Franchising in Europe in on track for continuing positive growth. The 27 nations that comprise the European Union represent a single market of more than 450 million consumers. Though most franchises operating in Europe are of European origin, many US companies plan to expand and operate franchise units in the EU in the near future.
Consider these statistics:
- The world’s #1 franchise McDonalds earned more revenue in the EU than the US last year, and expects that trend to continue. The hamburger chain forecasts sales to increase in 2008 by nine percent for the EU vs. less than four percent for the US. The chain gets 55 percent of its sales outside the US.
- The franchise industry is booming in the UK, with the number of franchise units increasing by 44 percent over the last decade. Franchising accounts for ₤10.8 billion annually in sales.
- 48 percent of the US-based franchisors operating in the EU rate the UK at the best region for expansion, with Germany and France also offering good prospects for franchise expansion.
- Of the franchised brands developed and operating in the EU, about 80 percent originated in domestic EU countries.
- In 1972, a European Code of Ethics for Franchising was created by the European Franchise Federation to act as guidance for responsible practices in “business format franchises.” The Code has been since been updated to reflect current business practices.
- The EF has 17 member associations that represent franchisors in different European countries. Franchisors that belong to these associations are thus affiliated with EFF and adhere to the Code. Members of EFF associations gain credibility as a reputable franchise business that practices ethical franchising.
- The European Franchise Federation estimates that there are 8,500 distinct franchise brands operating in the EU compared to about 2,500 US brands.
- Nearly one-third of US franchisors considers the future potential for expansion into the EU as “outstanding.” According to research by the William Rosenberg International Center of Franchising at the University of New Hampshire, 66 percent of US franchisors currently not operating in Europe plan to expand into the EU market.
- Western Europe leads the EU in retail sales and surpasses North America. Retail revenues in EU have surpassed more than $1 trillion US this decade.
European Franchise Federation: www.eff-franchise.com
International Franchise Association: www.franchise.org