Franchising in Bulgaria
The Franchising business model in Bulgaria is attracting many people who want to start and manage their own business. Franchising is perceived as less risky compared to independent initiative due to the advantage of starting up business quickly based on a proven trademark, and immediate access to the tooling and infrastructure, as opposed to having to develop them.
- The first franchises appeared in Bulgaria in the 70s, but was in the mid-90s when the industry began to develop more strongly.
- In many sectors are already present major franchises (or chains that do not use franchise).
- Despite the above, a large portion of the population is still unaware of this system, in part because of the limited information available.
- A large part of the master franchise is in the hands of Greek companies.
- The attraction of Bulgaria has increased a lot with its entry into the European Union, which attracted more investment and franchising. In the next few years will continue installing important channels of the most renowned brands.
Average cost for starting a franchising in Bulgaria is BGN 5 900 (for comparison – it is $ 40 000 in US).
The average monthly royalties are 4,9 % of the turnover.
The average initial investment in franchising business is BGN 29 500.
Average number of units of the franchising chains in Bulgaria: 11.
The contracts are on average for a period of 5 years.
In the end of 2008 in Bulgaria there were 1 478 franchised business units from 60 companies. In 2009 the numbers of units is 2211 and in 2010 – 2954.
In 2009 the companies that provide franchising rights are over 80 - 62% of them are Bulgarian and 68 % were operating in Bulgaria for more than 5 years. In 2010 the number of franchising companies in Bulgaria is 198 (64 % are Bulgarian).
Reasons for failure
The franchisers surveyed point out that only 28 % of the candidates for franchise have made a good research on the business model they want to adopt.
Reasons for choosing franchising
Characteristics of franchisees
Most popular business sectors are: food (32 in Bulgaria), cosmetics, education, real estate, hotel.
Food & beverage: McDonalds (since 2000 – before that it was not franchise), Subway, KFC, Starbucks.
Real estate: Re/Max,
Cosmetics: No Vello
Hotel: Holiday Inn, Best Western, Metropolitan
Others: Office 1 Superstore;
Catalog of the franchisers: http://www.franchising.bg/buy_franchise_bg.html#franchise