Franchising in the Netherlands
Population: 16.669.112 (2011)
Most important cities and population: Amsterdam (790.044)
Den Haag (496.745)
GDP: US$ 780.668 millions (Nr 16 in the world)
Income per capita: US$ 51.410 (Nr. 9 in the world)
Number of franchise networks: 715
Number of franchisees: 29,500
% of retail trade: High
Most important sectors: Franchisors / Franchisees
Retail Food: 85 / 5,300
Retail Non Food: 190 / 10,800
Services: 290 / 8,700
Sectors in real growth: Services (2010: +20 franchisors)
Real State situation (premises): Rather good
Initial investment average: € 50,000 - € 1,500,000
Average royalty: 0% - 30%
Average contract duration: 5 years
Average entrance fee: € 15,000
Koelewijn & Partners advises and supports franchisors.
Koelewijn & Partners advises and supports franchise organizations in every stage of development. Whether the franchisor aims for higher returns, growth or continuity, Koelewijn & Partners work towards win-win solutions for both franchisees and franchisors.
For over 20 years Koelewijn & Partners has helped franchisors in every stage from the initial concept to operational support. Koelewijn & Partners know the core themes of franchising, safeguard the cohesion in the franchise organization and think ahead.
Koelewijn & Partners:
-
Guides starting and established franchise organizations, from SME to multinational.
-
Supports groups and individual franchisees.
-
Takes care of recruitment of master franchisees, franchisees and franchise management
-
Has experience in retail, (financial) services, food, healthcare and wholesale.
-
Has helped over 1,000 organizations and is a partner for over 75 franchise formulas every year.
Koelewijn & Partners fulfils a stimulating role in the franchise market in the Netherlands with innovative services and inspiring initiatives.
Franchising in Brazil
As it is in the News all around the World, Brazil is crossing a good moment in its history, with continuous growth, increase in the level of external investment, political an economical stability.
That for itself indicates the potential of the country, but, when it comes to Franchising, the figures are even better…
Franchising in Brazil has seen an unprecedented yearly growth in the last 2 years:
-
20% Growth in Turnover, crossing US$50 billion
-
17% growth in the volume of franchisors, reaching 1,8 thousand
-
10% growth in the volume of franchises, reaching a little over 90 thousand units
Franchising at a rate around 2 times the growth of the regular economy and it is expected to stay that way at least for the next 3 or 4 years.
That reality is stable because of the benefits in Brazil for small local companies, including franchisees:
-
Lower taxes (both direct and indirect)
-
Franchisee’s local know how, which is mandatory in a country as large as Brazil
-
High risk in creating new business concepts
-
Growth of Shopping Malls and their interest in having Franchises and not local entrepreneurs as their tenants
One other interesting point is that Franchising in Brazil is still very Brazilian, with international brands accounting for less than 10% of total volume (that number is even lower if we take out McDoonald’s).
The reason for that lies in History and Geography… With a past of a closed market to external goods and brands and being one of the only large countries in the south Hemisphere, Brazil used to be out of the radar of important External Brands.
Now the reality is changing and at the same time Brazil is eager to discover new and interesting concepts from other countries and external Brands strat looking ate Brazil as a real opportunity.
Unfortunately, making those interests match is not an easy accomplishment. Brazil is still a very large country (geographically), with poor credit lines, high interest rates and different weather conditions from the countries in the North Hemisphere.
That makes it necessary to adapt some points of a business model to make it suitable to Brazil, including the redefinition of seasonal products, the franchisee size and profile (it is very difficult to enter Brazil through a single franchisee or a Master franchise), the logistics strategy (when that is applied).
Companies really interested in investing to overcome this difficulties will sure have plenty of success in Brazil, while companies that just want to take their chances in the country will probably have difficulties in the long term.
Franchising in Mexico
Franchising in Mexico has been gaining strength in recent times, due to the advantages it presents versus other business models. Franchising in Mexico is regulated by Federal Law (Article 142 of the Industrial Property Law), which states that there are three components that must be transferred in order for a Franchise to exist:a) a Trademark, b) Technical Assistance and c) Know-How.
