subscribe to brand news 
b2b Magazine
03.10.2016 | Лидия Соколова

Preferential topic

part 1      part 2       part 3


Franchising is practically the only segment that does not slow down growth even in a crisis. According to various estimates, in some countries the growth is up to 35% per year. Despite the fact that the top 5 most attractive franchises in the world traditionally include American restaurant brands, fashion still accounts for about 70% of franchises.


According to market participants, clothing/footwear/accessories stores with an area of 50 to 200 m2 are opened mainly through franchising, and development is mainly due to the expansion of portfolios of existing groups. Thus, if a well-known large franchisee works in the local market, successfully and well-established, for example, in the fashion industry, the vast majority of global brands will strive to enter the market with his help.



According to Natalia Chinenova, chief consultant of Fashion Consulting Group on business technologies in retail, the franchise market of the planet in 2016 is 30 thousand networks in more than 100 countries and 3 million enterprises with a turnover of $3.79 trillion. Asia occupies the largest share - 33%, followed by Europe and North America. The share of the Latin American market is growing very rapidly: if in 2007 it did not exceed 7%, today it is already almost 12%.


Despite the fact that trading technologies are similar all over the world, a franchise in America differs from franchising in Europe, the Asian franchise system has its own characteristics, and the Russian one has its own. At the same time, trends are traditionally traced around the world that set the tone for global changes in every region, state and even city. So, China has overtaken the United States and came out on top in the world in terms of the number of franchises. Local franchises are winning back their markets from foreign ones: the more this trend manifests itself, the higher the level of development of franchising in the country as a whole. Brazil is the leader in this indicator, with 90% of the share of local franchises, followed by the USA, India, South Africa and Japan, where "home" concepts are more popular than foreign ones. In Russia, the share of local franchises is over 60% of the entire market of franchise offers.


In addition, according to Ms. Chinenova, new technologies have appeared in the development of the franchising system, integrated franchising marketing (IFM), an integrated approach to the simultaneous achievement of several goals and objectives within the launch of new franchise projects and the development of existing franchise systems. IFM is aimed at increasing brand awareness at all levels: local, regional, national and international: this increases the demand for the franchise and causes additional interest in the company.


The technology requires franchisees to master mobile devices, actively communicate on the Internet, participate in social network communities, etc. New financial instruments of franchising are also actively developing, for example, the so-called internal financing, an option for banks to cooperate with firms and their future franchisees. The essence of the scheme, according to Natalia Chinenova, is simple: the franchisor grants the franchisee the privilege to purchase goods at a discount to help cover the costs of starting their own business, the bank credits the franchisee based on the interest rate at a level not higher than the discount provided by the franchisor. In addition, franchising enterprises are actively opening in the format of tonars, prefabs or pop¬up store. International franchises are actively developing the markets of the BRICS Union countries: Brazil, Russia, India, China are considered the most promising for international expansion of franchising, according to the International Franchise Association.

"For the most part, the market and trends in the franchising market are formed by European and American franchises, where the USA has been a leader for many years, setting the tone for changes in franchising technologies," says Natalia Chinenova. With a global market share of only 12%, America dominates the number of brands in the top 10 largest chains. The turnover of the US franchise market is about $2.1 trillion, or about 63% of the global one.

Author: Ekaterina Reutskaya