 2009, 960 franchise systems and 711,000 franchise stores exist in Germany (DFV, 2010)1, of which approximately 16,965 franchise stores can be counted amongst the clothing, shoe & accessorize branch (DFV, 2007).2 Leading franchise system providers in the German fashion retail are Street One, Cecil, and Esprit (TW, 2009)3. In Germany there is no legal definition of the term franchising, commonly accepted is a definition approved by the European Franchise Federation and the Deutscher Franchise Verband. Regarding the structure of franchise systems in Germany the franchise contract is an indispensable tool, stating any obligations of the franchisor and the franchisee, from the franchisee’s right of utilization of the franchisor’s patented property right, to territory protection, prescription of order minimums and order frequencies, assortment composition, initial fees, running expenses, visual merchandising and additional guidelines. Additionally, the German fashion retail is analyzed, pointing out price deflation, a weak economic cycle, and an ongoing concentration process as problem areas. The German market is saturated, critical, demands professional franchise concepts, and is dominated by yet powerful franchise system provider, that are sharing the fashion franchise market among each other. In 2008, Germany’s consumer spending on clothing is 57.94 bn. € (including VAT). Yet, the German fashion retail is one of the greatest and top selling European fashion markets with 18% clothing market share (TW, 2008)4. Further investigations reveal that completely vertical organized clothing companies are leading the German fashion market (KPMG, 2006)5, followed by supermarkets, and discounters (Dispan, 2009)6. Multi channel retailing is increasingly important, a mix of directly operated stores, franchise concepts, shop-in-shops and concessions. Problematic for franchisee acquisition is the German risk averse considering selfemployment, and negative future expectations. The report evaluates these influential aspects and concludes that it is crucial for franchisors to enter the German fashion retail with a proofed and clear franchise profile, as the German fashion retail is saturated, critical, and sophisticated. It is recommended: To use intensified hybrid business format franchising in Germany, so that the franchisor works as a multi-channel retailer, reaching various customers and taking a greater part of the German fashion branch. To adopt increasingly conversion franchising, as it enables cooperation with entrepreneurial retailer that already provide relevant experience in the German retail. 8 To advertise the advantage of franchise systems, namely the compensation of the franchisee’s size disadvantage and safer profitability through a professional system. To improve the adoption of EDI into fashion franchise systems, as profit can be highly increased that way. To focus on mono label stores, as multi brand stores are being increasingly eliminated from the German fashion market To use franchise systems as a tool for fast expansion, as it enables fashion organizations to maintain lean and minimize capital investment and risk 9 1. INTRODUCTION Franchising is literally in fashion. This form of entrepreneurship is increasingly adopted by various sectors, including the fashion retail giving Benetton as an example. Especially in times of global economic uncertainty, the advantages of franchising are getting surfaced. Companies, that provide established business models, expand further via franchising and new starters use this strategic tool for launching their business with a renowned brand and strong partners. Today, Germany can show 960 franchisors, 58.000 franchisees and 452.000 employees in the franchise segment, achieving 48 bn. € in 2009. Leading franchise systems are Tui, Mc Donalds, and Schülerhilfe7. Franchise systems are based on a close partnership between independent and financially separated companies, the franchisor and the franchisee. The franchisee gains the right to exploit a business under the conditions of the franchisor’s business concept. The leading franchise system providers in the German fashion retail are Street One, Cecil and Esprit (compare graphic x, Textilwirtschaft, 2009)8. Franchise systems, as well as shop-in-shops, concessions, and contractual sales areas, proof the raising commercial relevance of vertical partners between trade and industry. But is the franchise system suitable for the German fashion retail in particular? At which stage of development are franchise systems within the German fashion retail to be found? Which impact has the development of the German retail for the success potential of fashion franchise systems? Which other distribution channels are commonly applied by fashion companies and which ones are successful within the German fashion retail? Particular problem areas investigated in this research include the specific conditions of the German fashion retail: The German clothing retail is saturated and suffers from a fierce price competition as well as an ongoing concentration process. An alteration of successful trading forms in the fashion branch is taking place, bringing completely vertically organized clothing and textile companies to the top, but also supermarkets and discounters are representing a powerful competition for franchise systems in fashion. This report examines the characteristics of franchise systems and its suitability for the German fashion retail. Based on literature, expertise sources and interviews with professionals in 5 fashion franchise organizations (Wellensteyn International GmbH & Co. KG, LERROS Retail GmbH, Ulla Popken GmbH, Elégance- Rolf Offergelt GmbH, OSKA Textilvertriebs GmbH) the thesis aims at analyzing the conditions of the German fashion retail and pointing out recommendations for a successful entering of franchise systems into the German fashion retail. The final product is an evaluation of the suitability of franchising as a strategic business tool for the German fashion retail, which can be used by professionals as an academic source for decision making. 10 METHOD OF RESEARCH AND STRUCTURE The initial starting point has been extensive desk research, followed by field research. The empirical part of this thesis is the qualitative research in form of qualitative interviews. Qualitative interviews, compared to quantitative ones, are characterized by open questions. The order and the amount of questions vary depending on the interview situation. In order to get the current state as complete as possible, franchisors got interviewed who provide relevant experience. The interviewees got contacted via email, informed about the topic of the research, and invited for an interview. Depending on the geographical distance the interview took place via phone or face-to-face. All interviewees got informed that the interview was taped. Afterwards the tapes got transliterated and are the source for the final thesis. Since the objective of this thesis is to analyze the suitability of the franchise system for the German fashion retail the second chapter is used to analyze the German fashion market, to demonstrate the German trade development and make a rough global comparison, in order to be able to draw conclusions about the special demands of the German fashion retail for franchising. The third chapter defines franchising in general and in its modifications, points out the historical development of franchising and gives a separation of franchising from other distribution forms. Then the framework of franchise systems is outlined, considering the special demands of the fashion retail on franchising as well as the managerial aspects of franchising. The fifth chapter draws a conclusion in form of a SWOT. The final conclusion evaluates the suitability of franchise systems for the German fashion retail and gives a possible future scenario for franchising in Germany. 11 2. FRANCHISING IN THE CONTEXT OF THE GERMAN FASHION RETAIL 2.1. FRANCHISING AS A MONO -LABEL-CONCEPT Today, fashion organizations that previously used to produce their products themselves, nowadays work with foreign sub-organizations, which have taken over the production part. Therefore, the fashion organization’s primary task of a producer changed to that of a trader, making brand creation and therefore marketing and sales strategies to key responsibilities. Consequently, many fashion companies use their emphasis on branding for forward integration into the trade market by introducing shop-in-shop-, franchise-, and other concepts, as well as more and more own retail stores. That way fashion organizations turn to vertical integrated producer that provide strengthened control of their sales channels. This control enables them to improve their lead times and delivery cycles, developing flexible concepts to react nearly as quickly on fashion trends and consumer demand as verticals do. Moreover, fashion organizations expand ever more via mono-label-stores that are targeting an exactly defined customer group with their brands and sales concepts. The concept of a mono-label-store is mostly highly standardized and provides an experience for their consumer. Any detail of a mono-label-store, such as the assortment composition and the store layout that consists of single system modules, is directed to the target group which is expected for the shop. The advantage of a mono-label-concept is the response to the modern consumer demand of experience shopping (Wortmann, 2009)9. 2.2. GERMAN CLOTHING RETAIL MARKET First of all a definition of retail is given. ―Retail is any form of resale of goods and services to the end-consumer. Trading companies as well as producer can do retail. Essential is merely, that the main task of the retail is not lying in merchandise producing, but in turnover (buying and distributing) of goods.‖ (Gabler, 2008)10 The German retail environment is characterized by a fierce competition on price and an ongoing concentration process. Weak producer brands were and are substituted with private labels, weak distribution partners are eliminated. As a consequence, between 1992 and 2004, the numbers of companies in the German clothing retail fell from 36,955 to 23,985 (-54%). The retail industry appears now to be dominated by large, modern retailers (Baker, McKenzie, 2007)11. However, the size of sales area is growing continuously, meanwhile the productivity per unit area is declining. In 2005, coming to retail formats, independent stores had 28% market share, specialty chains 29% market share, department stores 14% market share, hypermarkets (variety stores and discounters) 15%, and mail order stores 14% (compare Elaboration on Textilwirtschaft BTE). A study of Retail Intelligence (September 2008) publishes that Germany has had a consumer spending on clothing of 57.94 billion € (including VAT) in 2008. Between 2002 and 2007, the marked had a growth of 3, 6%, being confronted with price deflation. Almost all clothing producers focus on branding, internationalization and verticalisation in form of own trade- and retail activities. Therefore, outsourcing, supply chain management and diversification is of strategic importance. Many clothing producer regard own retail activities as more dynamic as distribution through wholesale. With own retails, companies can control their sales floors and experiences from the point of sale can be used for collection development. Producer 12 who are doing retail, use many times various forms parallel: Common is a mix of directly operated stores, franchise concepts, shop-in-shop concepts and concessions. (Dispan, 2009)12. With each retail form they appeal to different consumer needs and are therefore broadening their sales potential. It is to observe that an alteration of successful trading forms in the fashion branch has been- and still is- taking place. Completely vertically organized clothing and textile companies are leading the German fashion market, such as the Swedish Giant H&M. Vertical companies diversify many times into other segments such as jewelry, perfume, and cosmetics, in order to gain additional income, to strengthen the brand, and to become a lifestyle vendor (KPMG, 2006) 13. Supermarkets from the foodsector, such as Aldi and Lidl, have entered the non-food sector and are expanding extremely aggressive with clothing offers. Also discounters, such as Takko and Kik are of great relevance for the fashion retail (Dispan, 2009)14. Generally, it is to mention that the German fashion retail is already saturated for some years, so that an increase in market share can nowadays only be reached by squeezing one’s competitor from the market. Competitors are offering more and more products with similar styles and quality, which are from the customer’s point of view hardly distinguishable, and therefore easily replaceable. Therefore, consumer loyalty is decreasing. In order to maintain successful on the fashion market, producer and retailer therefore try to compete with stronger market differentiation and better response to consumer demands (Riekhof, 2004)15. 2.3. GERMAN CLOTHING RETAIL MARKET IN EUROPEAN COMPARISON Taking a look at the retail turnover in the clothing sector in Europe, the importance of the German fashion retail becomes clear: In 2006, the UK is at the top of clothing annual retail turnover, reaching 59 bn. € and 19% market share. Germany comes in second with 57,1 bn. €, taking 18% of the clothing retail market share. Figure 4 clearly demonstrates the global significance of the German fashion retail, being one of the greatest and top selling European fashion markets. Fashion organizations that aim at entering the German clothing retail, need a convincing concept, a strong market presence, expertise knowledge and suitable locations. Knowing the German market is a great success factor (TW, 2008)16. Top 10 in Europe, retail turnover in fashion FIGURE 1 TOP 10 RETAIL TURNOVER IN THE EUROPEAN CLOTHING SECTOR17 13 2.4. FRANCHISE DEVELOPMENT IN THE GERMAN FASHION INDUSTRY Franchising in the fashion industry is used as a mean for vertical, controlled and secure distribution. Similar distribution forms are shop in shop systems, concessions, flagship stores and factory outlets (Zentes, 2007)18. Generally, the German fashion branch mainly consists of medium-sized enterprises, and is affected by buying resistance and decreasing market volume. In 2006, the clothing retail accounts for 10% of the German retail. As illustrated in graphic 5 below, franchise systems within the German clothing, shoe & accessorize branch are contributing to 14,5% of all German franchise branches (DFV, 2007)19, which leads to approximately 16,965 franchise stores in this sector20. Industry classification of German franchise systems in % (2006) Food 3,6 14,5 consumer electronics and computer 35,9 furniture & interior accessories other segments of retail 24,4 4,1 clothing, shoes & accessories 9,9 FIGURE 2 INDUSTRY CLASSIFICATION OF GERMAN FRANCHISE SYSTEMS IN % (2006) 21 Sub- Segments of the German retail in % (2006) 1% Food Consumer electronics & Computer 33% 43% clothing, shoes and accessories furniture & interior accessories 6% 10% other sectors of retail 7% FIGURE 3 SUB- SEGMENTS OF THE GERMAN RETAIL IN % (2006) 22 14 Franchising can be attributed to vertical distribution forms, which are according to a market research implemented by the TW expanding continuously. The research shows that in 2002 there were 12,500 corners, shop-in-shops, franchises, and concessions in the clothing and textiles branch in Germany, yet in 2007 45,600. Besides, the amount of brands building up vertical partnerships23 in Germany, has risen from 83 brands in 2002, to 187 brands in 2007. 43% of German labels work without vertical partnerships 24% work with vertical partnerships from these 24% o only 1, 1% are franchises o 12, 9% are shop-in-shops and corners o 10, 3% are contract floors (Textilwirtschaft, 2008) 24 The leading franchise system providers in the German fashion retail are o Street One (380 franchise stores) o Cecil (270 franchise stores) o Esprit (268 franchise stores) o S.Oliver (174 franchise stores) o Jack Wolfskin (169 franchise stores) (compare graphic x, Textilwirtschaft, 2009)25. During the past year, vertical fashion organizations, as well as fashion discounters, have expanded rapidly via mono label concepts and have harmed the clothing specialists, who cannot stand the competition of these giants. Therefore, franchising has become an increasingly interesting alternative for clothing specialists, as cooperating with a successful vertical fashion company can make survival and profit for the small retailer possible. Picture source: Esprit shop window. Available from: http://shopping-trend.de/fuersie/files/2008/09/esprit-shopgtd-aquitaine-public-domain.jpg [21 April 2010]. 15 A case study implemented by Exxent Management Team AG in 2007 26 concluded that franchising is relatively fast in offering new products to the European potential consumer. Regarding the fashion life cycle in the graphic underneath, franchises manage to deliver the European market in the best case during the growth phase, during the saturation stage the latest. Direct distribution forms of producers, discounters and network organizations are feeding the EU market faster than franchisors. Compared to specialty chain stores and department stores that are slower in offering new products, franchisors have an advantage. Consequently, it can be said that franchising is an advantageous distribution form for the German fashion retail, as it is able to deliver new trend products in a comparably fast way. FIGURE 4 DEVELOPMENT TENDENCIES OF DISTRIBUTION CHANNELS OF CLOTHING IN EUROPE27 16 2.5. IMPACT OF FINANCIAL CRISIS ON GERMAN FRANCHISE SECTOR The financial crisis has caused the recession in Germany. The consumer product industry is among others affected by a decreasing demand of the domestic economy and international sales markets. According to Dispan, the German textile and fashion industry had a decline of production of -9% (Dispan, 2009)28. The clothing branch is known for being especially sensitive for the economical cycle. The expertise magazine Textilwirtschaft formulates 10 theses (Textilwirtschaft)29: 1. Slow down of consumer willingness to buy 2. External capital becomes expensive 3. Price competitions intensifies 4. Organizations reduce costs where possible 5. Employments get axed 6. Disturbance of supply markets 7. Slow down of internationalization 8. Buy-out of companies slows down 9. Order budgets sink 10. Faster structural change The theses are pointing out that the already existing problems of the clothing and textile branch are now even tightened. Companies that are structurally not well prepared will disappear from the clothing market (Dispan, 2009)30. For successful entrepreneurship in times of the crisis owner’s equity is essential, as credits are hard to get and more expensive. As mentioned above, capital assets of many small and medium sized businesses are deficient in times of crisis. The loan extensions of banks have become more restrictive. To give an example, the German franchisor Esprit had to correct its expansion plans in 2009, decreasing its primary goal of opening 250 new stores to 170. Heinz Krogner, Esprit’s chief executive, explained that the franchisees are not getting financed by the banks. Further, the financing of orders is increasingly problematic for retailers, which leads to a minimized collection31. Jürgen Dispas expresses, that the majority of clothing traders orders in 2009 10% less than during the previous year (Dispan, 2009)32. Also Lerros experienced in 2009 a decrease of the order amount. They immediately reacted: They increased their NOS level and offered rather commercial styles. Simone Herrmann from Lerros explains that Lerros is only doing well when their customers are too. For the German organization it is useless to force their customers to order an amount, which they cannot sell. Therefore, they have a very detailed calculation, from which they draw conclusions for a realistic order menu, which is broken down per m², and takes the crisis into consideration (compare 6.6.2)33. Franchising requires relatively large investments, which is difficult to realize during the difficult economic time: According to a research implemented by the DFV in 2009 15% of the franchisors do not charge any initial fees 45% charge up to 10.000€ 30% demand between 10,000€ and 20,000€ 10% charge between 20,000€ and 60,000€ from its franchisees. 17 Further 5% of the franchisees have an amount to be invested of 0€ 45% franchisees have to invest up to 50,000€ 22% between 50,000€ and 100,000€ and 28% between 100,000€ and 700,000€. In the German fashion franchise branch there is the tendency to not charge initial fees (compare empirical analysis 6.6.), which is why the fashion branch preferably uses the term ―partner-stores‖ instead of franchises.34 Generally, franchisors claim that those systems have an advantage getting credits that are characterized by a good infrastructure and are a member of the ―Deutscher Franchise Verband (DFV), which is a federation of German franchisors. Members of the DFV act in concordance with the franchise definition and the code of ethics set up and approved by this federation. The primary objectives of the DFV are to monitor the development of franchising in Germany and to support its successful expansion while ensuring the safety of the franchise system 35. Further, the German aid program to reflate the market36 has developed additional improved means of support for new company formations. Even though the credit standing has become a critical topic, many businesses are getting bankrupt and many employees released, it is to observe an increasing interest in starting businesses via franchising. The restriction of franchise concepts may be regarded as a disadvantage in the beginning, but leads to a minimized risk for the entrepreneur, and has proved its success potential. 