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Special Russian way

In turn, Oksana Bondarenko, president of the company "Show­room Li­Lu», notes that fewer and fewer customers want to work on franchising in principle, if the company­copyright holder does not  give what the special conditions that make the opening of such a store more attractive. And if the so‑called big five American restaurant franchises are traditionally considered the most desirable in the world, and the first place in the top 100 world franchises is occupied by the French brand Yves Rocher, then in Russia a franchise in the fashion retail area It still exceeds other franchise offers and is the most popular type of business. The most popular among Russian franchisees are Armani, HUGO BOSS, Mango, Marella, Lio Jo and others, mainly Italian, Spanish and German brands.

The main difference in the approach to franchising in Russia and the world is in the payment terms for the goods, Oksana Bondarenko notes.   In all countries, payment deferrals or payment on the basis of sale are almost always in effect, in Russia, the prepaid option is mainly used. .

According to FCG experts, franchising in Russia in general is not yet a civilized type of business: less than 50% of franchisors work under a commercial concession agreement, registering it with authorized bodies. By and large, franchising is only one of the wholesale sales options for many Russian trademark holders. And if European, American or Asian franchising is the transfer to the franchisee of the right to use the trademark and trademark technologies (after all, the franchisee pays royalties and a lump-sum fee for these know-how of the brand holder), then most Russian franchisors are not charged royalties and a lump-sum fee, presenting this option as a benefit for a likely partner.

"Unfortunately, such a privilege often turns into dishonesty of the franchise holder," explains Natalia Chinenova. Franchisee enterprises, especially successful ones, are bought out by trademark holders or closed due to the lack of commodity security, unsatisfactory economic indicators and other aspects of unsuccessful operating activities.

The biggest problem of Russian franchising in general, Ms. Chinenova calls the lack of sales technologies and methods of conducting a successful business.

"Many Russian companies, for unknown reasons, attribute the equipment and appearance of the trading enterprise to the franchising system and technologies, forcing the franchisee to invest in the re-installation and equipment of the premises amounts much larger than even the cost of the goods sold, the expert explains. – At the same time, how exactly to sell, control sales, manage them or how to act in periods of falling sales, the franchisor does not think. It is considered that if the franchisee bought the goods or received them on the terms of sale, then further actions are the franchisee's business responsibility. Therefore, for a company that has decided to develop according to a franchise scheme, it is very important to turn to experts, consultants who have experience in creating a franchise model specifically for the clothing or shoe business, and not to invent a bicycle. This will avoid a lot of mistakes at the initial stage and, accordingly, save time and your own finances as much as possible.

According to Alina Strelkova, the Operating Director of ECE Russland, most Western retailers still need partners who have good connections in Russia and understand the specifics of the Russian market.

"For this reason, most Western retailers work through franchisees or local partners," explains Ms. Strelkova. The main reasons include the lack of a developed network, deep knowledge of the market, high risks and complex logistics. There are large franchise groups that work with several brands, which is absolutely atypical for other countries. In the crisis, in the conditions of economic instability, small and medium-sized retailers prefer to shift the risk to franchisees, while large retail chains use the crisis for expansion when they can get profitable rental and other conditions. In the future, large retailers will develop business in Russia independently, and medium-sized and small players through local franchisees­partners».

According to Lika Kazieva, Piquadro, Russia still often uses adapted, somewhat simplified schemes to make it easier for partners to manage the project.

"It is quite difficult to implement Western accounting systems, to observe the same dates with the home market for the start of sales of new collections," Ms. Kazieva lists. But in general, franchisors have become much more flexible, but they have tightened the requirements related to financial risks. In turn, Waldemar Weiss, head of the Russian branch of the Munitor Group, notes that due to the peculiarities of national franchising, in Russia it is precisely this type of enrichment that sometimes takes wondrous forms. "There is no such thing anywhere in the world: along with the normal forms of receiving remuneration, franchisors of false dmitry appear on the market," Mr. Weiss shares. "For example, a certain Zara City sends out;letters of happiness ” to regional shopping centers, assuring everyone that they are representatives of the same, real “Inditex ”. In Russia“the parade of the violent and great” is constant – false armani, false cavalry. I have been offering for a long time to carry out work among sellers of fakes and to open fashion department stores from the Gardener's franchise in places, although it would be honest.

The problems with the introduction of the world experience of franchising in Russia lie precisely in the legal field and the practice of business organization by domestic entrepreneurs, agrees Natalia Chinenova.

"The development of franchising technologies involves, for example, the return of unrealized products to the franchisor's warehouse at the end of the season," the expert reports. "But most Russian franchisors are not ready to provide such a service to their partners in a number of objective reasons: undeveloped logistics structure, lack of outlets for unsold goods, low marginality, which does not allow to sell drains at bargain prices, unbalanced commodity matrix, which does not allow to exchange goods promptly. In fact, most Russian companies still do not apply many sales technologies inside their own outlets, and in order to adapt all the accumulated international franchising experience, it is necessary to first understand what is happening inside the business of the trademark holder. As a conclusion, we can say that improving business processes within Russian companies offering franchises will allow for faster adaptation of international practice to the Russian market.

However, according to Anna Panyukova, head of Retail services at JLL, it is generally worth adapting any, even the most successful global experience.

"No matter how progressive the Moscow consumer may be, the most competent retailers in any case adapt either store formats or marketing campaigns to the domestic buyer, which is certainly correct," explains Ms. Panyukova. There are a lot of both successful and unsuccessful examples of the development of franchising networks in Russia. There are even such cases   in our opinion, the most interesting,   when the unsuccessful development of previous franchisees does not embarrass the new partner, and  he takes up the work. This is a bold approach, and, of course, it is easier to learn from the mistakes of others. Therefore, the most successful networks have many partners and, as a rule, encourage communication between them, arranging joint corporate events, reward the most successful. The Russian market borrows the best examples, because in America and Europe the development of franchising has been going on for more than the first decade. We are by comparison with them novices.

Author: Ekaterina Reutskaya

Photo: Shutterstock.com