Research Indicates EU Is Hot Spot For Expansion of Franchising

Newswise - stretching from the Arctic to the Mediterranean and the Atlantic to the Aegean Sea, the European Union represents a single market of over 450 million consumers in 25 nations. New research by the William Rosenberg International Center of Franchising at the University of New Hampshire indicates franchisors from around the world, and particularly those in the United States, are poised to take advantage of this dynamic market.

A new research report, “International Franchising: The European Union (EU)”, was presented recently at the International Franchise Association 46th Annual Convention Schlentrich Udo, a professor of the franchise management of hospitality, and director of the Center for Rosenberg at United Nations Headquarters of the Whittemore School of Business and Economics.

“Although the U.S. based franchisors have been operating in the EU countries for many years, the entry and expansion in the new enlarged EU market is not without risk. The experience of United States-based franchise companies that have operated in the EU system offers valuable lessons for potential entrants and also for businesses interested in expanding into the newly enlarged European market franchise, “said Schlentrich.

According to the International Franchise Association, franchising in 2001 the companies accounted for 56.3 percent of quick-service restaurants, 18.2 per cent of the accommodation establishments, 14.2 percent of retail companies food, and 13.l percent of table / full service restaurants. Franchises employed almost 10 million people, with direct output close to U.S. $ 625 million and a payroll of $ 230 million.

The United Nations Headquarters researchers surveyed 109 US-based franchise companies, representing more than 115000 units worldwide. Of those surveyed, most firms franchise units were located in the United States (69.8 percent), and four out of five franchised units in the United States was owned by franchisees (80 percent). More than half of the United States-based franchise companies (52 percent) surveyed operate units outside the U.S., representing nearly a 20 percent increase in the international expansion of U.S. based systems Franchising since 1996, and a 53 percent increase since 1989.

“The assessment of the franchise in the EU is timely, particularly in light of the potential opportunities presented by EU enlargement with 10 new member countries. Two new countries, Romania and Bulgaria, are about to be given the right to join the European Union, while Turkey and Ukraine are working actively in its implementation. The EU has an active franchise, with hundreds of thousands of franchisors and franchisees operating throughout Europe, generating billions in sales annually, “the report said.

Almost one third (3l.3 percent) of respondents believed that franchisors its future potential in the EU was outstanding, nearly half (48.4 percent) believes it is moderate, and 20.3 percent considered it Limited.

The respondents seem ready for expansion. Nearly four out of five franchise companies (79 percent) plan to open new units outside the United States in the next three years, which represents approximately a 25 percent increase since 1996, and nearly 70 percent increase since 1989. The most important countries / regions identified for the expansion franchise over the next three years were the U.S. (28 percent), closely followed by Canada (26 percent), Europe (15 percent), the Pacific Rim ( 9 per cent) and China (7 percent).

More than half of United States based on the survey franchisors already operating in EU countries, and the majority (51 percent) of those operating in Europe for the United Kingdom, the United Kingdom, where they are most units. Although less than half (45.1 percent) of the United States-based franchisors surveyed do not currently operate units in EU countries, 66 per cent plan to enter the market.

That bodes well for the United Kingdom. More than half (60 percent) of the United States based on franchisors that do not currently operating in the EU find the UK to be the most attractive EU country for entry. However, 22 percent of the U.S. based franchisors that do not operate in the EU said France was the least attractive EU country for entry.

The UK also did well with the U.S. based franchisors already operating in the EU, with 48 percent saying that the UK is the most attractive EU country for expansion. Germany was also considered a good place for the expansion franchise, as well as France. Those surveyed said Cyprus, Malta, Estonia and Slovenia were the least attractive EU countries for the expansion, all newcomers to the EU and each represents a very small market.

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Tags: Enlargement of the European Union, EU, European Union, U.S, UK, United Kingdom, United Nations Headquarters, United States