A brief history of franchising in Mexico…
Mexico has a rich history in franchising of more than 20 years, time in which this model has solidified and gained popularity as it offers a reduction of the risks involved in starting and operating a business; to reach this level of maturity, franchising in Mexico has gone through three different yet distinct stages:
-
Inflow of International Franchises: The first franchised concepts to be established in Mexico came from the United States of America in the trailing years of the 80’s. Brands such as McDonald’s, Howard Johnson’s, Kentucky Fried Chicken, Pizza Hut, among others. Once these concepts were established in the country, the Transfer of Technology Law (which later was substituted by the Article 142 mentioned above) where for the first time, the figure of a “Franchise” was legally recognized. In that same time period (1989) the Mexican Franchise Association is created with the purpose of promote and develop franchising in the country.
-
Birth of Mexican Brands: The establishment of a legal framework made it possible for franchising to set deep roots in the business community in the country and slowly become widely accepted. Just as the international brands were making their way into the country, Mexican concepts such as Helados Bing, El Fogoncito, Hawaiian Paradise, among others were created and pioneered in the development of national franchise systems, paving the way for a solid future for a great number of Mexican born concepts.
-
Internationalization of Mexican Brands: After 20 years, the Franchise industry in Mexico has reached an advanced level of maturity which has placed it in 7th place world-wide (as established by the World Franchise Council) just behind traditionally strong franchise markets such as the U.S. and Brazil.
-
Understanding the Legal Framework in Mexico...
In order to successfully establish operations in Mexico, a Franchisor (be it national or international) must comply with the established legal framework. The objective of this paragraph is to provide a quick overview of these basic 5 requirements:
-
Establish a business entity (or be established as a business entity, in case of a foreign brand).
-
Have any trademark, patent, slogans and proprietary names used in the operation of the franchise properly registered at the Instituto Mexicano de la Propiedad Industrial (Mexican Industrial Property Institute).
-
Create a Franchise Agreement (in any of its accepted formats such as Unit Franchise Agreement, Area Development Agreement and/or a Master Franchise Agreement) that complies with the stipulations provided in Article 142 of the Industrial Property Law.
-
Provide documents that will complement the above mentioned Agreements such as Confidentiality Agreement, Proprietary Software Use License, Exclusive Product Use and Distribution Agreements, etc.
-
Prepare a disclosure document knows as the Circular de Oferta de Franquicia (C.O.F.), which is a standard document that must contain certain elements and information that provide the current state of the franchise and must be presented to any prospect interested in acquiring a franchise 30 days before the execution of the Franchise Agreement can occur. Some of basic elements that the C.O.F must contain are:
- Name, nationality and contact information of the Franchisor.
- Years in operation.
- Intellectual Property Rights which are property of the Franchisor and will be involved in the franchise acquisition and operations processes.
- Type of payments and amounts that must be paid by the prospective Franchisee.
- Type of technical assistance (training, site visits, other services) provided by the Franchisor.
Although it has not been an easy road, franchising in Mexico is now an established and mature business model. Proof of it is that there are close to 1,000 franchised concepts in the country of which 84% are national brands.
To further understand the impact franchising has in this country, the Mexican Government, through the Ministry of the Economy has created the Programa Nacional de Franquicias (National Franchise Program) in which it offers to both emerging franchisors and potential franchisees the ability to finance their projects with interest-free loans for a 3 year period. The PNF has created a boom in the sector which has benefited a great number of people, both directly (by being able to take advantage of the financing offered), and indirectly (by the creation of thousands of jobs in the country).
Franchising in Finland
Finland is probably best known as the homeland of good rally & formula drivers, Santa Claus and Jean Sibelius. In business, everyone sure knows Nokia and think that Finnishmen are technology-innovative people. Also the fact that Finland is the country that has the longest border with Russia, makes people in elsewhere Europe to think that they know Russian market very well. ”This is partly true”, says Henri Laakso, franchise consultant and managing director of FranCon Franchise Consulting and continues: ”Yes, we are innovative and we have good technology innovations and yes, we do make a lot of business with Russians, but we have a lot of more know-how, too - for example in franchising business.”
