The franchise market continues its growth at an accelerated pace in 2023, given the high interest of Romanians in opening a franchise business. Thus, in the first quarter of the year, approximately 30% more franchises were opened in Romania than in the first quarter of 2022, according to Franchwise, the largest consulting company in the field of franchises in Romania.
Between January and March 2023, most franchises were opened in Bucharest, Brașov, Craiova, Iași, Bacău, Constanța and Timișoara, with average investments between 80,000 euros and 100,000 euros, Franchwise reaching a total number of 300 openings intermediated franchises, which represent total investments of over 22 million euros. The most attractive areas for a franchise business are ice cream parlors, cafes, convenience stores, consulting and business mentoring services or franchises in the field of photovoltaic panels.
“We see an increased interest in business investments, especially franchises, because there is a process of mindset change at the social level: Romanians are more open to entrepreneurship and especially to the choice of franchising as the first form of entrepreneurship due to the fact that it represents a safer investment than a self-employed business. We are increasingly seeing the replacement of apartment loans with loans for investments in starting one’s own business. We feel an increased interest in financial and entrepreneurial education, which helps the Romanian business environment to develop. Although the franchise market is still an insufficiently explored territory in Romania, at the regional level we have a considerable advance compared to Bulgaria or even Hungary, franchises contributing exponentially to the development of the local entrepreneurial culture”, declared Paul Voicu, Franchwise Managing Partner.
Regarding the profile of Romanians who invest in a franchise, 60% of them are men and 40% women, over 35 years old, most of them in their first business. In general, those who want to open a franchise invest in services (from networking and business consulting to children’s education services), niche retail (convenience stores, florists, etc.) and HoReCa – here the focus being on businesses that sell a single product and on the customer experience, such as gelaterias, specialty cafes, confectioneries with gluten-free desserts, pizzerias, etc.
Launching a franchise business has become attractive for Romanians due to the many advantages it has, among which: the know-how offered by the franchisor, the recipe for business success and the high chance of success, the rapid growth, the power of the brand and ongoing franchisee support. Having access to resources, Romanians have greater confidence to open a business and start with more chances of success.
Investments in franchises, from 15,000 euros to over 250,000 euros
A franchise business can be started with amounts between 15,000 euros and 20,000 euros, such as dessert franchises, focused around a single product – fresh donuts from Hello Donuts, waffles of various varieties from Bubble Waffles. However, investments can exceed 100,000 euros, for the opening of pretzels or simigeria (the Simigeria Petru franchise), pizzerias (Treevi Pizza) or even specialty restaurants (the Bread and Wine project of the Sosa&Sosa group, which also operates the Energiea and Expirat brands, with vast experience in the field of food & beverage).
Also, there is an increased interest in investing in master franchises, where the fields are diverse – from gelato shops with sugar-free products (Yole franchises) to business performance optimization with the help of drones (Coptrz franchises). Masterfranchises involve investments of over 250,000 euros, being attractive in general for entrepreneurs with business experience, who want to complete their existing portfolio of businesses with a franchise or to diversify their business activity.
Regardless of the type of franchise chosen and the level of investment, the amounts represent the average investment for opening a turnkey business, including franchise costs.
“Franchises do not come with a recipe for success, but certainly the chances of success and returns are much higher than in a traditional business, if a number of factors are taken into account. For example, for a business that needs a location to perform, results depend on three pillars: brand, franchisee involvement, and the ford (the location itself). For future entrepreneurs who want to open a franchise, I encourage them not to look at the franchise only as an investment – the entrepreneur’s presence in the business is needed to achieve performance. The franchise does not run itself. I also encourage them to talk to themselves, analyze what their wants, needs and abilities are and choose the right franchise for those wants. Once the right franchise is chosen, I encourage them to do their homework, call on experts and not miss important steps in the process – from careful data analysis to discussions with franchisees in the system and getting to know the franchisor and his team, a team that will be involved in helping the franchise network”, explains Raluca Voicu, Franchwise Managing Partner.
The service sector is constantly growing in Romania (from education services for children to business consulting services, business networking clubs and green businesses. Commerce is not left behind either, a market where the most attractive investments are proximity retail stores (My Inmedio network). In HoReCa, another attractive area for franchises, the market is consolidating, with franchise investments in this sector being oriented towards brands that focus on a single product and that focus on the purchase experience especially for customers (ice cream shops, specialty cafes, pizzerias).
The return on investment in a franchise depends on several factors (from the attractiveness of the marketed product or service to the way it operates, as well as the potential to scale nationally). On average, the payback period for franchise investments in Romania is between 2.5 and 4 years.