2.6. CHAPTER SUMMARY The second chapter explains the special conditions of franchise system in the German fashion retail. Franchise systems are in Germany confronted with a saturated market, price pressure and market penetration. The importance of the German market as a great demographical target group as well as the relevance on the European level is described. Visible changes of sales strategies in the German fashion retail are pointed out, that lead to rising competition from verticals, supermarkets, and discounter. Besides, the advantage of running own retails and multi-channeltrading is described. An overview of the German franchise segment and its development is given, showing the fast expansion of franchise systems. The leading franchise systems in the German fashion retail are Street One, Cecil and Esprit. The raising significance of mono label store concepts and the resulting future chances for franchising is stated. Additionally, a description of the impact of the financial crisis on franchising in the German fashion retail is pointed out. As an outcome the crisis is leading to insolvencies and raising unemployment, but franchise systems may, if credibility is achievable, be a safe business strategy due to the strength of the system. The second chapter also compares franchise systems in the Russian retail with Germany. The German fashion retail demands clear franchise profiles and professionalism. 18 3. THE TERM FRANCHISE The following chapter deals with the basic principals of franchising, as well as with specific contents that are relevant for the final thesis. First, the containment of franchising is pointed out. A definition of franchising and its historical development follows. Additional information about franchise history is given. It is to mention that it is common within the fashion industry to use the term ―partner-stores‖ instead of ―franchises‖ (TW,2005)37, as in the fashion industry usually no fees are charged for franchising. 3.1. STRATEGIC ALLIANCES- LOOSE VERSUS CONTRACTUAL RELATIONSHIPS In order to get an insight into the characteristics of franchise system, it is essential to explain the difference between loose and contractual relationships in advance. Loose relationships are ―collaborative networks and alliances to exploit market opportunity or to combat a market threat‖ (Fernie, 2004)38. Loose relationships are defined by usually independent organizations, which operate as representatives for several retail members. Contractual relationship means subcontracting of licenses and franchises (Fernie, 2004)39. Franchising is defined as a contractual relationship of franchisor and franchisee that allows the franchisee to produce or distribute the franchisor’s brand products or services. Thus, franchises can be described as a form of ―controlled distribution‖, as it is based on cooperation with intermediaries that underlie strict contractual bindings considering brand distribution (Turban, 2009)40. 3.2. DEFINITION FRANCHISING As there is no legal definition of the term franchising in Germany, the thesis is based on the definition of franchising determined in 2004 by European Franchise Federation (EFF), which is accepted by Deutscher Franchise Verband (DFV) as well: „Franchise is a distribution system by which goods and/or services and/or technologies are marketed. It is based on a narrow and sequential cooperation of juridical and financially self-employed and independent enterprises, the franchisor and his franchisees. The franchisor grants the right to his franchisees and at the same time puts on to them the obligation to carry on a business according to his draught. This right entitles and obliges the franchisee to use the system name and/or the trade mark and/or the service brand and/or other commercial protective rights or copyrights as well as the know-how, the economic and technical methods and the commercial system of the franchise giver. This happens against a direct or indirect remuneration for the duration of a written franchise contract, based on the condition of running technical and economic support by the franchisor‖ (DFV, 2004)41. The multiplication of franchise systems, which is based on fixed standards and guidelines, is an essential success factor, as through enterprise size the efficiency of franchise systems can get increased. A great presence on the market can lead to a positive brand reputation, increasing the chances for success of the franchisee as well as of the franchisor (Meier, SJ, 2005)42. 3.3. COMPARATIVE DISTRIBUTION FORMS WITHIN THE FASHION INDUSTRY Most distribution forms do not underlie a legal definition. Especially in the fashion industry it is difficult to define the boundaries of each distribution form clearly. Each 19 company adopts a distribution system differently, fitting it to their overall corporate strategy. To give an example the company Ulla Popken explained in an interview that they treat their franchisees rather as shop-in-shop partners, which illustrates the vague treatment (the complete interview can be looked up in the appendix). The definitions of comparative distribution forms underneath must therefore be treated as an orientation, but can vary from organization to organization. 3.3.1. SHOP-IN-SHOP A shop-in-shop system is a shop, which is an optically separated department of the remaining business. In this department a special brand or a special product line is presented. Many fashion companies install brand-shops into their stores in order to reach a higher turnover ratio per sales area. Usually, the size of a shop-in-shop is around 40-100m². Shops that are smaller than 40m² are called corners (Terrahe, 1997)43. 3.3.2. CORNERS In contrast to the shop-in-shop system there is no interior design specified for corners, because mostly only a small selection of the assortment is presented. The needed sales floor space is smaller than that of a shop-in-shop solution. Merchandise planning and goods supply are implemented by the retailer (KPMG, 2000)44. 3.3.3. CONCESSIONS The retailer leaves part of his sales area to the producer, who in return pays a turnover-related rent. The producer is responsible for the interior design of his sales area, for the supply of goods and for the visual merchandising. Further, the producer sells his assortment on his own account. The staff may or may not be provided by the producer of the retailer (KPMG, 2000)45. 46 3.3.4. STORE-IN-STORE SYSTEMS Store-in-store systems are mostly separated from the main store and provide a separated entry. The store design is developed together with the producer, who also provides merchandisers for a conceptual presentation of the assortment (KPMG, 2000)47. 20 3.3.5. CHAIN STORE From the customer’s point of view the chain store system is not distinguishable from the franchise-system, but the inner structure is very different. The manager of the chain store is an employee, who earns a fixed salary plus eventual commission earnings. In contrast, the franchisee is fully independent and responsible for his salary himself (Dieses, 2004)48. 3.3.6. VERTRAGSHÄNDLERSYSTEM “DEALER’S SYSTEM” The dealer’s system is comparable with the franchise system. The dealer is authorized to distribute the products he gets from a producer, whole trader or another organization. He uses the brand and the brand names to some extend, but it does not lead to a full identification, as in franchising. Moreover, the single licensed dealer maintains distinguishable for third parties. He does not underlie a complete organizational-, marketing-, and control-system; however he is subjected to some specifications as well (Dieses, 2004)49. In fashion an example for this distribution system is a multi-label boutique shop. 3.3.7. LICENSE SYSTEM In a license system the grantor of the license gives industrial property rights, such as patents or labels, to the license holder, who mostly pays a certain license fee. Both parties are self-employed trader. The major difference to the franchise system is the fact, that within the license system the license-giver does not provide any organizational-, marketing-, or business management concepts (Dieses, 2004)50. 3.3.8. BUYING GROUP A buying Group is based on the amalgamation of economically and judicially independent organizations with the common objective to cooperate in buying, disposal, administration, investments and financing activities. The effect of such a group is that small and medium sized businesses can support each other and stand the competition of big companies. Contrary to franchise systems, buying groups do not provide its organizations a complete system package, nor do the single businesses have a common appearance on the market (Steiff, 2004)51. 3.4. FRANCHISE CLASSIFICATIONS Franchising lacks a legal definition and is developing continuously. Moreover, different franchise-varieties exist that have specified criteria, the major franchise modifications are explained underneath. The thesis focuses on the modern franchise form ―business format franchising‖. Conversion franchise Conversion franchising is taking place if retailers, that are already running a retail business in a certain sector, are switching from their status of an independent retailer to a franchisee. Conversion franchising is becoming increasingly important, as many retail businesses are not profitable anymore, being unable to stand the competition of retail chains (Meier, SJ, 2005)52. Distributional franchise In this system the franchisee distributes certain goods that are labeled by the franchisor. 21 Production franchise The franchisee produces the goods to be sold in the name of the franchisee (Dieses, 2004).53 Business format franchise The franchise-concept counts for the whole business of the franchisee. Departmental franchise The franchise system is only relevant for a certain space of the store. For instance, the franchisee may be only present in a department in the retail partner’s store. Mini franchise Mini franchise is a very small franchise system located in a store. It is often dealt with as a shop-in-shop system (Dieses, 2004)54. Single-unit franchise If a franchisor works with single-unit franchise systems, the franchisee may only open one franchise store. Multi-unit franchise The franchisee may open multiple franchise shops of the same franchise system (Dieses, 2004)55. Pure franchise A fashion organization can be defined as a pure franchisor, if he only distributes via franchising and does not implement any other distribution forms. Hybrid franchise Hybrid franchise takes place if the franchisor works with franchise systems as well as with other distribution forms such as retail, mail order, shop-in-shop, or concessions (Steiff, 2004)56. Mono franchising The franchisee is obliged to only work with one franchisor. Multi franchising Multi franchising is not concordant to the general franchise principle, as one franchisee may cooperate with multiple franchisors and therefore does not fully identify with the franchise system. In Germany, multi franchising is rare (Steiff, 2004)57. 22 Master franchising The master franchise agreement is ―…granting limited rights to recruit new franchisees and imposing upon the master franchisee responsibility for providing certain field support services.‖ (Barkoff et al, 2008)58. Master franchising is often used for franchise expansion into developing countries, such as Russia. Single franchising The franchisor may only give one licensee the rights of the franchise system, so that the franchisor is responsible for all of his franchisees (Steiff, 2004) 59. 3.5. THE HISTORY OF FRANCHISING Franchising, a vertically structured distribution system, is rooted in the USA. In 1865, the first franchisor called ―singer sewing machine company‖ starts to build up a distribution net for sewing machines, in which they cooperate with self-employed, but integrated retailer. In 1900, product distribution franchisors in the US further expand, especially in the soft drink-, automobile-, and mineral-oil-industry. The modern business format franchising, commonly used today, arises during the 1950ies. It includes, that the franchisor offers the franchisee next to the rights of distributing the franchisor’s products or services a whole system concept for running a business (Dieses, Patrick, 2004)60. In Germany, the first franchise-systems develop at the end of the 1960ies. In 1965 the foreign fast food franchisor Wimpy opened the first franchise store in Germany, followed by the foreign franchisors Nordsee in 1968 and Ihr Platz in 1969, who changed their existing German chain stores to franchise stores (Steiff, 2004) 61. The number of franchise-systems in Germany for the year 1970 is estimated to be 40; in 1986 there exist already 150 franchise-systems (Dieses, 2004, p.6)62. The number of franchise-systems in Germany is continuously increasing: in 1995 there are already 530 franchise-systems, in 2007 approximately 850 and in 2009 yet 960 (DFV, 2010)63. FIGURE 5 DEVELOPMENTS OF FRANCHISE SYSTEMS IN GERMANY 64 23 About 711.000 franchise shops are estimated to exist in 2009 in Germany (Handelsblatt, 2008)65. The further future expansion is estimated to be higher-thanaverage compared to the national economy (DFV, 2010)66. The German franchise turnover in 1996 is 12, 8 bn. €67, in 2001 31, 7 bn. €68, and in 2009 it is estimated already 48 bn. €. FIGURE 6 TURNOVERS OF FRANCHISE-SYSTEMS IN GERMANY IN BN. € 69 In Germany, the leading franchisors in 2009 are Tui, followed by McDonalds and Schülerhilfe. 50% of all German franchise systems can be assigned to the service industry and 27% to the German retail, to which the German clothing retail belongs (Deutscher Franchise Verband e.V., 2009)70. Comparing the international expansion of franchise organizations in the tertiary sector, franchising is especially in the United States of America and in France of great importance for growth and employment, but also in Germany the number of franchisors and franchisees, as well as the portion of profit from franchise-systems of the gross domestic product is increasing continuously (Zentes, 2005)71. Anyhow, previous expectations for the growth of the franchise sector in Germany have not been fulfilled. Zentes explains that even though a general trend towards growth has been to observe, it has been below expectations. Other countries have had a much higher degree of franchising. Possible reasons are, that before 2005 abuse of franchising has been many times taking place and become public, which has lead to negative reports in the media (Zentes, 2005)72 and hindered potential franchisee from starting a franchise cooperation. Further, the German market is saturated and the economic cycle is suffering for some years, which might also be influential factors for the limited growth of franchise systems in Germany. 24 3.6. CHAPTER SUMMARY This chapter defines franchising as a contractual relationship of franchisor and franchisee, allowing the franchisee to produce or distribute the franchisor’s brand products or services. The definition considered for this research is approved by the DFV and the EFF, as in Germany no legal definition of franchising exists. Franchise systems in the fashion branch are to be distinguished from other distribution forms. Therefore, the chapter explains the definitions of shop-in-shops, corners, concessions, store in stores, chain stores, dealer’s systems, license systems and buying groups. Franchising exists in various specifications. Therefore, the meaning of conversion-, distributional, production-, business format-, departmental-, mini-, single-unit-, multi-unit-, pure-, hybrid-, mono-, multi-, master-, and single franchising is explained. The second chapter ends with an outline of the history of franchising, focusing on the franchise development in Germany in particular, that began in 1965. Today Germany has 711,000 franchise shops, and makes 48bn. € turnover with this sector. 25 THE STRUCTURE OF FRANCHISING IN THE GERMAN FASHION INDUSTRY In the 4th chapter the most relevant aspects of franchising within the fashion segment are outlined, focusing on the legal aspects of franchising, the types and obligations of each partner, costs and fees, and the managerial aspects of franchising. 4.0 4.1 MONO-BRAND CONCEPTS Franchise stores can be assigned to the category mono-brand stores, which appear on the retail market as private brands. Mono-brand stores list products in their assortment that are all marked with the private brand label. Mono-brand concepts are defined by a uniform brand presence and a complete brand experience. Therefore, consumers expect mono-brand franchise stores to provide complete assortment-concepts. For mono-brand concepts the ―outfit‖-thought, offering the consumer a complete fitting plays a significant role. Outsiders are not able to distinguish franchise stores from the company’s own retail stores, as mono-brand stores are appearing on the market uniformly. The figure below shows possible modifications of mono-brand-stores (Turban, 2009)73. Figure 7 Mono-brand concepts74 4.2 THE FRANCHISE CONTRACT Whereas in Belgium, France, Italy and Greece there is a juridical regulation of franchising, there is none in Germany. Therefore, all legitimate issues need to be stated in a franchise contract. Drawing up a franchise contract in Germany, multiple judgments and numerous single laws need to be considered. On the European level there exists a so called ―EU-Gruppenfreistellungsverordnung für vertikale Vertriebsindungen (Vertikal GVO)‖, which provides a guideline for the obligatory content of franchise contracts75. Further, the evaluation of franchise contracts can get investigated under consideration of the ―European Code of Ethics for Franchising‖ (for further information see 6.3.). It is a code of conduct for franchising developed by the EU-committee, and got accepted by the ―Deutscher-Franchise-Verband‖ as well. However, this code of conduct is only effectual for members of the federation DFV and therefore must be regarded as an indication for the development of franchise contracts, but it is not binding before the German court of law (Tigges)76. If a franchise contract complies with these guidelines mentioned above, it provides sufficient security for franchisor and franchisee. 26 In the German fashion branch, the franchisor is mostly the producer, who is interested in prescribing order minimums and order frequencies in the franchise contract. These prescriptions enable the franchisor to implement secure production planning and minimize his business risk. The franchisee is under pressure and has to make sure he can comply with these regulations. The franchise contract also states all services that are included in the franchise package, such as advertising and promotional support. Advertising costs are usually beard by the franchisor, but he may claim contribution fees from the franchisee or percentile interest of turnover. According to Sherman (2004)77, the franchise agreement sets the binding rights and obligations of each party of the franchise relationship, for which a balance of power is crucial. ―On one hand, the franchisor must maintain enough control in the franchise agreement to enforce uniformity and consistency throughout the system, yet at the same time be flexible enough to anticipate changes in the marketplace and modifications to the franchise systems and to meet the special considerations or demands resulting from the franchisee’s local market conditions.‖ He further points out, that the contract should mirror the franchisors corporate philosophy, and specify all aspects of strategic planning, market research and customer testing. Kadensky adds that the franchisor usually gives the franchisee the right of utilization of his patented property right, such as label, logo, the system name, products and technologies. The franchisor offers the franchisee a territory protection for the location of his franchise-shop, which guards the franchisee from competitive franchisee- or retail shops of the franchisor in the near area (Kadensky, 2008) 78. Another important aspects of franchise contracts is the territorial protection of franchisees: According to the TW research, only 12% of franchises, shop-in-shops, corners and concessions do provide a territory protection for their partners (TW, 2007)79. Nevertheless, territorial protection is an important criteria of franchisees for the selection of a reliable franchise system. For better insight into franchise contracts please see 6.4. 