The number of franchises on the Romanian market rose by 50% in 2006. There are currently some 300 retail and services franchised brands in Romania and their number is expected to grow even more after January 1, 2007.
Statistics show that locally three out of four entrepreneurs go bust in the first three years after launching a company. But the percentage is different for businesses started as a franchise, when only one in four firms fail on the market in the first three years of existance.
According to Laura Ion, founder of the Association of Franchise Networks in Romania, the failure of a franchise may be caused by breaching procedures or the rules set by the franchiser; the appearance of laws restricting the activities of the franchisee; or insufficient market testing.
The costs of setting up a franchised business in Romania varies from 10,000 euro to over 3 million dollars - the costs of the Marriott Hotel franchise here. The cheapest are businesses in the food production and real estate companies, while the most expensive are pharmaceutical networks, hotel chains and retail brands.
Most franchises in Romania come from the US while a significant part come from Europe. But Romania has its own franchises: Tina R, Smart Three, Turabo Caffe, Rompetrol, the Ziua newspaper, La Mama or Bela Italia all had their share of success. But most of them have yet to go international.
According to Laura Ion, this is because the Romanian market has no tradition in franchising and brands have generally be well-known before developing into franchises.
HotNews.ro, Nov 27, 2006
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