Franchise market may reach 3 bln in 2010
Bucharest - The franchise market, put at approx. EUR 1 bln in 2006, may reach close to EUR 3 bln by 2010, given that many foreign companies are waiting for Romania to join the European Union before the expand operations in the region, according to the Romanian Franchise Association.“Romania is only at an early stage of franchise development. In contrast, Hungary now has a market of approx. EUR 3 bln, roughly where we would like to be in three years’ time. So far, franchise contracts have mostly been closed in the fast-food and restaurant segment, but there are signals that areas of interest will diversify after 2007,” President of the Romanian Franchise Association Costin Anton stated on Wednesday, according to Mediafax.
Anton explained that several foreign companies are interested in developing franchise networks in Romania, in sectors such as production, trade and garment industry.
According to participants in the workshop on Franchise in the EU and Romania, organised by the Chamber of Commerce and Industry of Romania on Wednesday, costs for developing such a business vary from one case to another, with the entry fee, for instance, ranging from EUR 3,000 to several millions, in the case of luxury franchise brands.
“The entry fee is only the beginning. It only accounts for 10-20 per cent of the total investment, and companies must be aware of this when they decide to set up a franchise business. For instance, foreign chains which franchised five-star hotels on the Bulgarian seaside charged as much as EUR 5 M in entry fees. There are, however, a lot cheaper franchises as well,” chair of the European Franchise Committee Alexandru Stoican explained.
So far, retail has been the favourite target of franchise businesses, with almost half of the contracts signed in this sector, reads a survey report released by Euromonitor.
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