4.3 OBLIGATIONS OF FRANCHISORS One of the franchisor’s obligations for a successful implementation of a franchise business concept is the development of a hierarchy in advance. Both parties have to stick to the system and its hierarchy (Zentes, 2006)80. According to Mendelsohn, the franchisor is obliged to test his franchise system in advance, to ensure it is profitable, to ―honestly present the facts to the franchisee to enable the franchisee to make an informed decision‖, and to provide certain initial services, that help the franchisee establishing his store. Moreover, he is responsible for continuous support service, such as ―updating of the operational manual‖, marketing and promotional help, advertising, profit and performance analysis and continuous research and analysis. It is also significant that the franchisor only chooses franchisees with the needed knowhow and capital (Mendelsohn, 2004)81. Zentes differentiates between initial services and continuous services the franchisee expects. Initial services usually include providing a brand label, and implementing location analysis, finance consulting, return on investment forecast, store construction support, introductory training, guide book, and exact support doing the first essential steps for opening a new store. Continuous services are controlling, formulation of franchise-system goals with regular updates, business consulting, training, benchmarking, national promotion, 27 care for the brand label and maintenance of store interior and updating of the guide book (Zentes, 2006)82. 4.4 TYPES OF FRANCHISOR A research implemented by KPMG in 2007, points out 4 different types of franchisors. The basic advisor The ―laissez-faire type‖, who is working with a soft franchise system. He provides little service and limited requirements, which results in a relatively cheap system. The disadvantage for the franchisee is that he is left alone in many aspects. The sales-supporter The all-round advisor, who is working with a hard franchise-system, which provides the advantage that such full service can recover the individual weaknesses of franchisees. The research observed a tendency of German franchise systems to work towards becoming an all-round advisor. Most franchisors regard the first three stages as development phases they get through when they start to develop franchise systems, but the final goal of a franchisor is to reach the stage of an all-round advisor (KPMG, 2007)83. 4.5 OBLIGATIONS OF FRANCHISEES The franchisee is obliged to follow the constraints the franchise-system implies, even though he is self-employed. He has to have the necessary skills for being selfemployed and must select the franchisor in an objective and professional way. The franchisee should put emphasis on personal meetings in advance. The franchisee must be honestly giving all relevant information to the franchisor (Mendelsohn, 2004)84. For a better insight into possible franchisee obligations please see 6.4. 4.6 SUCCESS POTENTIAL OF FRANCHISEES The success of a franchise system is dependent on multiple factors. Generally, a franchisee can only be successful if he chooses a suitable and professional franchisor for cooperation. Lately, it is to observe that the number of franchises in Germany has been growing continuously even though the economic circumstances are inauspicious. Therefore, the theory is increasingly emerging that the world financial crisis is stimulating the motivation for doing franchising. More and more highly qualified employees loose their jobs due to the crisis and consequently choose the franchise opportunity. These professionals as franchisees increase the success potential of franchise start-ups due to their skills. Further, the franchise success is strongly secured as franchisees are getting professional support during the whole business foundation process (HodappSchneider, 2009)85. Jürgen Finkbeiner, working for the fashion franchisor Chelsea, a German fashion organization, claimed in 2005 with pride that from more than 50 franchisees from the new German states, with whom they used to cooperate, only 3 had given up so far (TW, 2005)86. Chelsea helps its franchisees to gain success by extensive support regarding choice of location, business planning, analysis of equity requirements and sales planning. The DFV published that the success rate with franchising in comparison to selfemployment on one’s own initiative is six times higher. The business results with 28 franchising are for 47% better, and the return on investment is 67% superior to the industry average. Moreover, the buying power on the market is strengthened via franchising, leading to approximately 18% lower buying costs on average (HodappSchneider, 2009)87. According to a research implemented by the TW in 2008, 74% of vertical partnerships do not last longer than 3 years (TW, 2008) 88. It is to mention that this research did not only investigate the length of franchise relationships, but looked at franchise relationships together with shop-in-shops and concessions. Therefore the outcome of the length of franchise relationships can vary from these 3 years. 4.7 VISUAL MERCHANDISING For vertical partnerships, including franchise systems, visual merchandising89 has great influence on the business success. The market research of the Textilwirtschaft90 found out, that in 2008 75% of vertical partners within the German clothing and textile branch support their partners in sales 81% provide decorative and promotional materials for the POS 55% provide a merchandise service 47% offer trainings for employees 35% support organizing POS-events 30% give an allowance for advertising costs. Also Wellensteyn91 and Lerros92 understand the importance of visual merchandising very well: Wellensteyn provides any merchandise material for their franchisees, such as give aways, posters, etc. Lerros additionally emphasizes the global shop-window recognition: Each Lerros-store all over the world has the same seasonal shop window design. Simone Hermann, Head of Export at Lerros, explains that this is significant for targeting the global consumer from today, who may shop in Russia today and in India or Germany tomorrow and is expecting the same service from Lerros anywhere. Picture source: Lerros Retail GmbH. Available from: http://www.lerrosindia.com/images/storeconcept/visual_8_Lerros-Schweinfurt.jpg [21 April 2010]. 4.8 INITIAL FEES VERSUS RUNNUNG EXPENSES Initial fees for entering the franchise-system may be a significant barrier for franchisees, as most small and medium sized entrepreneurs do not provide sufficient capital assets and are dependent from creditors. Especially in times of decreasing turnover rates of the German retail, which is even reinforced due to the financial crisis, German banks are getting increasingly skeptical offering credits to entrepreneurs who want to start business in this unstable sector. Therefore, the 29 franchisor’s support of managing this financial barrier is a crucial criterion for franchisee acquisition. The franchisor can either accompany the potential franchisee to credit institutions or provide corporate finance models. Another possibility is to decrease initial fees or to even skip them and to increase running expenses. The advantage of relatively cost-intensive initial fees is that potential franchisees may get acquired, who have above-average entrepreneurial skills and feel certain to achieve a fast return on their investment. Further, franchisees with little experience and insufficient economical skills may feel frightened off buying the franchise system, and the franchisee may evaluate the franchise system as more professional and less risky if initial fees are charged. The disadvantage of relatively cost-intensive initial fees is that in times of recessions and the financial crisis, many small and medium sized entrepreneurs have problems providing capital assets, even though they might provide high entrepreneurial skills (Kröcher, 2009)93. Mango’s franchise system is an example for a comparably high investment. The initial fee is 100,000€, plus costs for store interior of additional 550€/m², costs for store construction of 1000€/m², and specific loan guarantees. Nonetheless, Mango provides an attractive franchise system as they deliver only goods on consignment, so that the franchisor has a highly limited risk. The implemented survey for this thesis has filtered out that in the German fashion retail it is of common practice to not charge any initial fees (compare 6.4.), which is why it is common within the German fashion retail to use the term ―partner-stores‖ instead of franchise. Still, the initial investment for franchisees is expensive, as franchisors of the German fashion retail support their franchisees building up a franchise store, but the costs for store construction and interior design has usually to be paid for by the franchisee himself94. 4.9 COSTS FOR STORE CONSTRUCTION The market research carried out by Textilwirtschaft95 explored that in 21% of all vertical partnerships96, costs for store hardware are borne by the supplier. In 52% of the cases vertical suppliers are contributing to the financing of the shops and in 26% of the cases the trader finances store furniture himself. As visualized underneath, costs for store constructions that have to be paid for by the franchisee vary enormously. Further, store construction costs are defined differently by each fashion company and are therefore not 100% comparable. Lerros estimates costs for franchise store hardware, such as furniture, lightning and floor to be 750€/m²97 and Ulla Popken gives an estimation of 380€ per m²98 . Michael Spang from Oska explains that store construction costs for Oska shops vary from project to project: If dry construction is acceptable, it costs Oska’s franchisees approximately 400€ to 500€ per m²99. The graphic demonstrates that costs for franchise store construction in the German fashion retail per m² are approximately around 300€1500€, depending on the franchise business concept. 30 1.400 € 1.200 € 1.000 € 800 € 600 € 400 € 200 € 0€ Estimated costs for franchise store interior per m² 1.250 € 1.200 € 750 € 550 € 450 € 380 € 330 € Estimated costs for franchise store interior per m² FIGURE 8 ESTIMATED COSTS FOR FRANCHISE STORE INTERIOR PER M² 100 4.10 A SSORTMENT COMPOSITION IN FRANCHISE SYSTEMS The assortment planning for fashion stores is dependent from information about buying habits, frequencies and other parameter. In franchise systems the assortment combination is usually subdivided: The obligatory assortment contributes to 80%, 15% is optional assortment determined by the franchisor, and 5% may be ordered by the franchisee as a local addition. The flexible variable is the physical size of the franchise store. Pre-determined system blocks are combined depending on the store size. The Textilwirtschaft points out that in 49% of vertical partnerships traders can order without influence of the supplier, 38% let their traders order on the base of order suggestions from the supplier, so called menus. In 17% of the cases the supplier can manage the sales floor planning partly by himself, and in 7% of the cases the supplier manages the sales floor fully by himself (Textilwirtschaft, 2008)101. Meier outlines a possible strategy, which is used by 90% of franchise networks, to form advisory boards, in which franchisees participate. Each franchisee has the possibility to suggest certain products or styles, or to at least discuss the suggestions of other participants when determining the obligatory assortment. In 2008, the Textilwirtschaft- market research102 concluded that in 51% of all surveyed vertical partnerships, there has been a well functioning supply control. 28% of vertical partnerships are evaluated as having a well functioning NOS 103 offer and 31% are able to react on short-term fashion trends. Regarding the delivery of new items, 46% claim to have regularly too many articles in their shops, while another 46% argue to have gaps in the assortment. Even 26% explain to have many times problems with timing of delivery. The qualitative research revealed positive results concerning order delivery: The franchisor Elégance for instance, originally doing mail order business and therefore providing a great amount of inventory stock, is permanently deliverable, which is a great advantage for its franchisees (compare interview 6.6.5.). 31 4.11 SALES PLANNING IN FRANCHISE SYSTEMS In the optimum case, sales data from the franchisee’s cash register is delivered to the head office daily, a permanent access to the sales data would be best. As a service, 25% of Germany franchisors deliver weekly statistics to their franchisees, 100% of franchisors deliver monthly, quarterly and annually statistics. It is further common that the order of obligatory assortment, including NOS articles, is communicated either via the connected cash registry, fax, intranet or telephone. Budgeted sales and results are usually calculated on a yearly, or in fashion on a seasonal base (Meier, 2005)104. 85% of vertical partnerships surveyed by the Textilwirtschaft in 2008105 do pass their sales data to their supplier, o from which 45% are handing their sales data on to their vertical supplier daily o 32% do it less than daily, but at least once a week o and yet 21% do it less than weekly. A good implementation of the received sales data in new collections is done by 21% of all vertical partnerships. A positive example can be given by Lerros: The fashion franchisor expects its franchisees to deliver their sales date daily, but at least weekly to their system office for optimum sales planning106. There are three forms of contractual order styles. If a franchise partnership is based on the classical order type, the trader has the full merchandising risk. Indeed, an individual agreement can be set up which determines under which circumstances goods that could not get sold can be returned. If the franchise partnership is based on a commission contract, the retailer is a commission agent who is self-employed, but works on the account of the franchisor, so that he has no merchandising risk. Goods that could not get sold can be returned to the franchisor. The commission agent is not able to change the pricing and is fully dependent on the franchisor’ prescriptions. If a franchise relationship is based on a consignment contract, the franchisee has no merchandising risk, as the franchisor is legally the owner of goods to be sold, but in the moment of selling the franchisee is entitled to change the consumer price independently (Turban, 2009)107. 4.12 ELECTRONIC DATA INTERCHANGE Electronic data interchange, in the following shortened to EDI, is an important tool for the franchise system that ―lets retailers and suppliers regularly exchange information through their computers with regard to inventory levels, delivery times, unit sales, and so on, of particular items‖ (Prentice-Hall, Inc.)108. According to a TW research (2007), ERP systems are indispensable for 98% of the consulted companies. Delivering sales data, ERP enables companies to visualize sales areas and to evaluate them individually. Companies can react fast on bad sales and on fast sellers. Those, who are connected with their customers via EDI, reach many times a higher turnover. An example is given by Marc O’Polo’: In 2007, 5% of their customers are connceted with EDI, reaching 40% of the turnover made with partnerships (Probe, 2007)109. Lerros, owning 7 franchise stores in Germany and others in Russia, Czech Republic and Ukraine, is with 60% of its sales areas 32 connected. The ERP department of Lerros in Neuss works with a reporting system, which shows sales-, discount- and rate of inventory data on a daily base. They analyze their turnover rates daily, using various filters, for instance ―top 20‖ lists for domestic and foreign countries (compare interview)110. In fact, in 2008 48% of vertical partnerships in the German textile and clothing industry, are providing professional controlling of their sales floors, 37% do sales floor controlling via telephone and personal information exchange Merely 31% provide professional controlling of their sales floors via EDI (TW,2008)111. Contrary, only a tenth of the interviewees of the Textilwirtschaft-research 2006-2007 are with at least one third of their customers connected via EDI. Elegance, having 3 franchisees in Germany and the main part of its franchisees in 63 foreign countries, is with none of its partners EDI- connected112. Also Oska, a Munich fashion franchisor, is neither EDI connected, nor working with identical cash registries. Oska’s franchisees either deliver their data from their cash registry per email, fax or telephone, or collect the labels of sold items and send them back to Oska’s head office for evaluation. Oska is aware that a unique electronic data interchange is important and is planning the introduction of EDI in the near future (compare interview). Lerros Moden GmbH, headquartered in Neuss, is connected with 60% of its partners- including franchisees- via EDI and regards it as self-explanatory to work with electronic data interchange continuously 113. The fashion franchisor Ulla Popken is also with all partners since March 2010 EDI connected114. Uwe Bulk von Klingenthal critically arguments, that EDI is only a tool for looking backwards. It is not enough to analyse the figures of the past for doing sales forecasts. For being fully prepared, regular communication with and visits of franchisees is also significant, in order to realize problems before they arise. 4.13 MANAGERIAL ASPECTS OF FRANCHISING 4.13.1 CORPORATE IDENTITY Corporate Identity contains ―the distinctive characteristics or personality of an organization, including corporate culture, values, and philosophy as perceived by those within the organization and presented to those outside. Corporate identity is expressed through the name, symbols, a logo used by the organization, the design of communication materials and is a factor influencing the corporate image of an organization‖(BNET)115. The basic elements of corporate identity in franchise systems are national activities, brand image and unique corporate design, team spirit and shared responsibilities. Corporate identity is an essential success factor for franchising and the basis for the immaterial duplication effect. In consequence, franchise systems provide better attractiveness for customers, a higher and saver profit, and a weaker right to claim reimbursement. The external representation of corporate identity of franchise systems is determined by the closeness of the system as a whole. Franchise systems are usually realized as mono-label stores that provide a unique profile, which is a good condition for successful marketing. Regarding the internal relationship, the corporate identity can be described as a common ―roof‖. The system leads to a feeling of social affiliation. It reinforces the self-esteem, motivates members of the system and leads to shared 33 responsibilities. Therefore, corporate identity is the standard for efficient cooperation of independent organizations (Funck, Birkigt et al., 2008)116. 4.13.2 THE FRANCHISE RELATIONSHIP According to the Rational-Choice-Theory from Coleman117, the trust in vertical partnerships including franchise relationships can be based on a pre-calculation. Both parties evaluate the potential profit, the evolved risk and the potential harm and use this estimation for the direction of their activities. Taking a closer look at franchise relationships in the German textile and clothing branch, it is to mention that 85% of all vertical partnerships surveyed by the Textilwirtschaft in 2008 are doing management by objectives regularly in form of discussions. In 74% of all cases the contractual relationship is not taking longer than three years. 57% of vertical partnerships offer special conditions to sales area-, shop-, and franchise- partners. A relationship is maintained in 55% by providing a good mentoring through qualified regional representatives/ key accountants. A joint discussion of growth strategies within the patch is realized by 19%. Tterritorial protection is only provided in 12% of all vertical partnerships (TW, 2008)118. It can be outlined that many times vertical partnership are regarded as unsatisfactory. The assumption that ―many partnerships only exist on paper, in reality the supplier mostly enjoins the conditions on the trader‖, is approved by 66% of vertical partnerships. 57% affirm that ―suppliers profit stronger from sales areaand shop systems than traders do‖ (TW, 2008)119. 34 4.13.3 THE FRANCHISORS AND FRANCHISEES PERCEPTION OF FRANCHISING The franchisee’s associations of their situation within the franchise system according to Zentes (2005) 120: Negative Constriction Dependency Poor in responsibility Bondage Poor independence Low creativity Positive Profitability Entrepreneurial Rather long-lasting Rather easy Rather riskless Rather perceived as employee relationship an employer- The franchisor’s associations of their situation within the franchise system according to Zentes (2005) 121: Negative Positive Limited control Independent Little sanction power Unbound Liberal Autonomous Creative Entrepreneurship High profitability of the franchise concept The table above shows that the image of franchising from the franchisee’s point of view is mostly positive, but has negative evaluations, especially regarding the franchisor-franchisee relationship. Franchisees criticize to have only poor independence and responsibility, and are limited by constrictions in their creativity. On the other side, the franchise business is expected to have low risk, and a good return on investment. For better acquisition of franchisees in the German fashion retail, it is therefore significant to improve the image of the franchise concept. This can be realized by improving information for potential franchisees, for instance by enabling communication with other franchisees. Another important step is that franchisors who are looking forward to expand in the German fashion retail should become a member of rewarded associations, such as the ―Deutscher Franchise Verband e.V.