Did you know that the largest European pizza, convenience store or donut coffee shop chain are all Finnish? You can find Kotipizza in almost every corner and it is nowadays almost synonym for pizza in Finland. Kotipizza’s most famous pizza called ”Berlusconi” won the Prize of ”Best Pizza in the World” competition in 2008 – and Italians didn’t like it. Convenience store chain R-kioski have appr. 1.500 stores in Finland, Baltic countries and Eastern Europe. Arnold’s Bakery & Coffee Shop is modern-looking donut coffee shop which sounds like American but is pure Finnish concept.
Franchising came to Finland in the early 1970s with American car rental, hotel and restaurant businesses. Pretty early this business model came also to the interest of Finnish companies and franchising started to spread also to other lines of business. Nowadays there are appr. 220 franchise systems of which 85% are domestic ones and 15% imported (= international). “Yes, we have Body Shop, McDonald’s and Subway of course, but we have also our own very well-developed concepts with large scale”, says Laakso.
The most of franchise systems are some kind of consumer and b-to-b services (50%). Retail concepts are the second largest sector (35%) and the rest (15%) are food/restaurant/fast-food/cafe businesses. There are some 8.000 outlets of which 2/3 are franchised. “Franchise networks are not as large in Finland as typically in other European countries because of small and very centralized market. Average amount of outlets per network is only 30-35 as in some larger market as in the UK you should probably double the amount”, Laakso is comparing. There is no specific franchise law in Finland yet, as in Sweden for example. Otherwise, the infrastructure for franchising is pretty similar in every Scandinavian country – there is one Franchise Association for franchisors, but no franchise expos or special media other than internet services for franchisee recruiting. In Finland www.ketju.fi is the only webservice specialized in franchisee recruiting. “Although Finland is a small market with only 5,3 million people, we have certain kind of support services very well developed, for example training services.“ , Laakso tells.
DiFM Diploma in Franchise Management
School & training sector in Finland is well-developed. For example in the latest EU-ranking reading skills of Finnish people are the best in the world. Finnish school system and training know-how has got large international interest. Training know-how and innovations can be seen also in the franchise sector. One good example is training program called DiFM - Diploma in Franchise Management which is developed by FranCon and nowadays run by Franchise Business College in Finland. It is long-lasting (one year) management training program for franchisors (managing directors, franchise managers, development managers, area managers etc.) who want s to develop their skills in franchising business. Issues to cover in the program are amongst others: franchise business planning, franchisee recruiting, control & guidance, concept management, franchisee leadership and financial management. The program includes five two-day sessions – four of them in Finland and the last one in London.
IFCN helps international franchisors to entry into Finnish market
Mr. Laakso has also been active in international franchising via IFCN – International Franchise Consultants network. IFCN is a multi-national network formed by franchise consultants that can produce franchise consulting and franchisee recruiting services worldwide in over 30 countries at the moment. Franchisors who are exporting or planning to export their concepts internationally should contact their local IFCN partner who can help them to develop their international franchising business and to take it to all over the world fast, cost-effective and reliable way. ”FranCon is Finnish representative in the network and we have helped many clients of our IFCN partners - international franchisors to entry Finnish market.”, Laakso tells and continues: ”Finland is a pretty good piloting country for many international franchisors as this is a small market, which means lower investment need for the start plus you can create all the necessary connections fast and easy. Also infrastructure works well and you can get all services in English.”
Henri Laakso is franchise consultant with experience of 18 years in his company FranCon Franchise Consulting. He has been consulting hundreds of Finnish and international franchisors over the years. He is the author of three business books (of franchising) and several other publications. He has been awarded with several acknowledgments of his work for franchising – for example from Finnish & British Franchise Association and UKTI.