Franchising in the Netherlands

Last Wednesday we had a guest lecturer who was a financial expert on franchising. I asked him several questions about franchising in the Netherlands. The two questions I wanted answered most was “How much of retail in the Netherlands is a franchise?” and “What are the growth expectations for franchising in the Netherlands?”. In one of my first articles I wrote that in a few decades 50% of retail would be a franchise. But since I have not yet found an answer to my first questions that will probably not be applicable to the Netherlands. Since no one has done any research to how much of retail is actually a franchise, it has been done for different branches but not for retail in its entirety. As for the questions about growth al that the guest lecturer could say was that it has been steady for the past 5 years, but no percentage of growth.

Results from last weeks interviews

I regret to have to tell you all but as of yet no one I approached had the time to do an interview which is not really surprising since it is the Christmas season. Since I over looked this fact I will probably get some interviews in January since the people I approached did want to talk about franchising but didn’t have the time at the moment.

Activities for the coming week

In the coming week I am going to try to get some interviews with franchisors and franchisees. With their opinion about the future of franchising I will try to give my readers a broader perspective on franchising. I will also try to get opinions of independent business owners on why they are not in a franchise.

It should be clear by now that I think franchising is the future of retailing. What I haven’t made my mind up about is whether this is a good or a bad thing. On the one hand I am afraid that every shopping centre will look exactly the same on the other hand it will improve continuity of businesses everywhere which is good for creating customer loyalty.

Franchising is the way to expand

According to many small business owners franchising is the way to expand their business.

For example Stamatis Kapsimalis a successful franchisor says his decision to franchise his business hailed from a dream he had of owning a chain of stores across the country.

Kapsi as he is affectionately known by staff and customers says he thinks franchising is the future of business because it allows the business owner to grow his business. For small business owners wanting to expand their business with more stores it is easier to turn their store into a franchise. It relieves them from having to deal with the day to day business of their new store. It also increases their back office since certain will not be done by the franchisee but handled by the head office. Most of the franchise formulas however tend to outsource bookkeeping and accounting so this frees up more of their time. The common misconception that small business owners have when trying to franchise their business is that it is easy money for them. I personally know of an example of a painter who wanted to franchise his business so he could take on bigger jobs. In the progress he contracted two of his fellow businessmen to join his franchise but he forgot that with the contracts he had drawn up he would become financially responsible for their businesses as well.

A new organization for franchisees in the Netherlands

On the 20th of November at the PSV-stadium the during the DOEgres “Stichting Franchisenemers Nederland” officially started (Stichting Franchisenemers Nederland van start). This organization was founded with the purpose of an exchange of knowledge between franchisees, franchisers and their franchise boards and other franchisees foundations. The DOEgres was organized to achieve the first steps of an exchange of ideas, it started in the early morning and continued into the early evening. The DOEgres was attended by over 200 franchisees from more than 30 different franchise formulas.

In my opinion this shows that franchising is growing not only in the number of businesses but also as an important player in the modern economy. The exchange of knowledge within the franchising world will lead to a faster increase in the number of franchises in the Netherlands. Since the mistakes made in the past by other franchisees can now be more easily avoided, but this is not limited to mistakes made by franchisees from that formula but also from many others. Since the success rate of a franchise is already at 93% opposite that of small businesses with a success rate of 62%. The number of franchises can only grow.

In my previous article I stated that 50% of retailing will be a franchise within 1 or 2 decades. If this foundation is successful maybe this will be closer to within the coming decade. So by the year 2016 or earlier we might see a fundamentally changed retail economy.

After looking around on the net for opinions about the future of franchising I can only come to the conclusion that Franchising is the future of doing business. According to many of the articles I found the reason for this is that it gives "new business owners the best possible chance of succeeding with the least risk." (www.zeromillion.com) Most people seem to agree that within 1 or 2 decades 50% of the retail economy will comprise franchises. That the growth of franchising is inevitable should be clear. According to www.franchiseperfection.com “The future of franchising is as bright as ever and if you are ready to take the step and go into business for yourself, franchising is the vehicle to take you where you want to be in the 21st century.”

The question that I now ask myself is “What will this do to the average shopping-centre?” If I were to walk through a shopping-centre in a randomly chosen town will I see any difference with the town I just came from. I hope not and I think for franchises to be successful in the future that there will have to be diversity within the franchise otherwise no one will travel from their comfort area to shop elsewhere.

This al leads to the next question I have to ask myself “How would I adapt a franchise formula to be unique in many different locations without losing the things that make my franchise recognizable to customers?”

First of all let me introduce myself. I am Sean van Drogen and I am a fourth year small business and retail management student at the Hanzehogeschool Groningen in the Netherlands.

As a part off a course we are now looking at the different forms of cooperation between entrepreneurs. One of the most important forms of cooperation that we are researching now is franchising. In order to get more information about the subject I decided to start this Blog. I am going to focus on the role that franchising is going to play in the future of the economy.