‖. 35 4.13.4 THE PERCEPTION OF SELF-EMPLOYMENT IN GERMANY The ―Entrepreneurship Center of the Ludwig-Maximilian-University Munich‖ and the organization ―Amway‖ have implemented a research in 2009122 about the actual perception of self-employment. This research exposes that in 2009 70% of employees regard self-employment as risky. 18% evaluate self-employment as an attractive occupational variety, which is a reinforced interest for self-employment, compared to the previous research implemented half a year ago (15%). The research further demonstrates that the old West German States regard selfemployment with 17% as less attractive as the newly- formed German states with 23%. Generally, one in five can actually imagine to become self-employed (18%), the majority denies self-employment with 80%. Especially personal living conditions play a significant role for or against changing to self-employment. 28% of singles are willing to dare the step, but only 15% of married employees. Further, people younger than 30 are rather positive about becoming self-employed as people older than 30, men are also rather positive than women. An additional outcome is that only 12% are attracted to self-employment as a mainoccupation, 50% would only become self-employed in the form of a side occupation and 12% would like to start with self-employment as side occupation, and switch to full-occupation later on. The evaluation of future possibilities is rather negative. 58% regard the current conditions for self-employment as rather bad, and do not expect it to become better, regardless of the expected economical revival. 26% regard the conditions currently as negative, but believe in better circumstances in the near future. Comparing the German development of formations of companies, Germany is internationally compared inferior. Germans regards self-employment as rather risky and complicated. Further, employees feel reinforced in the desire to maintain in fullemployment due to the fear because of the financial crisis (Amway GmbH, 2009)123. The research shows the difficulty for expanding on the German retail market for the fashion franchise sector. Many potential franchisees are denying the risk of selfemployment, and have negative future expectation concerning the German market. For this reason, franchising in the fashion retail branch must focus on risk minimizing, and target those niches, which are most likely to take the step into selfemployment. 36 4.14 CHAPTER SUMMARY The fourth chapter gives an insight into franchise contracts, pointing out the importance of the franchisor’s control, the maintenance of corporate philosophy, the flexibility to make changes and the franchisee’s right to use the franchisor’s property rights and to get territorial protection. Afterwards, the obligations of franchisors are explained. Four types of franchisor are distinguished: The basic advisor, the laissezfaire type, the sales supporter and the all-round advisor. The franchisee’s obligations are explained as well. The chapter outlines the aspects that are particularly relevant for franchise systems within the fashion retail, such as visual merchandising. The franchisor usually supports visual merchandising activities, by providing visual merchandise material for shop windows and give aways, poster, flyer, etc, as well as offering support in national marketing activities. Further the advantages and disadvantages of initial fees and running expenses are pointed out, considering the raising problem franchisee’s have with getting sufficient credits. As a finding usually no initial fees are charged in the fashion franchise branch, as the franchisee has enough costs in the beginning due to store construction. The fourth chapter also gives an analysis of assortment composition in franchise systems. Usually the main part of the assortment is prescribed by the franchisor, considering the physical size of the sales floor and only a small part can be ordered independently by the franchisee. The majority of franchisees deliver their sales data regularly to their franchisors, enabling a continuous improvement of the collection. It has been found out, that a connection of franchisors and franchisees with EDI enables to reach higher turnover and to react faster on best seller. Only one third of franchisor’s in the German fashion retail are so far connected with their franchisees via EDI. Finally, the 4th chapter focuses on the managerial aspects of franchising, explaining the meaning of corporate identity, as well as certain aspects of the franchisor and franchisee relationship. A great part of franchisee’s are not satisfied with the relationship, due to a feeling of being used and treated unfairly. Finally this chapter analyses the evaluation of self-employment in Germany, coming to the findings that the majority of Germans regard self-employment as risky and deny the step into self-employment increasingly due to a rising fear of the financial crisis. This attitude makes franchisee acquisition in Germany difficult. 37 5.1. SWOT- FRANCHISING IN GERMAN FASHION RETAIL Strength Weakness - Support in marketing - Safety of franchise partnerships is communication, advertising, profit dependent on franchise contracts, and performance analysis, no legal franchise law exists continuous research and analysis - Initial investment to be paid for by - High brand recognition franchisees is expensive - Advantageous buying conditions - Banks are increasingly skeptical for retailer offering credits to entrepreneurs in - Both parties profit from the the German fashion retail network effect - Franchisee underlies constriction, - Limited risk for franchisor and dependency, poor responsibility, franchisee bondage, poor independence, and - Low fix costs for franchisor low creativity - High productivity - Franchisor has little control and - Highly motivated and qualified sanction power partners - System-related slowness - Safer return on investment for the franchisee Opportunity Threat - Franchise systems in the German - Price competition and ongoing retail sector will grow faster as concentration process in Germany other distribution forms - Very sensitive and critical German - Franchises can protect small fashion retail retailer from insolvency - Low error tolerance in Germany - With hybrid business format - Suitable franchisees are not able franchise the franchisor becomes a to finance the partnership multi channel trader - Finance of orders is for retailers - Valuable local experience and increasingly problematic great customer bonding of retailer - Franchisee acquisition within the can be used by conversion German fashion retails is franchising hampered by German risk averse, - Franchisor can convince customers bad economic situation, saturated with advanced services and market and fear to enter selfservice-products employment - The German franchise potential is - Leading franchise system developable providers in the German fashion - The DFV gives professional retail are powerful competitors guidelines for franchises and hindering small and medium - Franchising supports fast sized franchise businesses from expansion while franchisor’s expanding in Germany maintain a lean business - Competition of completely vertically organized companies, supermarkets and fashion discounters - Decreasing consumer brand loyalty 38 5.2. CHAPTER SUMMARY The fifth chapter evaluates the information gathered in the earlier chapter, pointing out key finding, conclusions, and future tendencies. The evaluation takes place in form of a SWOT analysis. The main strength of a franchise system in the German fashion retail is that it provides the characteristics of a mono label store, which leads to corporate identity, brand recognition and market positioning. Further strengths are minimized entrepreneurial risk, the possibility to build up professional stores with highly motivated retailer and high success potential. Weak aspects are the difficulties of German franchisee’s to finance the initial costs for building a franchise store, the prejudices of franchising and the disadvantages compared to completely vertical fashion companies. An opportunity is the expected continuous turnover growth up to 2015, as franchising represents a professional survival solution for small and medium sized retailer, who would otherwise likely get eliminated more and more from the market. Moreover, opportunities are the adoption of hybrid- and of conversion franchising, the profitable usage of retailer’s skills and their knowledge of the German target group, the support through associations such as the DFV and fast expansion possibilities. The major threats for franchising in the German fashion retail are the general downwards trend of the German economy, including price decline and concentration process, the low error tolerance and skeptic of the German retail, the risk averse of Germans, the difficulty of standing the competition of leading giants in the fashion franchise branch, as well as of verticals, supermarkets and discounter. A further threat is the lack of owner’s capital necessary for starting a franchise business. Possibilities for improvement of franchising are the realization of completely EDI based franchise cooperation’s, which would enable franchise organizations to react immediately on new trends and best seller, as well as an automatic re-delivery of NOS articles, as verticals can do. The size factor of franchises is also an influential factor for standing the competition of verticals and discounters. The higher the amount of franchisees of a franchisor, the higher the production amount, and the lower the production costs: That way, franchisors can realize a low production price and can offer comparable prices to the end-consumer as verticals can do. 39 CONCLUSION In conclusion the statement ―franchise is in fashion‖ can be generally corroborated, but looking concretely at franchising in the German fashion retail multiple factors influence and partly limit its suitability for this market. In Germany, the franchise system has gone through a rapid economic growth in the past. Starting in the late sixties of the nineteenth century in Germany with approximately 40 franchise-systems in 1970 (Dieses, 2004, p.6)124, the number of franchises has risen since then continuously. In 2009 960 franchise-systems are recorded (DFV, 2010)125, the German franchise sector reaches 48 bn. € in 2009. In international comparison, franchise expansion in Germany is still below primary expectations. Possible reasons are the difficult German retail market conditions, as well as the huge investments required from franchisees for starting a franchise store, which is between 300-1500€ per m² (compare 4.6) for store construction, not including possible initial fees that can be charged from the franchisor on top (compare 4.5). The huge investment is especially in times of the financial crises hard to finance. Further reasons are the risk averse of Germans in general, also reinforced due to the crisis: Many people prefer to stay in a safe employer-employee relationship instead of daring the step into self-employment (compare 4.13.4). The German market provides low risk tolerance, leading to a tendency of fashion organizations to enter the German market primary with other distribution forms, such as shop in shops, concessions and corners, that are easier to handle, instead of franchise stores, that are so far only used less often (compare 6.5.). The German fashion market is with regard to franchising dominated by giants such as Street One, Cecil and Esprit. Small and medium sized franchisors have therefore hindered conditions and rely on the benchmarks set-up by those leading companies. Germany is a highly sophisticated and critical market, only enabling professional franchise systems success. Franchise systems in Germany are confronted with a saturated fashion retail and decreasing market volume, being dominated by large, modern retailer. Market penetration is taking place: Weak producer brands as well as weak distribution partners are eliminated, private labels are getting stronger. Especially fully vertical organized fashion organizations, such as H&M, are leading the fashion market, but also supermarkets and fashion discounter are powerful competitors. The German fashion retail reaches in 2009 an annual turnover of 57,1 bn. €, and takes 18% of the European clothing retail market share. For fashion brand positioning a presence in the German fashion retail is therefore indispensable. The research also brought positive aspects of franchising in Germany to the top: The German retail market can profit from increased customer attractiveness, as franchising provides a unique brand profile and strong corporate identity. Franchise systems let both parties profit from discounts through higher quantities and the professional business concept (including professional support regarding shop location, assortment composition, visual merchandising, POS) increase the franchisee’s chances to make profit within the difficult German fashion retail. The German government provides a suitable legal environment, and Germans are commonly known for their reliability and thoroughness. Moreover, franchise systems follow the trend of mono label stores, whereas multi brand stores will be more and more eliminated from the market in the near future. As fashion companies provide nowadays mostly relatively little capital assets, franchising will be a primary choice for expansion on the German market in the 40 future. A global market presence, high duplication potential, relatively low investment, as well as risk transfer onto franchisees are and will be evidentiary arguments for franchising in the fashion business. Through a professional system strategy, the disadvantages of franchising, namely no direct customer contact, difficulty of operative franchisee control, the allocation of two margin leading to a higher end consumer price and little sanction power can become compensated (Riekhof, 2004)126. In conclusion, Germany is suitable for the positioning of the fashion brand via franchising, but the franchise system should be well established and represent a clear profile. If franchisors do not provide sufficient experience yet, it is recommendable to first gather franchise experience in less critical countries, such as Eastern European or Asian countries, and get to know the German market via own retails first. German consumers are known for being very critical and putting great emphasis on brand reputation. Therefore, it is even more significant for franchisors to focus on branding activities for their franchisees as well as to select franchisees that provide experiences and are highly entrepreneurial. That way, the consumer is not recognizing a difference in professionalism of franchisee-directed retail and of franchisor-directed own retails. THE FUTURE OF FRANCHISING IN GERMANY According to the Deutsche Bank Research, franchising in Germany is estimated to further expand until 2015 with 7% per year. The franchising turnover in 2015 will reach 70 bn. €. Until 2015 retail turnover is expected to grow with merely nominal 1,5% annually. One reason for this relatively low growth is that the clothing and textiles sector, as well as the household and food sector are getting saturated. Besides, e-business is an increasingly competitive distribution form for fashion franchising. However, franchise systems in the German retail sector can grow faster as other distribution forms. The service branch has the best future potential for franchising (Deutsche Bank, 2007)127. For the near future, Biesel envisages a strong competition about the organization’s presence on the market. Particularly medium-sized businesses will try to compensate their size disadvantage by introducing franchise- and partner- systems. That way these organizations will have the advantages of maintaining lean and providing a fast speed regarding decision making processes. Franchising makes rapid growth possible, so that the size of a company today has become ambiguous for the position of the company tomorrow (Biesel, 2004)128. Fashion companies that are based on the division of labor will suffer from the disadvantage that they provide a system-related slowness: Working with franchise systems, the fashion development goes through several hands namely the producer, the trader and the franchisee. These external procedures lead to a system-related slowness, important time which completely vertically organizations that concentrate on keeping every step in their own hands, safe. Additionally, the classical task division is allocating two margins, one to the whole trader/producer, and one to the retailer. This influences the pricing for the end-consumer, again giving an advantage to vertical structured companies that only calculate with one margin. Franchise systems are affected by this disadvantage, which is why it is even more important for 41 franchises to increase their strength of having a unique brand profile and extensive expertise knowledge of their unique selling point. Due to the great volume of franchise organization, expertise retailers will increasingly profit from quantity discounts in buying. Thanks to the size factor high brand recognition is also reached, leading to an exceptional performance (Riekhof, 2004)129. Favorable strategies for the German market will be ever more hybrid and conversion franchising. Especially hybrid franchising follows the ongoing trend of vertical brandoriented distribution systems, which are focusing on their system front. Based on this system front, which functions as a coordination center that is responsible for the overall business control, a possibly great variety of distribution forms is executed parallel and complementary. The distribution networks will become progressively complex, and rely on trustworthy relationships. The aim is to follow a penetration strategy, to reach an increase in output and to gain a broader amount of customers (Turban, 2009)130. The primary goal for a successful entrepreneurship will be to maintain the ability to react quickly on fast changing consumer demands. The growing price- and margin pressure will increasingly force trading companies to reconsider their current sales strategies. Strong and aggressive competitors will eliminate the weak positioned fashion companies especially in the mid- price segment to approximately 20% in the near future, estimating that currently the mid-price segment is contributing to 2325% of the relevant market (Riekhof, 2004)131. 42 REFLECTION ON THE RESEARCH The final thesis is based on current literature available in public and academic libraries, information from the World Wide Web, expertise magazines and interviews with professionals in the fashion franchise field. Even though all assumptions, conclusions and recommendations stated in this thesis have been proved, the validity of the thesis is limited due to various aspects: First of all, franchising is a distribution form that provides no legal foundation. Therefore, many fashion organizations interpret and implement franchising individually, even though in Germany franchising is usually based on a definition approved by the DFV and the EFF. Especially the qualitative interviews carried out for this thesis, have made clear that fashion organizations treat their franchise systems in various specifications, making comparison difficult. Many times a separation from shop-in-shop systems is very vague, statements such as ―We rather treat our franchisees as shop-in-shop partners‖ have been made132. The research has also pointed out that looking at the share of each distribution form used by fashion organization in the German fashion retail, franchising is contributing to a rather small part up to now. This shows that franchise system in the German fashion retail are still in its beginning, but with future growth, higher professionalism regarding the handling of franchise concepts can be expected, so that a clearer profile will develop. The third factor that partly limits the validity of the research is the limited number of pages permitted for this final thesis, which is why not all aspects of franchising that might be relevant for the topic could get considered. This research can be continued and can be a interesting topic for further scientific research in the near future. It is further to outline that mainly current literature and expertise publications have been used, in order to be able to give recommendations and conclusions that are based on recent economical and branch specific developments. 