Franchising in Greece Dr. Aris Ikkos JBR Hellas Ltd. Business Consultants.

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Franchising in GreeceFranchising in Greece

Dr. Aris IkkosDr. Aris Ikkos

JBR Hellas Ltd.JBR Hellas Ltd.Business ConsultantsBusiness Consultants

Franchising in GFranchising in Greecereece

JBR Hellas Ltd.JBR Hellas Ltd.2

A Brief HistoryA Brief History

• 1st franchise: mid-70s

• mid-80s: no more than a dozen

• current situation– more than 200 franchises

– more than 2.000 franchisees

– franchise sales: less than 5% of total

Why franchise in Greece?Why franchise in Greece?

• High percentage of self-employment

• Fast growing economy

• Competitive market

• Idle cash

• Maturing Franchise Market

• Franchise sales: less than 5% of total

Type of FranchisesType of Franchises

Restaurants21%

Food Retailing17%

Non-food Retailing23%

Home Improvement6%

Education9%

Health and Beauty Care - 5%

Clothing and Footwear

Business Aids and Services - 5%

Franchisees by TypeFranchisees by Type

Food Retailing15%

Non-food Retailing26%

Clothing and Footwear - 12%

Home Improvement15%

Restaurants22%

Education4%

Business Aids and Services - 2%

Health and Beauty Care - 4%

Reasons for FranchisingReasons for Franchising

70%Tested System

Growing Demand

Strong BrandAwareness

ExclusiveDistribution

Lack of FinancialResources

Other Reasons

Pre-franchise ExperiencePre-franchise Experience

Same Year26%

1 year18%

2 years9%

3 years7%

4 years6%

> 5 years30%

5 years4%

Life Cycle of FranchiseesLife Cycle of Franchisees

6-10 years15%

>10 years25%

<5 years77%

Non-Domestic Operations (26%)Non-Domestic Operations (26%)

Subsidiaries30%

Other25%

Master Franchises45%

Cost of Franchised Outlet Cost of Franchised Outlet (th. USD)(th. USD)

Business CategoryBusiness Category• RestaurantsRestaurants• Food RetailFood Retail• Clothing & FootwearClothing & Footwear• Home ImprovementHome Improvement• Non-food RetailNon-food Retail• Health & Beauty CareHealth & Beauty Care• Business Aids-ServicesBusiness Aids-Services• EducationEducation

Entry FeeEntry Fee

3,3 - 50,03,3 - 50,0

6,6 - 40,06,6 - 40,0

6,6 - 26,46,6 - 26,4

3,3 - 16,53,3 - 16,5

3,3 - 66,63,3 - 66,6

3,3 - 20,03,3 - 20,0

In. InvestmentIn. Investment

16,7 - 500,016,7 - 500,0

26,7 - 166,726,7 - 166,7

40,0 - 333,340,0 - 333,3

26,7 - 66,726,7 - 66,7

23,3 - 200,023,3 - 200,0

23,3 - 666,723,3 - 666,7

16,7 - 266,716,7 - 266,7

3,3 - 83,33,3 - 83,3

Franchisor RemunerationFranchisor Remuneration

0 25 50 75 100

Commision onInvoiced Sales

Commission onGoods Orders

Royalties

AdvertisingLevy

YES NO

Interest by CategoryInterest by Category

50%Clothing

Food & Restaurants

Home Furnishings

Various

Business Services

ForeignParticipations

Top 10 (out of 35 subcategories)Top 10 (out of 35 subcategories)

25%Espresso Bar - Cafe

Restaurants

Sandwich - Snacks

Coffee Restaurants

Women's Wear

Mobile Phones

Business Consultants

Cosmetics

Houseware

Men's Wear

Professional StatusProfessional Status

Owner51%

Marketing9%

Other 6%

N/A28%

General Manager6%

Ability to Invest (‘000 USD)Ability to Invest (‘000 USD)

17 - 5023%

100 - 23313%

> 2336%

N/A33%

50 - 10025%

Franchising in GreeceFranchising in Greece

Dr. Aris IkkosDr. Aris Ikkos

JBR Hellas Ltd.JBR Hellas Ltd.Business ConsultantsBusiness Consultants

The Greek Franchise MarketThe Greek Franchise Market• Type of Franchises• Active Franchisees by Category• Arrangements of Non-Domestic Operations• Life-cycle of franchisees• Length of franchise agreements• Contract renewal - extension• Reasons for franchising• Establishing of Pilot outlet• Entry fee and Initial investment• Franchisor remunerationSource: ICAP - Arthur Andersen: Franchising in Greece

Franchise Agreements DurationFranchise Agreements Duration

1 year4%

5 years24%

6 years6%

10 years34%

15 years5%

20 years8%

Other19%

Contract Renewals - 1997Contract Renewals - 1997

Renewal54%

Non-Renewal46%

Pilot OperationPilot Operation

After Franchising4%

Before or With Franchising

Profile of Potential FranchiseesProfile of Potential Franchisees

• KEM 99 Franchise Exhibition

• Athens, Jan. 29th - Feb. 1st, 1999

• 87 Exhibitors– 55 Greek– 22 International (USA, Italy, France, Canada)

• 15,000 visitors

• 5,700 questionnaires

FindingsFindings

• Interest by Category

• Professional Status

• Age

• Origin

• Ability to Invest

• Ownership of Shop Premises

• Engagement with the Franchise Method

AgeAge

Under 3022%

45 - 6015%

N/A14%

30 - 4449%

OriginOrigin

Attica70%

Abroad and N/A1%

Rest of Greece29%

Ownership of Shop PremisesOwnership of Shop Premises

N/A34%

Yes27%

Engagement with FranchisingEngagement with Franchising

0 25 50 75 100

Franchisee

MasterFranchisee

Franchisor

YES NO N/A

Source of Visitors’ ProfileSource of Visitors’ Profile

• Picture of Study

• 7 Categories• 35 Subcategories• Characteristics:

– Professional Status– Age– Origin– Ability to Invest– Shop Ownership– Franchise Engagement

Franchising in Greece Dr. Aris Ikkos JBR Hellas Ltd. Business Consultants.

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