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Ekaterina Soyak, the organizer of the BUYBRAND Expo, the largest franchise exhibition in the CIS, considers franchising to be the most profitable form of entrepreneurship in modern economic conditions. She spoke about the state of the Russian franchising market in an exclusive interview.

– At what stage, in your opinion, is the franchising market in Russia now?

– At the stage of formation and development. In 2003, there were no more than 15 franchising companies in the country, half of them did not have a complete idea of what franchising was. Now, fortunately, there is a common understanding of what kind of business this is, and it has become in demand. The development of franchising can definitely have a positive impact on the growth of the number of small and medium-sized enterprises in Russia. At the moment, there is a severe shortage of small companies in the country. So, according to various estimates, now we have less than 200 thousand microbusiness enterprises, which is several times less than, for example, in the EU, USA, China and Australia. In particular, in the European Union, the share of small businesses in GDP averages 57%, in Australia - 80%, in Russia this indicator is at around 20%. To improve the business climate in Russia in the next 7 years, it is necessary to open about 500 thousand small enterprises.
The franchising format simplifies the task for a potential entrepreneur as much as possible, providing him with a lot of options for a ready-made, stable business. A future businessman does not have to reinvent the wheel, he just needs to follow the example of a franchisor who has already faced all possible problems at the stage of building a business and knows how to solve them. All that remains to be done is to find the money. Now people increasingly prefer to buy a franchise than experiment with their own ideas.
Our company has been trying for 15 years to inform the government about the benefits of franchising. There are small progress in this direction, but nothing is changing globally yet, despite the fact that the top officials of the state speak about the need to improve the quality and increase the number of small enterprises. Franchising is the optimal tool for this. It has proven its economic benefits in all countries and is good because franchisees are forced to work in white, and this is additional tax injections into the budget. Unfortunately, there are statistics that show that only 2% of the population are ready to do business in Russia. This is an extremely low indicator. People do not want to open their own business, not only by franchise, but in any form at all.

Does franchising in Russia have its own peculiarities?

Yes, there is. The main feature is that, in general, the situation is almost unchanged: many entrepreneurs still think that if they bought a franchise, they should no longer work. There is no understanding that together with the franchise you get yourself hard work. Of course, in Moscow and other major cities, professional entrepreneurs who know what they want and know how to work in this business come to franchising. There is another problem: today many unscrupulous concepts are being proposed, and people who are going into business have to be extremely careful. According to statistics, more than two thousand franchises operated on the Russian market last year, but a maximum of 30% of them are really working. These are well-known, proven brands that have been on the market for over five years and have a good reputation. The rest are under a big question. This year, their number has increased, besides, over the past year, a huge number of very young franchisors have appeared on the market. Yes, they attract franchisees, but they haven't worked for a year yet. It will be possible to talk about their prospects only after some time. News is constantly being heard that criminal cases are being opened in the regions against franchisors, from whom entrepreneurs demand their money back. They sold off their franchise in large quantities and eventually came to bankruptcy.
Unfair advertising is another feature. People are offered to create a franchise, start selling it or buy a ready-made franchise business and become a millionaire tomorrow. This idea is supported by business consultants. Inexperienced entrepreneurs believe and, without understanding, rush to invest their finances. The result is not only their bankruptcy, but also the bankruptcy of partners.

To be continued.

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