Romanian franchises are starting to find their way onto a market annually generating turnover worth one billion euros. Though they now account for 20-25% of the total franchises on the market, Romanian franchisers are expanding their share year after year by adapting to market demand: small entrance fees and diversified services.
Romanian investors are no longer seeing franchises only as a means to start a business from scratch by using the brand and expertise of some foreign companies. More recently, a growing number of Romanian firms have been opting for franchises as a way to expand their businesses.
"Many people wanting to invest in something prefer this type of business because risks are relatively low and, moreover, they receive a turnkey concept that already works. The only drawbacks of a franchise might come from the restraints imposed by the format of the business," explains Razvan Blid, general manager of CHR Consulting, a franchise consulting firm.
Benvenuti, a network of footwear outlets set up in 2004 by Dan Pavel, one of the founders of Leonardo, the biggest domestic footwear retailer, has so far franchised two outlets, in Ploiesti and Ramnicu Valcea. Initial investments needed to open a Benvenuti store stand at 120,000 euros and franchisees need to hold a bank letter of guarantee worth 60.000 euros.
Leonardo retailer in turn announced it planned to develop a network of franchises, which, according to the company's management, is a natural progress of Leonardo business. Leonardo franchisees do not pay any network entrance fees, but must present a bank letter of guarantee for the stock of merchandise.
Another domestic firm expanding through franchises is Mondo Style of Timisoara, a producer of PVC, wood and aluminium windows and doors. It now has 22 franchisees countrywide.
Price is the main advantage of Romanian franchises. There are businesses on the market being franchised for 3,000 euros. An example in this regard is Elevate company, promoting the concept of advertising in lifts.
On average, four or five Romanian brands are franchised every year, reveals a survey by CHR Consulting on the franchise market in 2005. Last year, of 170 franchises on the market, 38 were Romanian. Most franchises were American (43), followed by Romanian, Italian (21) and French (18) franchises.
CHR Consulting representatives believe Romania's EU integration will not result in major changes in terms of the number of franchise brands present on the Romanian market, with annual market growth to be the same as it is now, 30%.
Despite the rising number of Romanian companies choosing this development formula, the highest number of Romanian franchises is registered in the fast food, bar and restaurant sector, as well as for clothing, IT, sport or entertainment businesses.
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