The franchise market hits EUR 3 bn. 5 international brands search for local investors
The franchise market in Romania is booming, and this is evidenced by the approximately 400 concepts that are currently open to development. In addition to well-known brands, both internationally and locally, such as Pizza Hut, Subway, or Paul, there are some companies that are currently exploring our market, in search of investors to further the success of the brands that they created.
The local franchise market has risen from 1.9 billion euros in 2015 to nearly 3 billion euros in 2017, a consistent 20 percent increase year-on-year, according to Investure Franchise Consulting (Francize.ro). The most spectacular developments are in the areas of services (tourism, insurance brokerage, rent-a-car, self-service car wash), HoReCa (especially fast food restaurants and cafes) and some retail segments (especially jewelery and cosmetics).
Cristina Şindile, General Director, BT Microfinance, the bank that pays loans up to 30,000 euros to those who want to invest in small businesses, said that this year there were many more credit applications than last year.
On this effervescent background, concepts that have already tested their success at the international level are now trying to penetrate the Romanian market, either through master franchises that can scale the business as much as possible on Romanian territory or through punctual partnerships with the help of franchisees.
"The master franchise should be for some investors who need to have a previous entrepreneurial experience and the ability to scale up the business. On the other hand, all brands also look at partners for simple franchise. The master-franchisee is the one who has to open the market and create a franchise network. The role of the franchisee, the one who owns a unit, is to be involved in the business life of that unit, to make it run as efficiently as possible,” said Paul Voicu, managing partner Francize.ro at the Franchise Investors Forum.
Here are some of the international networks that want to enter and expand in Romania:
Jesper Nielsen, one of the founders of Pandora's business, now has new plans with a new jewelry brand, Amazing Jewelry, which is positioned on a price segment below the market average and which by the end of the year will be present in over 30 countries.
At the end of summer, Amazing Jewelry opened a first unit in the Promenade Mall in Bucharest, following an investment of up to 100,000 euros - in connection with which the entrepreneur said he did not expect the level of rents so high in Romania - and is now pursuing the expansion in 7 other cities - Timisoara, Constanta, Brasov, Iasi, Oradea, Cluj-Napoca and Sibiu. Local sales will rise to 500,000 euros this year, according to estimates. The franchise fee is 20,000 euros.
Another concept is Logiscool, an idea that started from the need to solve the problem of the time spent by children with computer games and in the context of the digital revolution on the labor market, as Gyula Csitari, co-founder, said.
Thus, through this private school, children learn programming and create their own computer games at the same time. At the moment, there are 35 Logiscool centers in Hungary with 10,000 enrolled children, and the representatives of this business are targeting markets in the region for expansion.
Csitari says that the investment in opening a school ranges between 35,000 and 50,000 euros, including the franchise fee, and the total return of investment is achieved in two to three years. The entrepreneur is looking for both franchise partners in Romania, but also a master-franchisee who can open 40-50 such schools in 5 years. He said that the key person for this business does not necessarily need to be an IT specialist, it is more important to have an entrepreneurial mind-set.
Another company that wants to enter Romania through the franchise is Hitio Gym, a concept born in 2010 that has no other competitor at European level - fitness and martial arts under a single umbrella, a place where parents and children aged 5 years and older can train at the same time.
This is precisely what guarantees the attraction of a wide range of clients - parents and children. If the concept had success in Norway, a market where 16% of the population has a subscription to the gym, the more it will perform in Romania, where the percentage is only 4%, says Per Christian Pedersen, Founder and Co-owner, who managed to open 32 halls in the two years since launching the franchise, in Norway only.
The master franchise fee amounts to 130,000 euros and the franchise fee to 21,000 euros. The most suitable spaces, according to Pendersen, are near or within shopping-malls, in residential areas, not in the city center.
Among the companies that are looking very close to Romania at this moment are the Used Products Franchise, the largest second-hand retail chain with 57 locations in the Netherlands and Belgium, "a kind of Olx brought in stores”, as Paul Voicu says, with a franchise fee of 19,500 euros, and the Germans from Reisswolf, the market leader in document management solutions in Europe, present in 30 countries, with a franchise fee of 15,000 euros (on a single line of business).