43 6. APPENDICES 6.1. COUNTRY FACTS: GERMANY Source: http://www.infofranchise.com/detail.cfm?IdNotizia=8107&IdSezione=18&strKey=com Political-economic statistics and data about franchising Country name Germany Total Area 357,021 sq km Area Population 82,431,390 (July 2005 est.) 0-14 years: 14.4% (male 6,078,885/female 5,766,065) 15-64 years: 66.7% (male 28,006,268/female Age structure 27,003,958) 65 years and over: 18.9% (male 6,359,776/female 9,216,438) (2005 est.) total: 42.16 years Average age male: 40.88 years female: 43.53 years (2005 est.) Population growth rate 0% (2005 est.) Birth rate 8.33 births/1,000 population (2005 est.) Death rate 10.55 deaths/1,000 population (2005 est.) Net migration rate 2.18 migrant(s)/1,000 population (2005 est.) total: 4.16 deaths/1,000 live births Infant mortality rate male: 4.61 deaths/1,000 live births female: 3.69 deaths/1,000 live births (2005 est.) total population: 78.65 years Life expectancy at birth male: 75.66 years female: 81.81 years (2005 est.) Total fertility rate 1.39 children born/woman (2005 est.) Protestant 34%, Roman Catholic 34%, Muslim 3.7%, Religions unaffiliated or other 28.3% Languages German definition: age 15 and over can read and write total population: 99% (1997 est.) Literacy percentage male: NA% female: NA% Government structure federal republic Capital Berlin civil law system with indigenous concepts; judicial review of legislative acts in the Legal system Federal Constitutional Court ; has not accepted compulsory ICJ jurisdiction GDP (purchasing power $2.446 trillion (2005 est.) Parity) GDP (official exchange $2.83 trillion (2005 est.) rate) GDP - real growth rate 1.6% (2004 est.) GDP - per capita purchasing power parity - $29,700 (2005 est.) Labor force 43.32 million (2005 est.) 44 Unemployment rat 11.6% (2005 est.) Population below NA poverty line Inflation rate 2% (2005 est.) Public debt 68.1% of GDP (2005 est.) Exports $1.016 trillion f.o.b. (2005 est. Imports $801 billion f.o.b. (2005 est.) Debt - external $3.626 trillion (30 June 2005) Currency (code) euro (EUR) Exchange rates / $ euros per US dollar - 0.8411 (Feb. 2006) Big Mac price in dollars 3.58 Under(-)/Over(+) valuation against the $ +17 (%) Franchise Association Deutscher Franchise Verband E.V. Web Site www.dfv-franchise.de Year Of the first NA Franchise Network Number of franchisors 845 This information was updated January, 2006. 6.2. GERMAN RETAIL IN COMPARISON TO EUROPEAN COUNTRIES The general development of the German retail compared to foreign European countries is rather negative. Analyzing the annual retail turnover from 2000 to 2009, Spain reached the best retail turnover, followed by France and afterwards Italy. Germany has the weakest retail turnover, which can be partly explained by the development of German income. Since 2000, the real available income has increased with merely 0, 5% per year. Moreover, the saving ratio in Germany is especially growing: In 2000 it was merely 2%, in 2008 it is already 11,2% (see Graphic 9 below). As a result, the German retail has a weak annual growth, in 2009 the retail is only contributing to 25% of the total consumer spending, whereas in 2000 it still was 28%, and in 1991 even one third (Mütze, 2009)133. FIGURE 9 REAL RETAIL TURNOVERS OF SPAIN, FRANCE, ITALY, GERMANY 45 FIGURE 10 SAVING RATIO OF ITALY, SPAIN, FRANCE, GERMANY IN % OF AVAILABLE INCOME, 2000-20071 Many companies of the German retail have reacted on the small growth potential of Germany, by diversifying intensified into foreign countries. Even though, the crisis has a worldwide significant impact, some industrial countries, such as France, and especially the emerging markets, show a higher medium-term growth potential than Germany. It is further to mention that big companies have the capacities to use geographical diversification as a strategy, small and medium sized businesses many times do not have the possibilities to expand (Mütze, 2009)1. 6.3. FRANCHISE DEFINITION SET UP BY THE EUROPEAN FRANCHISE FEDERATION ―EUROPEAN CODE OF ETHICS FOR FRANCHISING This European Code of Ethics is the up-to-date version of the Code first elaborated in 1972 by the European Franchise Federation (EFF). Each National Association or Federation member of the EFF has participated in its writing and will ensure its promotions, interpretation and adaptation in its own country. Proposed adaptations by Member Associations may come as complements to the basic Code, without altering it, and must be approved by the EFF’s governing bodies before being implemented. This Code of Ethics is meant to be a practical ensemble of essential provisions of fair behaviour for Franchise practitioners in Europe. DEFINITION OF FRANCHISING Franchising is a system of marketing goods and/or services and/or technology, which is based upon a close and ongoing collaboration between legally and financially separate and independent undertakings, the Franchisor and its individual Franchisees, whereby the Franchisor grants its individual Franchisee the right, and imposes the obligation, to conduct a business in accordance with the Franchisor’s concept. The right entitles and compels the individual Franchisee, in exchange for a direct or indirect financial consideration, to use the Franchisor’s trade name, and/or trade mark and /or service mark, know-how, business and technical methods, procedural system, and other industrial and /or intellectual property rights, supported by continuing provision of commercial and technical assistance, within the framework 46 and for the term of a written franchise agreement, concluded between parties for this purpose. "Know-how" means a body of non-patented practical information, resulting from experience and testing by the Franchisor, which is secret, substantial and identified; "secret" means that the know-how, as a body or in the precise configuration and assembly of its components, is not generally known or easily accessible; it is not limited in the narrow sense that each individual component of the know-how should be totally unknown or unobtainable outside the Franchisor’s business ; "substantial" means that the know-how includes information which is indispensable to the franchisee for the use, sale or resale of the contract goods or services , in particular for the presentation of goods for sale, the processing of goods in connection with the provision of services, methods of dealing with customers, and administration and financial management; the know-how must be useful for the Franchisee by being capable, at the date of conclusion of the agreement, of improving the competitive position of the Franchisee, in particular by improving the Franchisee’s performance or helping it to enter a new market . "identified" means that the know-how must be described in a sufficiently comprehensive manner so as to make it possible to verify that it fulfils the criteria of secrecy and substantiality ; the description of the know-how can either be set out in the franchise agreement or in a separate document or recorded in any other appropriate form.‖ (EFF, 2003)134 6.4. EXAMPLE FRANCHISE CONTRACT 135 BETWEEN: Mr. XXX, holder of National Identification Number 43.684.143-J, residing in Palau-solita i Plegamans (Spain), Poligono Ind. Riera de Caldes, c/ Mercaders 9-11. Intervening on behalf and in representation of the Spanish Mercantile Company PUNTO FA, S.L. (Sociedad Unipersonal) as proxy of the same, duly recorded in the Barcelona Register of Commercial Concerns, with legal address at c/ Mercaders 9-11, Poligono Ind. Riera de Caldes, Palau-solita i Plegamans (Spain). Mr. XXX declares that he is duly empowered to enter into this Agreement. (hereinafter PUNTO FA) AND: Mr. YYY, holder of Passport Number XXX-WV 675547, residing in 6 Novotushinskiy Pr. № 364, Moscow 123310 (Russia). Intervening on behalf and in representation of the Mercantile Company JOINTSTOCK COMPANY "COMPANY RAMO" as General Director of the same, with legal address at 65/32 Privolnaya Street, Moscow 109153 (Russia) and duly recorded on the Registration Chamber of the city of Moscow, under the n° 1063099-iu 2; Mr. Lipanov declares that he is duly empowered to enter into this Agreement. (hereinafter, RAMO) COMPANIES' BACKGROUND I.- PUNTO FA The company PUNTO FA has as a social aim, amongst other activities, the sale of garments and accessories, retail and wholesale and sells in particular those identified under the trademarks –BRAND X-. 47 II.- RAMO The company RAMO is interested in the sales management of the said garments and accessories to then sell them following the norms contained in this contract, the tenor of this declaration being the following TERMS FIRST.- MEANING OF THE CONTRACT PUNTO FA will deliver RAMO garments and accessories identified with the trademarks –BRAND X- (hereinafter the items), in order to let RAMO manage the sales in a store of a minimum selling surface of 176 square meters and a stockroom of a minimum of 26 square meters. The referred store will be inaugurated during the Spring-Summer 2004 Season, and located at 26, Lenina St., Ufa, 450000, Russia (hereinafter the store). SECOND.- LEGAL NATURE OF THE CONTRACT This contract must be considered as complex and atypical, but of a trading legal nature. RAMO complies in Russia with all legal requirements to be individual or collective trader, working as an independent legal and managerial entity and managed by its own means. Therefore, no responsibility, not even subsidiary can be held by PUNTO FA, over RAMO actions. This contract does not mean, in any way, nor should it be understood as an association between PUNTO FA and RAMO. RAMO undertakes to strictly follow all legal merchant requirements in Russia. THIRD.- DURATION OF THE CONTRACT From the 10th of November 2003 when this contract becomes operative, its duration will be of one year and extended tacitly from one year to the next one, unless it becomes inoperative in accordance with what it is disposed in term number 10. FOURTH.- OBLIGATIONS OF THE PARTIES A) OBLIGATIONS OF RAMO 1.- RAMO will only be allowed to manage the sales of items provided by PUNTO FA in the store established in Term number one and in any other stores duly authorized by PUNTO FA according to Point Seven Clause A) of this present Term. 2.- RAMO will only manage the sale of the goods retail. 3.- In the stores referred to in this contract, RAMO can only sell goods identified with the trademarks –BRAND X Likewise, RAMO will abstain itself from the covering and recognising with the marks –BRAND X - any products or services different from PUNTO FA's ones. 4.- In the store specified in Term First of this contract, as well as in any other RAMO's BRAND X shop authorized by PUNTO FA, RAMO can only manage the sales of the items provided and/or authorised by PUNTO FA. 5.- RAMO is obliged to install only PUNTO FA's own commercial signs in every BRAND X shop. The relevant terms of this contract mean the express authorisation by PUNTO FA, on the instalment of the sign by RAMO and its use and permanence during the validity term of this contract but it does not mean any grant of the PUNTO FA 's group Patent Rights. RAMO will not take any step nor engage in any activity which may constitute any infringement or damage to the patent rights of PUNTO FA's group. 48 Likewise, RAMO undertakes to inform PUNTO FA immediately, of any infringement of the said rights and to assist PUNTO FA in any legal action designed to restore PUNTO FA's Patent Rights. 6.- RAMO will submit every new BRAND X shop to the prior agreement of PUNTO FA in terms of the locations and square metres. Every new BRAND X store will be ruled by the terms of this Agreement, and registered by special appendixes. 7.- RAMO agrees to decorate every BRAND X shop based on the specific " BRAND X look" designed by PUNTO FA. 7.1: The decoration project of any BRAND X store will always be prepared by PUNTO FA and will include both the selling surface and the stockroom of the shop. 7.2: Any kind of modification in the original project based on a particular wish of RAMO or due to any mistake of RAMO on providing the data for the decoration project will be borne by RAMO. 7.3: Any business trip of PUNTO FA's architect to RAMO's store, that PUNTO FA estimates necessary will be borne by RAMO. 8.8.1: The BRAND X shop windows and shops will be decorated following the instructions given by PUNTO FA with the elements sent by PUNTO FA. They will be decorated by a window dresser designated by RAMO. 8.2: RAMO undertakes to send twice a year the person in charge of window dressing to the head office of PUNTO FA in Palau-solita i Plegamans (Spain) or to PUNTO FA's own stores indicated by PUNTO FA in order to follow a window dressing stage. 8.3: RAMO must send to PUNTO FA a set of pictures of each shop window in order to let PUNTO FA supervise the work effected. Based on these photographs, PUNTO FA will agree or disagree with the window dresser work, as the case may be. In case PUNTO FA does not agree with this work, RAMO will accept to replace the person in charge of this matter. 9.- RAMO will strictly follow the content of both Decoration Statement concerning qualities and quantities of the materials and works to be done and Decoration Guideline as gathered in Appendix n°1. 10.- RAMO will use as exclusive packaging for the garments sold in its stores the bags with the design and characteristics established by PUNTO FA. 11.- RAMO cannot change the trademark, distinguishing marks, labels or characteristics of the goods, so RAMO will manage the sale of the referred goods with the sign and characteristics particular to PUNTO FA's products. Likewise, RAMO will not add any label different from PUNTO FA's ones, unless it is required by russian law. 12.- RAMO is not allowed to subscribe advertising contracts of any kind be it in radio, press, T.V. or public premises, neither is it allowed to print propaganda or order gift articles, etc. containing the PUNTO FA's group logotypes unless given previous written authorisation by PUNTO FA. In this sense, RAMO will not use any labels, visit cards nor anyother kind of printed forms including the tradenames BRAND X, together or not with its company name or anyother specification, without the previous agreement of PUNTO FA. 13.- RAMO agrees to visit PUNTO FA's headquarters in Palau-solita i Plegamans (Spain) four times a year in order to see the presentation of the collections. 14.- RAMO undertakes to send the establishment's manager to attend a training 49 course on the management of BRAND X shops at PUNTO FA's own stores. 15.- RAMO will give as per uniform and for free, two BRAND X ensembles per seller and per season. 16.- RAMO agrees to conduct the necessary maintenance work at least every two years, and whenever the store conditions and decoration elements may need it, in order to have every BRAND X store in proper conditions in terms of tidiness, image and functioning. Precisely, those works include: repainting; maintenance works of the furniture, the air conditioning and the electric installation; polishing the parquet and the stone of the floor; removing the damaged cotton canvas of the cabins, as well as carrying out any needed repair. 17.- Prior to the signature of the present contract, RAMO has sent to PUNTO FA the company documents as well as a copy of the lease contract or title deed of the premises referred to in term first of the present contract. Likewise, RAMO undertakes to send to PUNTO FA, within the first six months of each year, an annual report of their commercial activities in the BRAND X shops corresponding to the previous year. 18.- The first season BRAND X shop is inaugurated, RAMO engages to contribute to the investment of PUNTO FA in Advertisement and/or promotional actions with the amount of 10.000.-USD and the second season with the amount of 15.000.USD. From the third season, RAMO engages to contribute to the investment of PUNTO FA in advertisement and/or promotional actions with any amount needed in order to achieve a global investment of minimum --% of the sales (Retail Price, including VAT). B) OBLIGATIONS OF THE MERCANTILE COMPANY PUNTO FA 1.- PUNTO FA will deliver the merchandise to RAMO or to any person or forwarder appointed by RAMO in the dates and terms agreed, in the headquarters of Palausolita i Plegamans (Spain). 2.- PUNTO FA will always provide RAMO with the Advertisement advice and will jointly establish with RAMO the advertising campaigns. In this sense, RAMO undertakes always to respect PUNTO FA's advice and to obtain the previous authorisation of PUNTO FA to start any advertising action. 3.- PUNTO FA will provide all the graphic material necessary to produce the advertising actions agreed. In this sense, PUNTO FA will design any kind of label, visit card or anyother printed form including BRAND X tradenames together with the company name and headoffice as it might be requested by russian regulations. The production cost of the labels, visit cards, or anyother printed forms will be borne by RAMO. 4.- The season BRAND X shop is inaugurated, PUNTO FA will invest in Advertising the amount of 10.000.-USD and the following season PUNTO FA will invest the amount of 15.000.-USD. From the third season, PUNTO FA will yearly invest in Advertising a minimum of ---% of its commercial margin as defined in Term SIXTH.3.3.1 of this present contract. The referred investment will include, amongst others, the catalogues production, the cost of the image rights charges of the models as well as 2.000 catalogues per season and store in which the price will be shown in the official language and currency. 5.- PUNTO FA will permanently provide RAMO with technical advice concerning 50 sales, repetitions, stock, tendencies, window dressing and merchandising. 6.- Previously to the store inauguration date, PUNTO FA will provide RAMO its assistance regarding the setting-up of the store. In this sense PUNTO FA will send at its own cost a window dresser, an expert in computers, a supervisor, a person responsible for the "merchandising" as well as a person responsible for the management of the stockroom. 7.- PUNTO FA will provide its advice regarding the Personnel Selection for RAMO 's BRAND X store. In this sense, PUNTO FA agrees to attend to the referred selection and to give its advice to RAMO. FIFTH.- RE-SALE PRICES. STOCK AND TRANSPORT 1.- PUNTO FA will deliver RAMO the products referred in the first term of the present contract, ensuring a regular supply of goods according to PUNTO FA 's stock during the season, to the stock of merchandise in RAMO's shop, to shop sales development as well as to the Bank Guarantee amount. 2.- The parties expressely agree that RAMO might manage the sale of the products to the price and conditions considered as suitable according to the russian market conditions. In this sense, and as an essential condition in this Contract, both parties agree to jointly establish the Retail Price every season verifiying its adaptability to the russian market and so in order to keep and maintain the unified commercialization of the products in the network of BRAND X stores in the country. 3.- In the BRAND X stores, RAMO will be allowed to carry out sales and/ or promotions. Therefore, in accordance with the current legislation or practice in Russia, RAMO will agree with PUNTO FA in advance, issues such as the dates, length, as well as specific conditions of the action to be carried out. Likewise, both parties expressly agree that if within the season, a promotional campaign covering certain BRAND X products is organised, the margins to be applied will be the initial margin as fixed in the below paragraph. However, for any promotional campaign organised within the last month before the starting date of sales, and where the retail prices are reduced in the same levels as during sales period, then the applicable margin will be the corresponding margin for sales, as fixed in the below paragraph. 4.- Until the deposited items are sold to the public, PUNTO FA is the only owner of them, being RAMO responsible of any damage which they may suffer. In these terms, and as a fundamental point of this contract, RAMO undertakes to sign an insurance policy with a first line Insurer Company, in order to cover the damages which may occur to the items contained in the store. The minimum cover must be of ONE HUNDRED EIGHTY THOUSAND EUROS (180.000.-EUR) for the shop mentioned in First Term of this Contract, following strictly what it is stated in Appendix n° 7. 5.- RAMO will pay in full all the transport expenses arising from the delivery of goods from the headquarters of PUNTO FA in Palau-solita i Plegamans (Spain) to its stores (ex-works terms). 6.- Likewise, both parties agree as an essential condition of the present agreement that in the BRAND X store referred to in the first term, RAMO will only be allowed to sell garments and accessories supplied and/or authorised by PUNTO FA during that present season. According to this, at the end of every season, this is to say once the Sales period as well as the final reductions are over RAMO engages to return to PUNTO FA or 51 anyother company appointed by PUNTO FA any stock in surplus, if any, in order to put it out of the commercial trade. 7.- PUNTO FA will pay in full all transport expenses, including both the transport itself and the insurance, of any return of merchandise from RAMO's store to PUNTO FA or any other company appointed by PUNTO FA. 8.- At the end of every season, and generally for any return of merchandise to PUNTO FA in Spain or to any other company appointed by PUNTO FA, RAMO will strictly follow the Packaging and Transport Guideline established by PUNTO FA as set forth in Appendix n°2. SIXTH.- SALE COMMUNICATIONS AND PAYMENT TERMS ON THE GOODS 1.- An invoice will be issued by PUNTO FA for every delivery of merchandise. 2.- Within the framework of this Agreement, and as an essential element of thesame, PUNTO FA hereby guarantees RAMO a commercial margin of 50% ofthe Retail Price excluding VAT stated on each item sold in the MANGO store during the season.At the same time, on each item marked with a sales price, PUNTO FAguarantees RAMO a commercial margin of 50% of the Retail Price excluding VAT.In this sense, at the end of the season PUNTO FA shall apply a special discount to invoices initially issued during the season in question as a means of ensuring the aforementioned commercial margins for RAMO. 3.