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We are starting to provide useful informations about franchising in Hungary
The first article is provided by Budapest Business Journal
(Click here for theRomanian version)
Demand drives franchising boom
Zoltán Batka, Katalin Tóth
There are an estimated 250 franchise networks in Hungary at present, with a total of 15,000–20,000 franchise holders These networks, some of which have only a few members, and some which link thousands of businesses, have combined revenues running into the thousands of billions of forints, and keep some 100,000 people employed.
Discouraging signs
Very interesting analysis about why some major international franchise networks have failed in recent years, including Wendy s, Dairy Queen and Quick, discouraging many other Western networks as Hardee, from expanding to the Hungarian market.
Interestingly, franchise owners in geographical proximity, principally German or Austrian ones, are not so interested in Hungary. Spanish and Italian networks, on the other hand, are much more open, although their aim is to first expand in South America and the Mediterranean, where they have an easier time adapting.
?Local failures can be attributed to a lack of bank financing, recession and slack discipline from management,? Halmágyi said, adding that enterprises hoping for big profit in the first two or three years are the ones that typically fail.
Home-baked success
Pastry franchise Fornetti, rumored to be considering entry to the U.S. market, is a Hungarian success story, and about to become a global one. The company, which has 20 master franchise holders worldwide from Dublin to Kuwait, and some 2,500 partners in Hungary, was founded as Fornetti Frozen Bakery Products Kft in 1997 by József Palásti, a baker in Kecskemét. Its basic concept of selling baked snacks made on the spot in relatively low-tech mobile ovens was an instant market hit.
“Those joining the network must pay a one-off fee of Ft 150,000 [€600], after which they only have to pay for the semi-finished goods we deliver to them,” said Tibor Molnár, Fornetti’s franchise director in Hungary. “Network members must agree to reach 750 kilograms of retail turnover within three months and participate in marketing campaigns organized by us. We provide the oven, technical and logistics background, and round-the-clock service.”
Fornetti has added 400 partners to its network in each of the last eight years. It has made a similarly dynamic plan for next year, primarily targeting settlements of 2,000–3,000 inhabitants as a possible growth area.
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