How to expand in How to expand in
Hungary?Hungary?
Presenter:Presenter: Tibor Kőrösi Tibor Kőrösi CEO of J.PRESS, board member of the Hungarian CEO of J.PRESS, board member of the Hungarian
Franchise AssociationFranchise Association
www.franchise.hu
Franchise business Franchise business in Hungaryin Hungary
• Area: 93,000 km2
• Population: 10.005.000
• GDP (2009): 93 billion EUR
• Main cities: - Budapest 1,712,210 inhab.
- Debrecen 207,200
- Miskolc 169,226
- Szeged 169,731
- Pécs 157,680
• Strategic geographical location
• Member of EU
Important facts about HungaryImportant facts about Hungary
Fan chart of the GDP forecast Fan chart of the GDP forecast HungaryHungary
Source: National Bank of Hungary
-8-7-6-5-4-3-2-10123456
07 Q
107
Q2
07 Q
307
Q4
08 Q
108
Q2
08 Q
308
Q4
09 Q
109
Q2
09 Q
309
Q4
10 Q
110
Q2
10 Q
310
Q4
11 Q
111
Q2
11 Q
311
Q4
12 Q
112
Q2
12 Q
312
Q4
Per cent
-8-7-6-5-4-3-2-10123456
Per cent
Unemployment rates: commonly used definitions
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Hungary 5,8 5,9 5,9 6,2 7,3 7,5 7,4 7,9 10,7 11,7
Germany 7,5 8,3 9,2 9,7 10,5 9,8 8,3 7,3 8,7 11,6
Slovak Republic 19,3 18,6 17,5 18,1 16,2 13,3 11,0 9,6 11,8 13,6
Czech Republic 8,2 7,3 7,8 8,3 7,9 7,2 5,3 4,4 6,9 9,2
Unemployment rates: commonly used definitionsUnemployment rates: commonly used definitions
Source: OECD
Slovenia
Franchisor : 110Franchisee : 1.100
Austria
Franchisor : 330Franchisee: 4.700
Romania
Franchisor: 170Franchisee: 1.100
Hungary
Franchisor: 350Franchisee: 18.000
Czech Republic
Franchisor : 330
Ukraine
Franchisor : 301 Franchisee: 18.170
Croatia
Franchisor: 150Franchisee: 1.000
Serbia
Franchisor: 50
Approximate data by national associations
The franchise-sector in Hungary isThe franchise-sector in Hungary isleading leading in East-Europein East-Europe
Bulgaria
Franchisor:140Franchisee:2900
Hungarian Franchise Association (HFA)Hungarian Franchise Association (HFA)
Currently 350 companies operate in Hungary as franchisors. The number of franchisees is >18’000 and 100’000 employees work in the franchise sector.
The HFA was established in May 1991 by 17 companies.
The roles of HFA:
1. To represent the Hungarian franchise sector2. To control the ethical franchising behavior in Hungary
according to the European Code of Ethics for Franchising3. To organize events for members4. To promote the franchise sector
Hungarian Franchise Association (HFA)
The HFA has 50 members
The number of franchise units of the members
> 7’000
The number of employees of the members are
> 55’000
Franchise fees 0 – 15’000 EUR
Investment fee 2’000 – 100’000 EUR
Foreign franchise-networks in HungaryForeign franchise-networks in Hungary
United States20 networks, 344 units
Germany14 networks, 244 units
Italy10 networks, 61 units
France8 networks, 87 units
United Kingdom6 networks, 149 units
Poland1 network, 3 units
Romania1 network, 1 unit
Denmark1 network, 2 units
Sweden2 networks, 11 units
Ausztria3 networks, 25 units
Belgium3 networks, 29 units
Spain7 networks, 48 units
There are 76 foreign franchise-networks with more than 1000 units operating in Hungary.
Hungarian franchise-networks expanding abroadHungarian franchise-networks expanding abroad
Romania 14Slovakia 9Poland 6
Czech Republic 3United Kingdom 2Bulgaria 2Italy 2Albania 1Bosnia-Hercegovina 1Croatia 1Kuwait 1Macedonia 1Moldova 1Montenegro
1Germany 1Serbia 1Ukraine 1
In all 48
Hungarian franchise-networks by sectors Hungarian franchise-networks by sectors
Services (50)
Clothes (46)
Food (31)
Health & Care (30)
Retail (29)
Business Services,Consultancy (28)
Real estate (25)
Restaurants (23)
Education (22)
Miscellaneous (18)
Furniture & Decoration(16)
Cars (13)
Hotels (6)
Sport (4)
Around 350 franchise-networks are operating in Hungary, with more than 18000 franchisee.
MembersMembers
50% of franchise systems are based on Hungarian ideas and owned by Hungarian companies as well. The other 50% are international licenses and coordinated by either subsidiaries of international companies or Hungarian companies owned by Hungarian master licensees.
20% of all franchise companies in Hungary are member of the Hungarian Franchise Association.
The activities of the HFA have three major scopesThe activities of the HFA have three major scopes
• The first and the most important one is to provide the possibility of ethical franchising by influencing and controlling all regulations connected.
• The second one is to extend the knowledge related to ethical franchising thru regional conferences in cooperation with country chambers.
• Last but not least, the Association helps to meet franchisors and franchisees, and in relation to this we do market organizing activities as well.
Which are those industriesthat would have good potential in Hungary:
- brand new and interesting products and services
- low investment
- home-based franchise
- services sector
- e.g.: café, accessories
Peculiarities of the Hungarian Market - I.Peculiarities of the Hungarian Market - I.
Peculiarities of the Hungarian Market - II.Peculiarities of the Hungarian Market - II.
- proper measure of franchise-fee- tailoring the business model and assortment to local needs- continuous assistance is expected- registered trademark- cultural differences- correct adaptation of the concept to the market- foreign brands are unknown to Hungarians
Negative example:
- Wendy’s, Quick, Dunkin’ Donuts didn’t take the local peculiarities into account, and had to retreat.
Tips and suggestions about entering the Hungarian market, mistakes to avoid:
THANK YOU