- The stipulations of Article 1 of this Sixth Term notwithstanding, both parties hereto agree that the payment of invoices is initially deferred, and the corresponding sums shall be paid as merchandise is sold to the final customer in the terms and conditions detailed below: 3.1.- RAMO is obliged to have a Computer Solution in the store following the characteristics fixed by PUNTO FA. This Computer Solution will include, amongst some other software, the Point of Sales and Stock Control management software. Likewise, RAMO engages to contract a Technical Service to maintain, repair and update the referred Computer System. It is established that all buying and maintenance charges of the referred computer elements and services will be borne by RAMO. The referred computer elements will be paid before deliveries to PUNTO FA. 3.2.- RAMO engages to control that its store: - effects a daily control reading on all garments sold. - communicates (via modem), the computer file including the sales of the day, every evening after closing. 3.3.- The sums to be paid to PUNTO FA by RAMO shall be deemed Partial Payments and shall be applied to the various invoices in chronological order for each season in order to avoid, amongst others, any exchange rate or price variation from one season to the following. In this sense, first digit of items references records the season. On each Payment Day, RAMO shall print out a specific list indicating the sum payable to PUNTO FA, which will be calculated according to the following: 3.3.1.- RAMO shall pay PUNTO FA 50% of the Retail Price excluding VAT stated on each item sold in the BRAND X store during the season and on each item marked with a sales price, RAMO shall pay PUNTO FA 50% of the Retail Price excluding VAT. 4.- RAMO engages to dispatch the merchandise stocked in customs maximum in a week since its arrival. In case this period is longer RAMO will pay PUNTO FA the 52 50% percent of the invoices amount corresponding to the merchandise deposited in customs as well as any damages caused to PUNTO FA for not dispatching the merchandise on due time. The previous will not apply in case of force majeure. 5.5.1.- RAMO undertakes to pay by bank transfer into the Spanish account indicated by PUNTO FA in EURO: a. every FRIDAY, the amount corresponding to the sales from the preceding Monday until Wednesday. b. and every TUESDAY, the amount corresponding to the sales from the preceding Thursday until Sunday. c. Every Friday and Tuesday RAMO will send to PUNTO FA via fax the bank proof of the due payments. 5.2.- The payment day Exchange Rate will be taken from www.oanda.com. 6.- Any cheques or credit cards unable to be charged will be under the sole responsibility of RAMO. 7.- One unjustified delay in the weekly payments referred to in this clause will grant PUNTO FA the right to suspend the sendings as well as to consider all the invoices issued to RAMO expired according to the first paragraph of this present term. In the same sense the amounts owed to PUNTO FA will bear a monthly interest of 1%. 8.- At the end of every season, PUNTO FA will check that every item sent to RAMO has been sold (and therefore paid according paragraph n° 3 of this present Term) or returned to PUNTO FA. The missing items (not sold, not returned) will be charged to RAMO. 9.- Payments for the amounts owed to PUNTO FA regarding window dressings, window dressing material, decoration project, decoration materials, advertising, and others (sweets, bags, silk paper... ) will be deposited by bank transfer in the currency specified in the invoice and into the account established by PUNTO FA. SEVENTH.- BANK GUARANTEE 1.- RAMO undertakes to guarantee the payments owed to PUNTO FA by issuing an "Irrevocably and at First Demand" Bank Guarantee for the minimum sum of . (..EUR) destined to guarantee the correct fulfilment of RAMO's financial obligations during the contract. 2.- The amount of this bank guarantee might be updated every season by PUNTO FA according to the value of the stock deposited in RAMO's MANGO shop as well as the average debt of RAMO. 3.- RAMO undertakes to strictly follow the Banking Guideline for the issuing and for the renewal of the Bank Guarantee, attached to this contract in the Appendix n°3. 4.-This bank guarantee will be constituted according to the model given by PUNTO FA and prior to the first sending of PUNTO FA's goods to the MANGO store. 5.- The non obtention of the Bank Guarantee will consequently lead to the termination of this contract. EIGHTH.- INSPECTION 53 RAMO will allow PUNTO FA, through the person or persons assigned by it, the inspection of the stores to check the strict compliance of obligations undertaken by RAMO. NINTH.- COMMERCIAL CODE OF PRACTICE The parties expressly agree to adjust their commercial code of practice to a code of conduct that will not damage the name, prestige and image of BRAND X products. The parties will abstain from using material, means or mechanisms of propaganda or of any other kind that could be damaging the name, prestige and image of BRAND X products. Furthemore, RAMO will abstain of appearing and/or expressing himself on behalf of PUNTO FA, in front of any media, be it in radio, press or TV. TENTH.- TERMINATION OF THE AGREEMENT This Agreement shall terminate or become null due to any of the following causes: 1.- By relinquishment or waiver of any of the contracting parties. Such relinquishment or waiver must be notified within three months before the contract expiration or extension date. 2.- By extinction of the juridical personality, temporary receivership, bankruptcy or insolvency of any of both parties. 3.- By important changes in the juridical structure of RAMO, or merging with another without prior written authorisation by PUNTO FA. 4.- By cession of the rights and obligations of RAMO to a third party without the prior written authorisation of PUNTO FA. 5.- By RAMO non fulfilment of "MANGO Store Management Manual" as well as carrying out any action that may affect PUNTO FA's image, Patent rights, quality of sold products or by infringement of the regulations concerning the managing of the premises, labour relationships, taxes,... 6.- By infringement or non-fulfilment by any of the parties of any obligation assumed through the signature of this Agreement. ELEVENTH.- RELATION BETWEEN THE PARTIES AFTER THE EXPIRATION OF THE CONTRACT 1,- Once this contract expires RAMO will submit to PUNTO FA all catalogues, manuals, price lists, advertisements and materials of any kind supplied by PUNTO FA. All publicity about PUNTO FA's products will be automatically stopped. Likewise, and as an essential condition, RAMO will take away from the store any commercial sign bearing the trademarks BRAND X. 2.- Likewise, RAMO will abstain from using the MANGO furniture or any BRAND X decoration element in order to decorate a different shop taking benefit of BRAND X own look and image, and which could mean a confusion in the market. 3.- Once this contract has expired both parties understand that any commercial relationship between them is an isolated mercantile act and therefore subject to the corresponding legal norms and characteristics. This contract does not mean in any way nor should it be understood as association between PUNTO FA and RAMO. 54 4.- RAMO expressly admittes that the present contract it is not an agency contract. In this sense, as an essential condition of this contract, RAMO acknowledges that the termination of the present contract does not mean in any case a right of compensation in favour of RAMO for the customers RAMO had when it was operating the BRAND X shop referred to in this contract. TWELFTH. - CUSTOMER SERVICE BRAND X stores will refund in full the amount of the purchase if the client is not satisfied with the product. The refund will only take place on the 30 days after the sale and for the products that would have been sold in the territory where the BRAND X shop is located. In case of products bought outside of the territory the BRAND X shop is located, RAMO will change them for size and/or colour, within the 30 days following the date of sale. In this sense, RAMO will follow what is provided in BRAND X store Management Manual. THIRTEENTH.- PREVIOUS INFORMATION RAMO acknowledges having been duly informed and received from PUNTO FA, full details about the Mercantile Company PUNTO FA and MANGO group as well as the list and description of the activity and business of the sector to which the present Contract refers to, contents and characteristics of the same and the activity to be carried out by RAMO such as the exploitation, the extension and structure of the BRAND X network, the market referred to in this agreement and the BRAND X "Know-How" and all in at least thirty days in advance of the signature of the present contract. Likewise, RAMO also acknowledges having received and examined an exact draft of the present contract, which was provided by PUNTO FA at least thirty days in advance to the signature of the present. FOURTEENTH.- EXPENSES. FEES AND DUTIES The cost of all expenses, fees and duties of any kind derived from the granting and non-fulfilment of this contract by RAMO, will be entirely at its own charge. FIFTEENTH.- APPLICABLE LAW AND RELEVANT JURISDICTION This Agreement is subject to the Spanish law. Both parties hereto agree that for any question related to the interpretation or fulfilment of this Agreement, they expressly submit themselves to the Courts of Barcelona (Spain) waiving their own jurisdiction if any. SIXTEENTH.- VERSIONS OF THIS CONTRACT. The present contract is signed in two versions, one in English and the other in Spanish. In case of misunderstanding between both versions, the Spanish one will prevail. IN WITNESS WHEREOF, the parties hereto sign this Agreement in duplicate and with the same purpose in Palau-solita i Plegamans, the 10th of November 2003. 55 The appendix of the franchise contract has been omitted due to space savings. 56 6.5. FRANCHISE STORES COMPARED TO DIRECTLY OPERATED RETAILS (GY 2009) Figure 11 Franchise- and own retail systems in the German Fashion retail, orientated at TW-research 2009 1 57 6.6. QUALITATIVE INTERVIEWS 6.6.1. TRANSCRIBED TELEPHONE INTERVIEW WITH WELLENSTEYN Qualitative Research Interviewee: Company: Date: Time: Interview method: Karin Schuler Wellensteyn 16. January 2010 12:30 a.m. telephone interview 1. Wie heißen Sie? Karin Schuler 2. In welcher Position sind Sie tätig und seid wann? Ich bin für den Vertriebsgeneralhandelsvertrerter, der die Exklusivrechte hat als Sales Manager in Deutschland (Berlin und neue Bundesländer) im Aussendienst tätig. Wir besuchen unter anderem auch Franchise-Nehmer, mit dem Ziel Optimierung der Warenpräsentation, Informationsvermittlung über neue Styles, neue Farben un generell Tips... 3. Seid wann ist Wellensteyn im Franchising Business in Deutschland tätig? Erst seid 2005. 4. Wie hoch ist die Einstiegsgebühr für Franchise-Nehmer? Fordern Ihr fixe gebühren und/oder prozentuale Anteile am Umsatz? Es gibt keine Einstiegsgebühren. Wellensteyn stellt seinen Franchising-Nehmern alles zur Verfügung was mit Merchandising zu tun hat, sprich Werbematerial, Give Aways, etc. Dafür ist der Francise-Nehmer verpflichtet, eine bestimmte Summe pro Saison abzunehmen. Wellensteyn übernimmt keine Personal- und Mietkosten, der FranchiseNehmer zahlt auch den Ladenbau selber. Der Franchise-Nehmer ist außerdem verpflichtet, pro Saison einen gewissen Zielumsatz zu erreichen. Wenn er diese Ziele nicht erreicht können pro Kollektion ca 100 Jacken kurz vor Kollektionsensende an Wellensteyn zurückgegeben werden, aber dafür müssen neue Jacken abgenommen werden. Da kommen wir also unseren Franchise-Nehmern schon entgegen, so dass diese eine Risikominimierung haben. Wenn der Franchise-Nehmer also gewisse Styles nicht verkauft kann er sein Angebot überarbeiten und optimieren. Das Orderminimum bei einem Franchise-Nehmer mit einer Verkaufsfläche von 100m² ist pro Saison ca 200-300 Jacken. Der Franchise-Nehmer hat 2 feste Ordertermine pro Jahr und dort ordert er die neuen Styles für die Saison. Pro Jahr kommen ca 15 neue Styles hinzu und ca 15 Styles pro Jahr fallen weg. Das heißt, dass der FanchiseNehmer das ganze Jahr über eigentlich Styles bei denen er einen guten Abverkauf hat nachordern kann. Auf der anderen Seite darf der Franchise Nehmer die Styles nicht reduzieren, weil wir sie ja das komplette Jahr über anbieten. Wenn dies trotzdem passiert ist das ein Vertragsbruch, der von Wellensteyn streng verfolgt wird. Wenn wir so etwas rauskriegen wird der Franchise-Nehmer gesperrt. Er wird dann bspw 6 Wochen gesperrt. Sie werden nicht mehr beliefert, so dass sie Umsatzeinbußen haben. Nach dieser Bestrafung muss der Franchise-Nehmer erneut unterzeichnen, dass er sich nicht mehr entgegen den Vertrafsvereinbarungen verhalten wird, sonst kann die Partnerschaft nicht weiter fortgeführt werden kann. 58 5. Wieviele Franchising Niederlassungen haben Ihr bereits in Deutschland? Jetzt eröffnet wieder einer in Berlin, also grade 10. Thomas Wuttke, der Geschäftasführer von Wellensteyn, handelt im Hinblick auf Franchising eher bedacht. Er ist nicht unbedingt darauf aus, Franchising bei Wellensteyn besonders stark zu machen. Er verdient mit dem klassischen Großhandel sehr viel Umsatz macht, aber wenn die Rahmenbedingungen stimmen ist Wellensteyn natürlich offen. Es muss eine gute Location sein (zb Berlin Kuhdamm), große Kaufkraft, Bruttosozialprodukt, etc 6. Welche Vertriebswege nutzt Wellensteyn neben dem Franchising? Es gibt einen Onlinevertrieb über die Wellensteyn Homepage, der aber gar nicht forciert wird. Wellensteyn möchte, dass der Kunde primär im Einzelhandel kauft, da es sich um Funktionsjacken handelt, so dass Kundenberatung eine wichtige Rolle spielt. Aus diesem Grund ist der Verkaufspreis bei einem Internetkauf wesentlich häher als bei einem Kauf im Einzelhandel, um diese Tendenz zu unterbinden. Franchise-Nehmer müssen sich vertraglich darauf einlassen, dass die keinerlei Ware von Wellensteyn per Internet vertreiben dürfen. Bei Vertragsbruch wird der Franchise Nehmer rigoros gesperrt. Im Grunde ist es auch ein Vorteil für den FranchiseNehmer, da so die Marke Wellensteyn im Internet nicht verbrannt wird. 7. Wie viel Prozent macht der Vertriebsweg Franchising an eurem Gesamtumsatz aus? Es ist nicht viel, maximal 2-3 Prozent 8. Betreibt ihr Auslandsfranchising und wenn ja in welchen Ländern? Mein Chef hat die Exklusivvertriebsrechte für die USA, dort haben wir eine super Kalkulation. In Deutschland haben wir eine Kalkulation von 2,3-2,8 und in den USA ist es ca 3,8-4,8. In den USA ist ein großer Hype für europäische Marken, und damit natürlich ein sehr attraktives Land für Auslandsfranchising, bislang haben wir 7-8 Franchise-Nehmer in DL. Gerade Outdoorjacken die aus DL komme sind sehr gut angesehen. a. Welches Land ist euer stärkstes im Bereich Franchising? USA b. In welchem Land habt ihr Probleme über Franchising erfolgreich zu expandieren? Nein. Wir sind sehr erfolgreich und wachsen ungemein stark momentan. 9. Welche Chancen sehen Ihr für das Franchising im deutschen Modehandel in den nächsten 5 Jahren? Franchising wird bei uns immer stärker ein Thema, da Franchising natürlich für Wellensteyn ein minimales Risiko bedeutet. Der Franchisenehmer trägt das alleinige Risiko, dieser muss sehen, dass er seine Umsätze macht. Natürlich gibt Wellensteyn ihm die Nötige Unterstützung. Durch die festen Ordertermine am Anfang jeder Saison, kann Wellensteyn natürlich optimal hochrechnen und seine Stückzahlen planen, die er sich auf Lager legt. Der Fracnhise-Nehmer hat ganz genaue Zielvorgaben und Budgets, die er einzuhalten hat, damit es ein rentables Geschäft ist. 10. Welche Risiken sehen Ihr für das Franchising im deutschen Modehandel in den nächsten 5 Jahren? Wellensteyn bietet bislang ausschliesslich Outdoor-Jacken an. Dies ist für einen Franchise-Nehmer natürlich schwer, da er nur auf sehr spezielle Bedürfnisse seiner 59 Kunden eingehen kann. Aus diesem Grund wird für die Nahe Zukunft geplant, die Produktpalette zu erweitern, mit Backpacking Bekleidung, Funktionstshirts, Treckingrucksäcke, etc. Dadurch wird Wellensteyn dann ein komplettes Sortiment anbieten können, wodurch seine Attraktivität als Franchise-Geber natürlich enorm steigen wird. 11. Inwieweit spüren Wellensteyn die Auswirkungen der Krise im Franchising (bzgl. Bsp. Einhaltung der Ordertermine und der Orderminimums, Acquise neuer Franchise-Nehmer? Wir spüren die Krise gar nicht. Seid 7 Jahren sind wir als Lifestyle Marke am Markt, vorher waren wir ein Berufsbekleidungshersteller für Werft- und Schiffsbesatzungen, wir hatten von 2009 auf 2010 im Aussendienst eine Umsatzsteigerung von 24%. In den Outdoorjacken liegt unheimlich viel Potential, und es herrrscht gerade ein krasser Hype auf unsere Jacken. Unser Image ist sehr wertig, wir bieten aber einen guten Preis 12. Bietet der deutsche Markt im Hinblick auf Franchising langfristig noch genügend Wachstumsmöglichkeiten? Was wird sich ändern wenn der deutsche Markt gesättigt ist? Wir sind ja im Hinblick auf Franchising erst in den Anfängen, es herrscht noch unendlich viel Potantial im deutschen Markt. Allerdings sind wir auch ein Nischenanbieter. Wir werden mit Sicherheit uns nicht so dicht besiedeln wollen wie andere Franchising Anbieter wie bspw Bestseller. Das entspricht nicht unserer Strategie. 13. Welche EDV Systeme nutzen Wellensteyn bei der Partnerschaft mit Händlern? Da sind wir nicht sehr gut ausgestattet. Wellensteyn benutzt bei der Partnerschaft mit Franchise Nehmern „Wennysoft―, was aber im Hinblick auf unser ungemein starkes Wachstumsvermögen in den letzen Jahren nicht mehr ausreichend ist. Man kann zwar Statistiken über Umsätze rausziehen, aber man hat keinerlei Verknüpfungen was zum Beispiel I-handling anbelangt. EDI ist heute eigentlich ein must have im Franchise-System, aber dafür wird Wellensteyn noch eine Weile brauchen. 14. Immer mehr Firmen nutzen den Vertriebsweg über das Franchising? Inwieweit spürt Wellensteyn als Franchise-Geber die wachsende Konkurrenz? Wie hebt Wellensteyn sich von der Konkurrenz ab? Jack Wolfskin ist unsere größter Mitbewerber. Aber wir heben uns sehr erfolgreich von der Konkurrenz ab. Wir haben keinen ökotouch, sondern gehen einen modischen und maritimen Weg. Wellensteyn sitzt in Norderstadt, und unser Image basiert auf unseren Wurzeln, unsere Werbung und auch die Kollektion spiegelt immer die Nähe zum Wasser, zur Seeluft wieder. Dies hat sich in den Köpfen der Endverbraucher gefestigt. Wir wirken edler. Die Marke hat ein unheimliches potential. Wellensteyn ist in den letzten Jahren sehr viel modischer geworden. Der Einfluss neuester Trends macht die Marke Wellensteyn zu einer Marke mit vielen Eyecatchern, was dem Franchise-Nehmer als Highlightartikel im Verkauf natürlich nützt, und Kunden anzieht. Der Vorteil bei dem Franchise-System von Wellensteyn ist, dass wir immer 500.000 Jacken auf Lager haben. Alle Jacken, die wir im Sortiment haben, sind NOS Artikel. Wir führen immer 500-600 Artikel. Das hebt uns ungemein von der Konkurrenz ab. 60 Der FranchiseNehmer kann bedarfsgerecht genau die Styles nachziehen, die er zur optimalen Umsatzsteigerung braucht. Außerdem führt Wellensteyn noch ein zusätzliches Extralager, auf das nur Franchise-Nehmer Zugriff haben 15. Wie würdest du die Geschäftsbeziehung zu Franchise-Nehmern bezeichnen? Franchise Nehmer werden sehr stark unterstützt. Sie haben Prioritäten bei der Auslieferung, bei Merchandisingartikeln etc. Es ist sehr partnerschaftlich. 16. Wie hoch ist die Erfolgschance eurer Franchise-Nehmer? Sehr hoch. Wir haben viele Referenzbeispiele, die zeigen, wie man mit uns erfolgreich sein kann. Ein Kunde in Usedom ordert für eine Ladenfläche von 80m² pro Saison 600 Jacken, sprich er verkauft 1200-1500 Jacken im Jahr durch 17. Nach welchen Hauptkriterien wählt Ihr Franchise-Nehmer aus? Die höchste Priorität liegt natürlich bei der Kreditbonität, er muss liquide sein, und muss das ganze finanzieren können. Ausserdem legen wir großen Wert auf Professionalität, der Franchise-Nehmer muss vorab Schulungen durchführen. Der Franchise-Nehmer sollte auch bereits Erfahrung im Bekleidungseinzelhandel mit sich bringen. Wir haben auch Franchise Nehmer, die schon meherere Stores haben, was natürlich eine super Vorraussetzung ist. Vielen Dank für das Gespräch! 6.6.2. TRANSCRIBED FACE -TO-FACE INTERVIEW WITH LERROS MODEN GMB H- PART I Qualitative Research Interviewee: Simone Herrmans Company: Lerros Retail GmbH Date: 26. January 2010 Time: 18:00 p.m Interview method: face-to-face Location: Halle29, Düsseldorf, Showroom 1. Wie heißen Sie? Simone Herrmann 2. In welcher Position sind Sie tätig und seid wann? Ich bin bei Lerros Retail GmbH als Head of Export tätig. 3. Seid wann ist Lerros im Franchising Business in Deutschland tätig? Seid Ende 2007. 