Report on franchising in the Czech Republic

Franchise market in the Czech Republic is comparatively young. It has been developing since the year 1990. At the moment there are more than 150 franchise systems operating in the Czech Republic. Almost half of them are domestic networks. PROFIT system experts forecast further growth during the following years.

Franchising appeared to be a remedy for financial crisis during last 3 years 2008-2010. Many companies decided to start franchise program as an alternative to costly development of their own networks. Franchising was also life line for many single entrepreneurs who got into trouble during the crisis.

More franchisors, more franchisees

Czech franchise market grows simultaneously to the economy, and franchising becomes more popular among Czech companies. There are over 150 franchise systems operating on Czech franchise market. Czech franchise market is on constant growth. In 2010 it grew by 14 new franchise systems - which was the second biggest growth in the Czech franchise history. The relation of foreign brands vs domestic ones is almost equal – in 2010 there were 77 (51 %) foreign brands and 73 (49 %) Czech ones. PROFIT system forecasts more than 170 systems by the end of 2011.

Together with the growing number of franchise systems the number of franchise outlets is also growing and franchising is becoming popular form of business among Czech entrepreneurs. At the end of 2010 there were app. 3476 franchise outlets in the Czech Republic owned by 2029 franchisees. A franchisee owns average middling 1,7 franchise outlet. Companies’ own outlets are still dominant with 5076 and they create 59% of all outlets in the Czech Republic.

We can observe a successful year for Czech franchise market - says Marek Halfar, franchise consultancy director of PROFIT system in the Czech Republic – it seems to be a good moment to develop franchise in the Czech Republic - economic conditions are getting better, on the other side Czechs are not afraid of franchising any more. They have started to trust in franchise as a proven way of doing business.

Czech franchise market is growing mostly in services and secondary in retail. The most numerous group of franchise systems is created by services – gastronomy and real estate. In retail the most numerous sector is clothing and shoes. In services sectors - gastronomy, real estate and private services - the number of franchise outlets is growing fastest of all. Numbers of first quarter of 2011 tend to confirm this positive trend.

There are over 150 franchise systems in the Czech Republic. PROFIT system forecasts more than 170 systems by the end of 2011.