4. Wie hoch ist die Einstiegsgebühr für Franchise-Nehmer? Es gibt keine Franchisegebühren. Wir sind Systemanbieter und fordern von unseren Kunden gar nichts. Der Franchise-Nehmer zahlt nur die Ladenausstattung selber. Das beläuft sich in DL rein an Hardware (Möbel, Licht, Boden) auf ca 750€/m². Allerdings haben wird eine gewisse Ordersummer, die der Franchise-Nehmer uns abnehmen muss, den wir mittels eines Wareneinsatzplanes ermitteln. Wir errechnen, was er pro Monat zu kaufen hat, brechen es dann runter auf DOB und HAKA, dann brechen wir es weiter runter auf Artikelgruppen. Diese Auswertung ist dann quasi der „Menuvorschlag― von Lerros and unseren Franchise-Partner. Er weiß dann ganz genau, wie viele Anteile er pro Produktgruppe ordern muss, und kann dann in einem gewissen Rahmen wählen, welche Styles er aus unserem Sortiment für seinen Store haben möchte. Diese Auswertung basiert auf einer Umsatzplanung pro m² und auf einer LOG. Wir sind mit unseren Kunden EDI verbunden. Wenn Lerros von Franchise spricht, meinen wir Store-Business, wenn wir von Bewirtschaftung reden, dann ist 61 das Shop in Shop. Zurzeit haben wir in Deutschland ca 100 Shop in Shop Systems im Bereich HAKA, und ca 500 SIS im Bereich DOB. 5. Wieviele Franchising Niederlassungen hat Lerros bereits in Deutschland? Wir haben 6 company stores und einen Franchiser in Deutschland, und zwar in Düsseldorf, Berlin, Schweinfurt, Schwäbisch Hall und Kiel. Wir sind, was Franchising in Deutschland betrifft, ganz am Anfang. Wir wollen erst Erfahrungen sammeln mit unseren eigenen Stores bevor wir unseren Kunden eine Franchising-Partnerschaft mit uns empfehlen. Wenn wir sagen können, dass es so und so ablaufen muss so damit wir Erfolg bieten können, starten wir mit dem Franchising durch. 6. Welche Vertriebswege nutzt Lerros neben dem Franchising? Wir bieten Großhandel, Multibrand, Shop in Shop, und im Ausland vermehrt auch an Franchises an. Wir haben aber keinen Onlinevertrieb. 7. Wie viel Prozent macht der Vertriebsweg Franchising an eurem Gesamtumsatz aus? Noch sehr wenig in DL, wir sind ganz am Anfang. In Russland machen wir mit Franchise ca 40% des gesamten Umsates 8. Betreibt ihr Auslandsfranchising und wenn ja in welchen Ländern? In Russland, Tschechien, und der Ukraine. a. Welches Land ist euer stärkstes im Bereich Franchising? Russland. b. In welchem Land habt ihr Probleme über Franchising erfolgreich zu expandieren? Wir haben bislang keine Probleme, weil wir ganz genau untersuchen ob sich das Land für Franchising eignet. In Spanien stehen wir zum Beispiel ganz am Anfang, da tasten wir uns Schritt für Schritt an den Markt, zunächst einmal nur mit Shop in Shop. Der 1. Schritt ist Distribution im Wholesale mit Multibrand, dann folgt Shop in Shop in Shop und dann Folgen Stores, die in der Regel Franchise Stores sind. 9. Welche Chancen seht Ihr für das Franchising im deutschen Modehandel in den nächsten 5 Jahren? Wir haben große Pläne. In den nächsten 10 Jahren erwarten wir, dass sich der Modehandel in 2 Bereiche teilen wird: Einmal der Bereich Franchise und einmal der Bereich Multibrand mit Wholesale. Das ist ein Geschäft was sich tendenziell konzentrieren wird auf sehr sehr gute Multibrandsanbieter, besonders in Mittelgroßen Städten mit einem gutem Einkommen, dieser Bereich wird gestärkt werden. Die kleineren Händler werden in den nächsten 10 Jahren sehr große Probleme mit dem Bereich Multibrand Stores bekommen. Diese haben dann die Möglichkeit auf Franchising umzuschwenken von einem guten Label. Lerros hat den Ehrgeiz den Bereich Franchise sehr deutlich auszubauen, allerdings sind wir noch in der Testphase, und haben unsere Stores erst 1 ½ Jahre am Netz, und wir befinden uns grade in der Witschaftskrise, so dass wir noch keine genauen Auwertungen machen können. Wir werden wahrscheinlich noch ein paar Monate warten, bis wir Bilanz ziehen werden. Die Marke muss für Franchising einen bestimmten Bekanntheitsgrad haben, da gehört Lerros bislang mit Sicherheit nicht unter die Top 10. Aber über ein wachsendes Engagement im Bereich Franchise ist das auch zu optimieren. Wenn wir 62 erstmal Deutschlandweit sichtbar sind, können wir auch anfangen mit Kampagnen zu arbeiten. 10. Welche Risiken sehen Ihr für das Franchising im deutschen Modehandel in den nächsten 5 Jahren? Ich sehe für Lerros mehr Chancen als Risiken. Wir setzen unsere ganze Energie in das Produkt, verbessern uns kontinuierlich und haben eine strenge best price policy. Was partnerseitlich ein Problem sein könnte ist die finanzielle Ausstattung des Partners, das heisst den ersten Schritt zu machen erfolgt Bankenseitig. Die Bank fördert den Bekleidungshandel nicht besonders stark über Kredite. Die Investitionsgröße ist schon enorm hoch am Anfang, man muss oft 3-6 Monate Kaution bezahlen, die Ladenausstattung, die Ware, die Renovierung etc. Bei einem 150m² Store kommt man schnell auf 50000€. 11. Inwieweit spürt Lerros die Auswirkungen der Krise im Franchising (bzgl. Bsp. Einhaltung der Ordertermine und der Orderminimums, Acquise neuer Franchise-Nehmer? Die Krise bestärkt uns eher, den Franchising Weg zu gehen. Im Ausland schlägt die Krise stärker zu als in Deutschland. Generell, trifft es momentan die Multibrand Kunden als erstes. Die Shop in Shop und die Store Kunden leiden wesentlich weniger. Der Multibrand Kunde streicht ganze Lieferanten weg, und der Shop in Shop Kunde machte im Jahr 20% weniger Umsatz. Das heißt natürlich für Lerros, dass wir unseren Kunden auch weniger Ware liefern müssen. Unsere Ziel ist es partnerschaftlich zu Handeln, und unseren Kunden nur die Warensumme zu verkaufen, die er auch gebrauchen kann. Wir möchten nämlich gerne dass der Kunde die Ware überlebt, wir versuchen zu helfen, in dem wir eine größere Menge an NOS Artikeln bieten, und bieten Fashion, die wenig Risiko mit sich bringt. Der Konsument entscheidet sich dorthin zu gehen, wo er ein klares Angebot bekommt. Dies bekommt er in einem Lerros Store, da er dort ein Komplettangebot vorfindet, wir haben DOB und HAKA und gehen in alle Produktgruppen rein, Bekleidung, Unterwäsche, Socken, Gürtel. Das ist einfach für den Kunden, da er ein breites Angebot ist dass ihm alles bieten kann. 12. Bietet der deutsche Markt im Hinblick auf Franchising langfristig noch genügend Wachstumsmöglichkeiten? Ja, da wir ganz am Anfang stehen ist noch keine Sättigung des Marktes in Sicht. 13. Welche EDV Systeme nutzen Wellensteyn bei der Partnerschaft mit Händlern? EDI. Wir haben 60% unsere gesamten Flächen EDI connected. Wir haben eine Warenwirtschaftsabteilung mit einem Reporting System, das tagesgenau aufzeigen kann, was alle Flächen pro Tag an Abverkäufen, Rabatten etc vornehmen. Wir können die Umsatze monatlich und täglich betrachten, auch im Vergleich zum Vorjahr. Wir können top 20 Listen erstellen für In- und Ausland... 14. Immer mehr Firmen nutzen den Vertriebsweg über das Franchising? Inwieweit spürt Wellensteyn als Franchise-Geber die wachsende Konkurrenz? Wie hebt Lerros sich von der Konkurrenz ab? Wir machen unser Ding gut und sorgen dafür, dass unsere Franchise-Nehmer Geld mit uns verdienen. Nicht jeder der Franchising macht kann es auch. Wir legen viel Wert darauf Erfahrungen zu sammel, und haben diese über Shop in Shop bereits ausreichend gesammelt. Wichtig ist auch, dass wir unsere Franchise Kunden helfen, die richtigen Standorte zu finden, den richtigen Mietpreis und die richtige 63 Vertragsdauer zu verhandeln. Das ist unser Service: Wir haben dafür spezialisierte Expansionsmanager, dafür bezahlt unser Kunde nichts. Außerdem bieten wir unseren Kunden Konzeptfenster, diese bestehen immer aus einem Backlit, eine Saisonszene, und diese werden weltweit in allen Stores so dargestellt, und der Effekt ist phenomenal. Nichts ist so wichtig wie die Ansprache über das Shop Window. Wir haben überall die gleiche Bildsprache die zu unserem Produkt passt. Wir sind eine international Marke und machen ein internationales Produkt. Unser Kunde ist heute kosmopolit, er kauft überall ein und möchte überall das gleiche Produkt kaufen. Mit diesem Konzept-Window schaffen wir es, die Marke weltweit einheitlich zu kommunizieren. 15. Wie würdest du die Geschäftsbeziehung zu Franchise-Nehmern bezeichnen? Wir sind sehr partnerschaftlich. 16. Wie hoch ist die Erfolgschance eurer Franchise-Nehmer? Sehr hoch. Wir haben besipielsweise einen Kunden, der vor 6Jahren in Russland den 1. Store aufgemacht hat, und heute den 11. Aufmacht. Ich gehe also davon aus dass man mit uns Geld verdienen kann, und Zukunftperspektiven hat 17. Nach welchen Hauptkriterien wählt Ihr Franchise-Nehmer aus? Die Liquidität ist zum einen sehr wichtig. Aber ganz wichtig ist auch unternehmerisches Denken und eine Affinität zu Zahlen. Erfolg ist planbar. Wenn man mit Zahlen umgehen kann, die eine eindeutige Sprache sprechen, kann man erfolg haben. „Ich glaube...― gibt es bei uns nicht. Wir haben jedes einzelne Produkte genau durchdacht und analysiert, welche Erfolgsmuster vorhanden sind und wie wir sie auf das Produkt übertragen können. Unser Store-Team kümmern sich permanent um die Beratung unserer Franchisees in allen Bereichen. Wir haben für jedes Problem fundierte Vorschläge. Es scheitert oft an mangelnder Bonität, oder er möchte unsere Erfolgsmuster verändern. Immer dann wenn wir auf partnerwunsch etwas verändern haben war der Francise-Nehmer weniger erfolgreich. Wir können nur dann Erfolg bieten, wenn wir das Franchise-System stringend durchziehen. 18. Wieviele Bewrber habt ihr momentan? Wir machen zurzeit ca 6 Franchise- Stores im Ausland auf, und haben ca 2 ½ mal soviele Bewerber. 19. Wie lange sind eure Verträge mit Franchise-Nehmern? Sie sind in der Regel unbefristet. 20. Bietet ihr euren Kunden ein Hanbuch? Nein 21. Wieviele Ordertermine müssen eure Franchise-Nehmer einhalten? 12 pro Jahr und wir liefern immer nach Fertigstellung. Vielen Dank für das Gespräch! 6.6.2.1. TRANSCRIBED TELEPHONE INTERVIEW WITH LERROS -PART II Qualitative Research Interviewee: Simone Herrmanns Company: Lerros Moden GmbH Date: 03.March 2010 Time: 10:00 a.m. Interview method: telephone interview 64 1. In unserem letzten Interview erwähntest du dass Lerros in Russland ca 60% des gesamte Franchise-Umsatzes machst. Habe ich das so richtig verstanden? Ja 2. Warum ist Russland für euch so attraktiv für Franchising? Weil Russland ein unheimlich expansiver Markt ist. Der Bedarf an Monobrand Stores ist enorm. In Deutschland ist die Expansionsstärke deutlich geringer. Es gibt Systemanbieter die in Deutschland trotzdem sehr stark sind, zum Beispiel Street One. Street one gibt es in Russland überhaupt nicht, deswegen ist unter anderem die Konkurrenzsituation in Russland auch sehr günstig. Außerdem sind für die russischen Kunden die Vorraussetzungen sehr günstig. In Deutschland musst du, um Franchise Nehmer sein zu können, erfahren sein und Geld haben. In Russland muss man die richtigen Beziehungen haben, man bezieht eine gute Store location über connections, und finanziert sich entweder über die Bank, über Private Investoren, oder über deinen Lieferanten. Ein weitere Vorteil des russischen Marktes für Franchising ist, dass der Markt Fehler verzeiht. Besonders in Aufbauländern ist die Fehlerquote sehr hoch, in Russland liegt sie bei 20%. 3. Hat euer Erfolg in Russland damit zu tun, dass ihr mit Lerros den mittleren Markt entspricht, und in Russland die Mittelschicht sehr stark wächst? Ja definitiv. Wir bieten ein Produkt im Markt der Mitte, und spüren unheimlichen Bedarf. Ausserdem hat sich der russische Kleidungsstil in Russland in den letzten 10 Jahren stark gewandelt, der russische Kunde kleidet sich heute cosmopolit. Vor 10 Jahren hat jeder russischer Mann zur Arbeit einen Anzug mit Krawatte getragen, heute kleidet sich er der Russe mit einer edlen Jeans, oder Baumwollhose, dazu Hemd und Pulli. Casual Mode hat heute in Russland ein deutlich breiteres Feld. 4. Arbeitet Ihr mit Master Franchising? Wir haben keinen Masterfranchisor. Wir arbeiten mit jedem Franchise-Nehmer in Russland separat. Einen Masterfranchiser braucht man dann, wenn man nicht genug über den russischen Markt weiss, oder wenn man sein Risiko minimieren möchte. Wir haben jahrelange Erfahrungen und russische Kontakte. Wir haben in Russland einen guten Ruf, da wir ein System bieten, was Zukunfstpotential hat. Wir haben aktuell 22 Franchise Nehmer in Russland. Unser Kontakt mit Ihnen ist sehr eng. Wir sehen uns einmal im Monat, entweder in Deutschland oder in Russland. In Moskau haben wir ein representative Office in dem wir auch einen Showroom haben wo wir mit unseren Franchise-Nehmern die Order Abwicklung durchführen. Außerdem haben wir ein Visual Merchandise Team, dass jeden Store alle 2-3Monate besucht und sich um shop window und interor design kümmert. In den nächsten 10 Jahren wird es mit Sicherheit auch in Russland eine Marktbereinigung geben, so dass die schwachen Marken verdrängt werden, die sich nicht an den russischen Markt angepasst haben. 5. Wie würdet Ihr die Zahlungszuverlässigkeit russischer Franchisenehmer im Vergleich zu den deutschen Franchisenehmern beschreiben? Die Zahlungszuverlässigkeit eines russischen Franchise Nehmer ist von deutschen Lieferanten in der Regel als mittelmässig eingestuft. Es kommt darauf an, wie gut dein Kontakt zu den Kunden ist, und wie wichtig dein Produkt für den Geschäftserfolg des Franchise-Nehmer ist. Wenn dein Franchise Nehmer einen Mono65 und ein Multibrandstore hat dann arbeitet er mit beispielsweise 25 Marken, davon sind mindestens 20 Marken von deutschen Lieferanten. Der Franchise-Nehmer bezahlt die wichtigsten Lieferanten für Ihn zuerst. Wir bieten diese Produkt. Wenn ein Kunde nicht zahlt kriegt er auch keine Ware, womit dem Kunden wichtiger Umsatz verloren geht. Wir sind sehr streng mit unseren Forderungen, und wissen, dass der Kunde unsere Ware braucht. Die Verfolgung von Forderungen ist ein sehr wichtiger Teil unseres täglichen Jobs bei Lerros. 6. Wie würdet Ihre die Rechtssicherheit für euch in Russland beschreiben? Wir haben natürlich Store Verträge, an die man sich halten miss. Ich stelle mir es sehr schwierig vor, wenn man aus einem Franchise-Vertrag aussteigt, den wir vor Gericht verhandeln müssen. Das wird in Russland nicht funktionieren. Wenn man meint dass das in Russland zum Erfolg führt dann hat man von dem Land keine Ahnung. Deswegen ist der enge Kontakt zu unseren Kunden so wichtig. Wir haben als Franchise Nehmer eine gewisse Macht, da wir für den Erfolg unseres FN zu einem großen Teil verantwortlich sind. Wenn wir dafür sorgen, dass am POS alles gut läuft und er Erfolg hat, dann kann er auch zahlen. 7. Wie bewertet ihr den russischen Einzelhandel im Vergleich zum deutschen? Russischer Einzelhandel ist sehr interessant. In Russland ist der Verdrängungsmarkt deutlich schwächer. Im Gegensatz zu den gesättigten Deutschen Märkten herrscht in Russland Bedarf. Gerade in Zeiten der Krise ziehen sich russische Einzelhändler deutlich von französischen und italienischen Lieferanten zurück, weil diese nicht komplett liefern können, und fokussieren sich auf deutsche Lieferanten. Deutsche Lieferanten sind im Hinblick auf Passform, Qualität, und Zuverlässigkeit an den russischen Bedarf sehr gut angepasst. 8. Wo seht ihr euch im Hinblick auf Franchising in Russland in 5 Jahren? Wie sehen uns innerhalb der nächsten 2 Jahren mit eigenen Stores in Russland. Wir werden natürlich parralel weiterhin mit franchise stores wachsen. Realsitisch in 5 Jahren sind würde ich sagen 50 franchise stores und 20 eigene stores. 9. Welchen Markt seht ihr als geeigneter für Franchising an, Russland oder Deutschland? Ich kenne den deutschen Markt nicht so intensiv, aber ich weiss dass der Deutsche Markt von Giganten im Bereich Systemanbieter dominiert wird, wie Street One, Esprit, S.Oliver. Die Chancen für Lerros sind daher in Zentraleuropäischen und Osteuropäischen Ländern sehr viel größer, weil wir dort viel mehr Bedarf zu haben. IN Deutschland müssen wir uns den Vergleich von größeren Mitarbeitern gefallen lassen, im Hinblick auf m² umsatz und rentabilität. Da sind in Deutschland schon sehr strenge Vorgaben. Ich muss da investieren wo ich best return on investment habe. Es ist enorm wichtig für Lerros weitere Stores in Deutschland aufzumachen, für die Positionierung unserer Marke. Aber leichter hat man es im Ausland. 10. Warum glaubst du, dass viele Franchise-Geber sich im Hinblick auf Franchising nicht an den Deutschen Markt herantrauen, und anstatt dessen die Expansion über Franchising in Osteuropa oder Asien vorziehen? Die großen Franchiser teilen sich in Deutschland den Markt, und geben die Benchmarks an. Wir eröffnen jedes Jahr 3-5 Stores in Deutschland. Wenn wir ein glasklares Modell definiert haben, sind wir auch für Franchising in Deutschland viel besser geeignet. 66 Best return in investment findet einfach im Ausland statt. Ich bin davon überzeugt, dass francising das system der zukunft ist, dass für Firmen unverzichtbar ist. Es wird in 10 Jahren noch Warenhäuser geben und etablierte Einzelhändler. Diese Platzhirsche werden sich mit Marken die Busde vollmachen die Systemcharakter haben. In den Shopping Malls in Deutschland gibt es heute schon zu 90% Monostores von Systemanbietern und Franchise-Nehmern. Multibrand Stores werden immer mehr aussterben. Viele deutsche Unternehmen sind dem deutschen Sprachraum sehr verbunden, und haben darüber hinaus das Problem, dass sie wenig in die Ferne und in das benachbarte Ausland denken. Vielen Dank für das erneute Gespräch! 6.6.3. TRANSCRIBED TELEPHONE INTERVIEW WITH ULLA POPKEN GMBH Qualitative Research Interviewee: Mark Brocato Company: Ulla Popken GmbH Date: 02.February 2010 Time: 09:00 Uhr Interview method: telephone interview 1. Wie heißen Sie? Marc Brocato 2. In welcher Position sind Sie bei Ulla Popken tätig? Ich bin Head of Global Franchising. 3. Seid wann ist Ulla Popken im Franchising Business in Deutschland tätig? Seid 1984. Wir sind aber heute im Hinblick auf Franchising eher national aufgestellt, in Deutschland ist unser hauptsächlicher Vertrieb über den Retail (eigene Stores). Franchising in Deutschland ist eher ein Ausnahmefall, wir behandeln unsere Franchiser eher wie Shop in Shop Kunden. 4. Fordern Sie eine Einstiegsgebühr für Franchise-Nehmer? Fordern Sie fixe Gebühren und/oder prozentuale Anteile am Umsatz? Nein, wir fordern keine Einstiegsgebühr. 5. Wie hoch ist dir Erstinvestition Ihrer Franchise-Nehmer für Ladenbau, Mobiliar, etc. Pro m²? Unsere Franchise-Nehmer müssen mit ca. 380€ pro m² für Materialien rechnen. 6. Welchen Service bieten Sie Ihren Franchise-Nehmern? Wir stellen VM zu Verfügung, einen Innenarchitekten, Visual Merchandising Material, wir helfen bei der Immobiliensuche, und wir geben montalich ein VM-Buch heraus. Wir machen ein System geschäft. Das heißt, dass wir Bausteine entwickeln, und dann errechnen, wieviele Teile dieser Bausteine unser Franchise-Nehmer pro m² verkaufen sollte. 7. Wieviele Ordertermine müssen Ihre Franchise-Nehmer einhalten? Wir haben 4 feste Ordertermine pro Jahr und machen 12 Kollektionen pro Jahr, sprich wir beliefern unsere Franchise-Nehmer 12 mal im Jahr. 8. Mit wievielen Franchisern arbeitet Popken bereits in Deutschland? Wir haben kaum Franchise-Nehmer in DL, wir haben zur Zeit 42 Shop in Shops und planen uns im Jahr 2010 zu verdoppeln. 9. Welche Vertriebswege nutzen Sie neben dem Franchising? 67 Wir sind ein ein Multi-Channel Unternehmen. Retail(300 Stück) , Franchising, Shop in Shop, Onlinevertrieb. 10. Mit welchem Vetriebsweg ermitteln Sie den meisten Umsatz? In DL ermitteln wir mit Retail den meisten Umsatz 11. Welche Anteil macht Franchising an Ihrem gesamten Vertrieb aus? Das ist noch zu früh zu sagen, wir haben nur 3-4 Geschäfte, das ist noch nicht nennenswert. 12. Betreiben Sie Auslandsfranchising und wenn ja in welchen Ländern? Ja, in Russland, Polen, Ungarn, Griechenland, Serbien, Saudi Arabien, Zypern, und noch ein paar weitere. Eigene Geschäfte haben wir in DL, Niederlande, Belgien, Luxemburg, Schweiz, Frankreich, Großbrittanien a. In welchem Land sind Sie mit Ihrem Franchise-System am erfolgreichsten? Noch in Griechenland, aber bald wird Russland unser erfolgreichstes Land im Hinblick auf Franchising sein. b. In welchem Land haben Sie Probleme über Franchising erfolgreich zu expandieren? 13. Welche Chancen sehen Sie für das Franchising im deutschen Modehandel in den nächsten 5 Jahren? Wir haben den Plan in Süddeutschland über Franchising zu expandieren, da wir in dieser Region noch viele Entwicklungsmöglichkeiten sehen. Wir sind bislang sehr stark mit eigenen Geschäften in Norddeutschland vertreten, fast alle unserer 180 Läden liegen in diesem Bereich. 14. Inwieweit spüren Sie die Auswirkungen der Krise im Franchising (bzgl. Bspw. Einhaltung der Ordertermine und der Orderminimums, oder bei der Acquise neuer Franchise-Nehmer? Auf jeden Fall, besonders stark ist Polen, Griechenland und Ungarn betroffen. 15. Wo möchten Sie im Hinblick auf Franchising in 5 Jahren stehen? Wir haben vor, in 5 Jahren uns im Hinblick auf Franchising zu vervierfachen. Dabei ist DL nicht mein Kernmarkt, wir konzentrieren uns in DL lieber auf Shop in Shop. Bei SIS haben wir eine kleine Investition für den Kunden, diese SIS sind meistens wegen Ihres Standorts sehr stark frequentiert und ziehen Leute mit verschiedenen Geschmäckern an. 16. Wie hebt sich Ulla Popken als Franchise-Geber von der Konkurrenz ab? Wir haben bereits langjährige Erfahrung im Große-Größen-Segment. Wir haben ein sehr breit gefächertes Sortiment. Wir haben ausgefeilte Konzepte hinsichtilich Shopdesign, Ladenbau, Visual Merchandising und Marketing. Des Weiteren bietet unser Franchise Team Ihnen in jeglicher Hinsicht unterstützung, und sie können weiterhin ihr eigener Chef bleiben. 17. Welche EDV Systeme nutzt Popken bei der Partnerschaft mit Händlern? Ab März 2010 haben wir EDI, alle unsere neuen Kunden werden damit schon verknüpft, die alten Kunden laufen noch über den typischen Wholesale, werden aber auch nach und nach angeknüpft. Ich würde uns als hybrid vertikal bezeichnen, wir machen ein Systemgeschäft, aber wir können nicht in allen unseren Vertriebsländern diktieren, was unser Franchise-Kunde zu kaufen hat. In Saudi-Arabien macht es bspw. Keinen Sinn eine volle Ladung Winterjacken zu schicken, wenn es bei denen 68 37° sind. Ich lasse ihnen die Möglichkeit, unsere Kollektionsbausteine zu wechseln, bis zu 30%. Dies ist relativ viel Varietät. 18. Wie würden Sie die Geschäftsbeziehung zu Franchise-Nehmern bezeichnen? Von einer Skala von 1-10 vielleicht eine 8+. Eine 10 wäre es enn ich mehr Zeit hätte sie besuchen zu gehen. Ich Sehe meinen Franchise-Kunden 4 mal pro Jahr während den Orderterminen und versuche außerdem, sie 2 mal pro Jahr zu besuchen. Aber ien ständiger, bzw wöchentlicher Kontakt ist in der Regel nicht möglich. 19. Nach welchen Hauptkriterien wählen Sie Franchise-Nehmer aus? Unsere Franchise-Nehmer müssen sich bereit erklären, ausschliesslich Ulla Popken Produkte zu vertreiben, also einen Monomarkenstore zu führen. Müssen einen Standort mit mindestens 70.000 Einwohnern wählen mit guter Kaufkraft. Der Franchise-Store muss gut frequentiert sein, und in einem Center oder an einer Einkaufsstraße liegen. 20. Wieviele Bewerber haben Sie ca pro Jahr für eine Franchise-Partnerschaft in Deutschland? Wir haben ca 5-7 Bewerber pro Monat. Unser Kernmarkt ist wie gesagt DL und diesen Markt versorgen wir sehr erfolgreich über unseren Retail, das ist unsere Kernkompetenz. Es scheitert meistens daran, dass die Bewerber entweder zu nah an unsrem eingenen Gebiet ansiedeln wollen, oder aber nicht kompetent genug sind. Viele Bewerber möchten gerne einen Franchise-Store über Ulla Popken eröffnen, haben aber nicht genügend know-how. Deutschland ist ein sehr informierter Markt, und damit sehr anspruchsvoll, auch die Konkurrenz ist sehr hoch, da muss Profenionalität gegeben sein, um erfolgreich in dieser Partnerschaft sein zu können. Außerdem ist Kreditbonität auch oft ein Grund zum scheitern. Vielen Dank für das Gespräch! 6.6.4. TRANSCRIBED TELEPHONE INTERVIEW WITH OSKA MODEN GMBH Interviewee: Michael Spang Company: Oska Moden GmbH Date: 07. February 2010 Time: 17:30 Uhr Interview method: telephone interview 1. Wie heißen Sie? Michael Spang 2. In welcher Position sind Sie tätig und seid wann? Assistent der Geschäftsleitung seid 2002 3. Seid wann ist Oska im Franchising Business in Deutschland tätig? Seid 2006 4. Wie hoch ist die Einstiegsgebühr für Franchise-Nehmer? Fordern Ihr fixe gebühren und/oder prozentuale Anteile am Umsatz? Nein. Wir fordern von unseren Franchise-Nehmern gar nichts, wir sind auch bei den Orderminimums flexibel. 5. Wie hoch sind die Kosten für die Erstausstattung ungefähr pro quadratmeter? Grundsätzlich ist unser Franchise-System sehr stark auf unsere Kundenanforderungen zugeschnitten. Unsere Stärke liegt im Großhandel, unser Eigenretail ist relativ klein. Unsere Kunden sind sehr unterschiedlich. Wenn unsere Kunden mit uns sehr stark arbeiten, und sich mit unsere Marke weiterentwickel, 69 haben wir für diese sozusagen ein „Bonuspaket― entwickelt. Das heißt, dass man bei uns dann bessere Bedingungen für den Franchise-Shop erhält, sprich einen höheren Rabatt und längere Zahlungsbedingungen. Wir verlangen dann aber, dass sie 80% ihrer Ware mit Oska bestücke. Das ist die einzige Bedingungen. Je nach dem, wie das individuelle Franchise-Projekt aussieht, passen wir unsere Unterstützung daran an. Das variiert von kleinen Werbezuschüssen, wenn der Laden eh schon unserem Look entspricht und kein neuer Ladenbau nötig ist, oder aber umfangreichere finanzielle Unterstützung beim Umbau, falls dieser erforderlich ist. Diese Unterstützung bieten wir aber nur wenn wir für uns gute Umsatzchancen sehen. 6. Also haben sie kein einheitliches Shop-Design in Ihren Franchise stores? Nein, wir haben ein Shop-CI, Vorbild ist dabei unser erster Franchise-Store, den wir in München eröffnet haben. Alle Franchise-Stores haben sich immer an diesem Look orientiert, aber eine eigene Ausprägung gefunden. Wir haben zum Beispiel graue Böden und eine bestimmte Art der Warenpräsentation. Der Franchise-Nehmer versucht unserem Umsatz so weit wie möglich nachzukommen, aber wir sind da flexibel, je nach Projekt. Der Einzelhändel hat in der Regel keine sechsstelligen Zahlen zur Verfügung um in einen Oska Shop zu investieren, und da wünscht er sich natürlich eine starke Beteiligung von uns. Diese Mittel haben wir in der Vergangenheit nicht ausreichend gehabt, und haben so realistische Zwischewege gefunden. Wir bieten realistische Partnerschaften. Wenn ein Laden nicht umgebaut werden muss, wenn der Trockenbbau in einer akzeptablen Form ist, dann können wir einen Oska Shop mit 400-500€ pro m² aufbauen. 7. Haben Sie keine Angst dass Sie so keinen einheitlichen Marktauftritt erreichen? Doch wir haben da natürlich bedenken. Trotzdem wissen wir, dass wir bei einer 100% Vorgabe nach unseren Vorstellungen eine Unterstützung bieten müssten, die wir uns in der Zukunft nicht leisten konnten. Wenn wir uns in den nächsten Jahren positiv weiterentwickeln, kann es sein, dass wir dazu bald in der Lage sind. Eine Einheitlichkeit im Sinne einer Wiedererkennung besteht ja, es gibt immer bestimmer einheitliche Elemente. Wir nennen unser System intern auch „Franchising-Light―, weil wir eben versuchen, unterstützend tätig zu sein. In der Regel führen unsere Kunden Multilabel Boutiquen, eine dieser individuellen Marken ist Oska, wenn dann dieser Kunde seinen Anteil an Oska verstärken möchte, und zu einer Monolabelboutique werden möchte, hat Oska einen präsenteren Auftritt und lässt sich besser verkaufen. Wir leisten da durch Rabatte Überzeugungsarbeit. Unser potentieller FranchiseNehmer hat aber oft Angst, die anderen Kunden der anderen Marken zu verlieren. Für unsere individuelle Marke ist es sehr essential, dass wir genau analysieren, ob der potentialle Standort bereit ist für unsere Marke. Unsere Kollektionen bedarfen intensiver Beratung, und sprechen daher auch eine Nische an, die in der Regel in einer Kleinstadt nicht ausreichend anzutreffen ist. In Metropolen ist der Markt dann groß genug, und wir können Erfolge aufweisen. Im Münchener Store haben wir bspw. Umsätze von Brutto 1,5Millionen € auf 90m². 8. Wieviele Franchising Niederlassungen haben Sie bereits in Deutschland? Bislang haben wir 6 Franchise-Nehmer in Deutschland. 9. Wie viele eigene Retails haben Sie in Deutschland? Einer in Deutschland, einer in London, einer in New York 10. Welche Vertriebswege nutzt Oska neben dem Franchising? 70 Wir arbeiten neben Franchising über den Großhandel, wir sind noch nicht bei Shopin-Shop angelenkt, arbeiten aber immer mehr darauf hin. 11. Wie viel Prozent macht der Vertriebsweg über Franchising in DL an Ihrem Gesamtumsatz aus? Cirka 30%. Die Franchisees sind unsere besten Großhandelskunden 12. Betreiben Sie Auslandsfranchising und wenn ja in welchen Ländern? Wir eröffnen jetzt einen Franchise-Store in Irland. Wir hatten ein Franchise-System in Amerika, dieser musste aber aufgrund von falscher Standortwahl geschlossen werden,weil der Kunde nicht für so eine individuelle Marke da war. Man muss die Kunden an unsere Kollektion heranführen, die Durchscnittskunde ist 50+ und braucht einfach eine Weile, bis sie unseren Stil annimmt, Da braucht es gute Beratungsqualifikationen um diese Zielgruppe an die Marke Oska zu binden. 13. Wie bewerten Sie die Eignung des deutschen Markts im Hinblick auf Franchising? Für uns ist der deutsche Franchising Markt gut, weil er für uns sicherer ist. Wir haben hier eine gute Rechtssicherheit und können relativ schnell unser Geld bekomme, dies kann im Ausland Probleme geben. Unsere deutschen Franchise-Nehmer kommen mindestens einmal pro Saison zu uns zum Odern, wir präsentieren unsere Kollektionen, und unsere Vertriebsmitarbeiter stehen in engem und regelmäßigen Kontakt zu unseren Kunden. Wir halten unsere Franchise-Nehmer in Deutschland für sehr zu verlässig, und glaube dass der deutsche Markt für unsere Kollektionen gut geeignet ist. 14. Welche Chancen seht Ihr für das Franchising im deutschen Modehandel in den nächsten 5 Jahren? Wir haben keine Roll-Up Strategie, aber wir wollen im Bereich Franchising sehr stark wachsen, wir haben einige Großhandelskunden, mit denen wir eine sehr gute und umsatzstarke Zusammenarbeit haben, und mit diesen wollen wir nach und nach zum Franchising switchen. Wir wären gerne in 5 Jahren in jeder Start mit minimum 300.000 Einwohern in Deutschland vertreten! Das kommt aber auf die Gelegenheiten, die sich bieten an. Wir haben in den letzten 2 Jahren eher konservatitv gehandelt, und Risiken minimiert wo es nur geht. Ir gehen aber davon aus dass sich unsere finanzielle Lage in den nächsten Jahren verbessern wird, und dann können wir auch wieder strategischer Arbeiten und mit mehr Mittel. 15. Inwieweit spürt Oska die Auswirkungen der Krise im Franchising (bzgl. Bsp. Einhaltung der Ordertermine und der Orderminimums, Acquise neuer Franchise-Nehmer? 2009 war bei uns von Umsatzrückgängen geprägt. Wir haben aber rechtzeitig reagiert und unseren Kostenplan dementsprechend umgeplant. Die Großhandelskollektion, die gerade für Herbst/Winter 2010 geordert wird, zeigt uns dass es wieder aufwärts geht und wir mit einem Plus rechen 16. Sind Sie mit Ihren Franchise-Nehmern EDI verbunden? Leider nicht, wir haben auch noch kein einheitliches Warenwirtschaftssystem. Zuzeit läuft es so, dass unsere Franchise-Nehmer uns ihre Daten in irgendeinem Format übermitteln. Das Thema dieser Daten ist für uns sehr groß, wir können so Trends sehr früh erkennen und nachproduzieren. Die Erfahrung aus unserem eigenen Retail hilft uns dabei auch ungemein. 71 17. Immer mehr Firmen nutzen den Vertriebsweg über das Franchising? Wie hebt sich Oska von der Konkurrenz ab? Es gibt mit Sicherheit sehr viel ausgearbeitetere Franchise-Systeme, die mehr zu bieten haben. Unser Partner ist primär der individuelle Einzelhändler mit einer Multilabelboutique. Wir bieten sehr individuelle Franchise-Lösungen. Diese individuelle Betreuung, die wir bieten, hebt uns von der Konkurrenz ab, die im Gegensatz zu uns einfach sagen „Take it or leave it!―. 18. Wie hoch ist die Erfolgschance eurer Franchise-Nehmer? Wir hatten bislang nur einen Fall in Amerika, bei dem Franchising mit Oska nicht zufrienstellend war, aufgrund falscher Standortwahl und mangelhaftem unternehmerischen Knowhow. Da wir aber sonst die Projekte sorgfältig auswählen ist die Erfolgsperspektive sehr hoch, bei ca 95%. 19. Wieviele Bewerber haben Sie momentan in DL pro Jahr? In schwierigen Zeiten in der Bekleidungsbranche wird es insbesondere für den Einzelhändler schwieriger. Dieser kleine Einzelhändler hat immer mehr Interesse daran, sich mit einem Hersteller zusammen zu tun um so seine Existenz zu sichern. Momentan haben wir viele Eröffnungen im Ausblick, wir wissen aber noch nicht was sonst im Jahr 2010 passieren wird, aber wir haben positive Erwartungen. Wir sind auch sehr kritisch bei der Wahl des Franchise-Nehmers und hinterfragen immer ob unser potetieller Kunde für eine Partnerschaft mit uns geschaffen ist. 20. Wieviele Ordertermine müssen Ihre Franchise-Nehmer einhalten? 2 am Anfang jeder Saison. Vielen Dank für das Gespräch! 6.6.5. TRANSCRIBED TELEPHONE INTERVIEW WITH ELÉGANCE ROLF OFFERGELT GMBH Interviewee: Markus Fischer Company: Elégance Rolf Offergelt GmbH Date: 28.January 2010 Time: 15:00 Uhr Interview method: telephone interview 2. Wie heißen Sie? Marcus Fischer 3. In welcher Position sind Sie tätig und seid wann? Ich arbeite als Bereichsleiter / Division Management Sales bei Elégance. 4. Seid wann ist Elegance im Franchising Business in Deutschland tätig? Seid 2000. 5. Fordern Sie eine Einstiegsgebühr für Franchise-Nehmer? Fordern Sie fixe Gebühren und/oder prozentuale Anteile am Umsatz? Wir fordern keine Einstiegsgebühren und keine fixen Gebühren. Der FranchiseNehmer muss lediglich den Ladenbau selber finanzieren. Bei einem Franchise-Store von ca 60m² beläuft sich dies auf cirka 20000€. 6. Bietet Sie Ihren Kunden ein Handbuch? Wir bieten kein Handbuch, aber eine Broschüre, in der alle Basics festgelegt sind, wie beispielsweise das Logo, Marketing Konzepte, etc. 7. Wieviele Ordertermine müssen Ihre Franchise-Nehmer einhalten? 72 Wir haben eigentlich nur 2 feste Ordertermine am Anfang jeder Saison, der Kunde kann jederzeit nachordern. Der nächste Ordertermin für unsere Franchise-Kunden findet jetzt während und nach der CPD statt. 8. Mit wievielen Franchisern arbeitet Elegance bereits in Deutschland? Wir arbeiten mit 3 Franchisern. Wir sind als Franchise-Geber stärker im Ausland, insbesondere im asiatischen Bereich, besonders in Japan, aber auch in Portugal, in Osteuropa und in Frankreich. In Deutschland sind wir mit Franchisern weniger stark aufgestellt, da wir in Deutschland hausgemacht vom Katalog kommen. 9. Welche Vertriebswege nutzen Sie neben dem Franchising? Wir sind ein Multi-Channel-Unternehmen und vertreiben über den Einzelhandel, Lizenzen, Versandhandel und über Internetvertrieb. Wir arbeiten auch eng mit Unternehmen wie P&C und Breuninger zusammen. Wir haben Shop in Shops und Corners. 10. Mit welchem Vetriebsweg ermitteln Sie den meisten Umsatz? Derzeit noch mit dem Versandhandel, dieser macht 60-70% unseres Gesamtumsatzes aus. 11. Wie viel Prozent macht der Vertriebsweg über Franchising in DL an Ihrem Gesamtumsatz aus? Das sind 10%. 12. Betreiben Sie Auslandsfranchising und wenn ja in welchen Ländern? Wir haben insgesamt 63 Franchise-Läden in Belgien, Frankreich, Griechenland, Großbritannien, Portugal, Finnland, Japan, Korea, Taiwan, Syrien, Katar, Jordanien, Russland, Estland und in der Schweiz. 12.1. In welchem Land sind Sie mit Ihrem Franchise-System am erfolgreichsten? Am erfolgreichsten sind wir in Osteuropa und in Asien. 12.2. In welchem Land haben Sie Probleme über Franchising erfolgreich zu expandieren? In Italien. 13. Welche Chancen sehen Sie für das Franchising im deutschen Modehandel in den nächsten 5 Jahren? Ich glaube Franchise funktioniert besser im Außereuropäischen Ausland. In Deutschland sind die Flächen einfach schon so stark belegt durch perfekte Retailorganisationen. Entweder macht man in DL am besten ein eigenes Geschäft unter eigener Regie auf, oder man geht Flächenpartnerschaften in Deutschland und in der Schweiz ein. Im Außereuropäischen Raum sind die Retailflächen noch nicht so stark besetzt, diese Länder sind noch wesentlich mehr in der Aufbau- und Gründerphase. Da wagen Unternehmer eher den Sprung in die Selbstständigkeit und investieren ihr Geld in Franchising. Von daher ist die Franchising-Expansion in Deutschland jetzt nicht in unsrem unternehmerischen Fokus. 14. Inwieweit spürt Elegance die Auswirkungen der Krise im Franchising? Nein, wir spüren die Krise in Deutschland nicht, jedoch in Osteuropa. 15. Welche EDV Systeme nutzt Elegance bei der Partnerschaft mit Händlern? Unsere Händler und Partner sind nicht an unser System angebunden. 16. Immer mehr Firmen nutzen den Vertriebsweg über das Franchising? Wie heben Sie sich von der Konkurrenz ab? 73 Wir haben eine Sonderstellung mit unserer Kollektion. Wir sind ein hochpreisiger Textilanbieter in der DOB Coordinates. Es gibt nicht viele andere Firmen die in diesem Preissegment Franchise-Partnerschaften anbieten. Wir haben einen sehr hohen Qualitätsanspruch und bringen Naturfasern zum Einsatz. Außerdem sind alle Kollektionen sehr farbenfroh und wir bieten eine Größenspanne von 34-48, und können so eine sehr breiten Zielgruppe gerecht werden. Außerdem sind wir permanent Lieferfähig. Bei anderen Franchise-Gebern hat man nur eine sehr limitierte Lieferfähigkeit, wir hingegen können über unser Zentrallager, über das wir auch unsere Endkunden durch den Versand bedienen müssen, beliefern. Unser Zentrallager ist natürlich immer sehr hoch bestückt, was einen großen Vorteil für unsere Franchise-Nehmer ausmacht. 17. Wie würden Sie die Geschäftsbeziehung zu Franchise-Nehmern bezeichnen? Wir sind Partner und legen grossen Wert auf unseren gemeinsamen Erfolg. 18. Nach welchen Hauptkriterien wählen Sie Franchise-Nehmer aus? Zahlungsmodalität und Liquidität spielt eine sehr große Rolle. Uns ist es wichtig dass wir es wirklich mit Händlern zu tun haben, die unternehmerisches Gespür haben. Wir haben kein Interesse an Leuten, die zu viel Geld haben aber überhaupt nicht kompetent sind. In diesem Falle ziehen wir uns lieber zurück, weil wir dann eher befürchten, dass die Kooperation unserem Image schaden würde als dass sie Elégance als Marke stärkt. 19. Wieviele Bewerber haben Sie ca pro Jahr für eine Franchise-Partnerschaft in Deutschland? Pro Jahr bewerben sich ca 5-6 Potentielle Franchise-Nehmer für Deutschland. 20. Nach welcher Zeitspanne erreichen Ihre deutschen Franchise-Nehmer in der Regel ihren return on investment? Nach ca 3 Saison haben unsere Franchise-Nehmer Ihre anfängliche Investition wieder wett gemacht. Vielen Dank für das Gespräch! 6.7. DATA EVALUATION OF QUALITATIVE SURVEY The data analysis is based on the interviews excuted with 5 fashion companies that are doing franchise business in Germany, namely Lerros, Wellensteyn, Elégance, Ulla Popken, and Oska. It is to mention, that these companies provide differenct characteristics and starting points, but a common criteria that influences the evaluation is that these companies are all German organizations. The point in time since then the companies are doing franchise business in Germany: Company Since... Wellensteyn 2005 Lerros 2007 Oska 2006 Elégance 2000 Ulla Popken 1984 74 The amount of initial fees the companies charge from from their franchisees: Company Initial fees in € Wellensteyn 0 Lerros 0 Oska 0 Elégance 0 Ulla Popken 0 The costs for store construction and hardware per m² in €, to be paid for by the franchisee: Company Costs Wellensteyn Not specified Lerros 750 Oska 400-500 Elégance 330 Ulla Popken 380 Do companies provide promotional and visual merchandise materials for their franchisees as a service? Company Provide promotional and visual merchandise material Wellensteyn yes Lerros Yes Oska Yes Elégance Yes Ulla Popken Yes Determination of order-minimums that franchisees have to buy per season: Company Order minimum Wellensteyn Yes Lerros Yes Oska No Elégance Not specified Ulla Popken flexible The company’s amount of franchise stores in Germany: Company Amount of franchise stores in Germany Wellensteyn 10 Lerros 7 Oska 5 Elégance 3 Ulla Popken 2 75 Distribution channels used by fashion companies besides franchising: Company Distribution channels implemented: Wellensteyn Online distribution, retail, shop-in-shop Lerros Retail, multibrand, shop in shop Oska Retail Elégance Online distribution, licensing, mail order, shop-in-shop, corner, retail Ulla Popken Online distribution, retail, shop-in-shop The German franchise turnover share of the company’s total turnover: Company German franchise turnover share Wellensteyn 2-3% Lerros 1-2% Oska 30% Elégance 10% Ulla Popken Not specified Foreign countries in which companies are doing franchise business as well: Company Countries Wellensteyn USA Lerros Russia, Czech Republic, Ucraine Oska Great Britain, Ireland Elégance Belgium, France, Greece, UK, Portugal, Finland, Japan, Korea, Taiwan, Syria, Katar, Jordan, Russia, Estonia, Schwitzerland Ulla Popken Greece, Russia, Poland, Hungaria The company’s most successful foreign country with franchising: Company Most successful foreign country Wellensteyn USA Lerros Russia Oska UK Elégance Eastern Europe, Asia Ulla Popken Greece Evaluation of future growth potential of franchising in Germany: Company Future growth potential Wellensteyn High, but focus maintains on own retail Lerros High Oska High Elégance Low, better in foreign countries Ulla Popken Middle, but focus lies in foreign countries with regard to franchise 76 Main risk associated with doing franchising in Germany: Company Risk of franchising in Germany Wellensteyn Only distributing outdoor jackets, the Wellensteyn franchise concept might not provide a round/complete collection neccessary for running a monolabel store. Lerros Brand recognition, important for successfull franchise business, is not reached yet. Limited liquidity of potential franchisees. Oska No uniform shop design and therefore no uniform CI may limit the franchise business success due. Elégance German market is saturated with very professional retail concepts leaving little space for franchises. Ulla Popken German market is very critical, in foreign countries the readiness to invest in franchising is higher. The evaluation of the impact of the world financial crisis on franchise business in Germany: Company Impact of crisis Wellensteyn None Lerros Yes, but stronger in foreign countries than in Germany Oska Yes Elégance None, but stronger in Eastern Europe Ulla Popken Yes, but stronger in Greece, Hungaria, Poland EDI connection with franchisees: Company Wellensteyn EDI connection No Lerros Oska Elégance Yes, partly No No 77 Ulla Popken Yes Evaluation of the franchisor’s relationship with it franchisees: Company Relationship with franchisees Wellensteyn Excellent, cooperative Lerros Oska Elégance Ulla Popken cooperative cooperative Cooperative, success-oriented Very good Success rate of franchisees: Company Wellensteyn Success rate Very high Lerros Oska Elégance Ulla Popken Very high Very high, approximately 95% Not specified Not specified Requirements for potential franchisees: Company Wellensteyn Lerros Oska Elégance Ulla Popken Requirements - Credibility - Liquidity - Professionalism - Experience within fashion retail - Willingness to participate on training sessions in advance - Liquidity - Credibility - Entrepreneurial, analytical skills - Willingness to sell Oska products with for minimum 80% - High frequencey of location, openness for individual designs - Liquidity, methods of payment - Entrepreneurial skills - Professionalism - Willingness to distribute only Ulla Popken products 78 - Location with high frequency Professionalism credibility 7. 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