The Franchise Market in Lithuania
Interview with Ilja Malkin, Director of Advanced Advice, Lithuania
How did you get started as a franchise consultant?
The idea of working in the field of franchising came in 2008. The initial idea was to establish Lithuanian franchising center that would educate the business society and raise awareness about franchising in Lithuania. This idea was implemented in 2009. During the process of establishing the Center I received lots of inquiries from businessmen wishing to develop their businesses by using the franchising model. In response to these inquiries, our company in collaboration with the UK franchise consultants, developed methods for franchise consulting services and offered them to Lithuanian and Latvian markets.
Who are your clients?
Since ADVANCED ADVICE offers full range of franchise consulting services, our clients range from local to well-known international brands. We have created franchise concepts for local companies and consulted various franchise brands on how to adapt their franchise concepts before entering new markets. Furthermore, through our internet franchise directory www.franchisehub.eu we assist international franchises in finding the franchisees in Baltics.
What are the current trends on the franchising market in your country?
Current trends are quite positive as the number of international franchise brands presented in the market grew rapidly. In the period 2008-2012, the number of international brands in Lithuania increased from 40 to over 200. We predict that this trend will continue because of the rising interest to Baltic markets from major international brands.
The number of local businesses developing their franchises grows in much lower rates. We note that the financial crisis forced the majority of local businesses to improve their effectiveness and efficiency before they turn on the international expansion engine. So we expect the number of local franchise brands to grow significantly in the next couple of years and, because of improved business processes, we believe that their franchise offers will be competitive in international market.
How many companies in your country offer franchises?
As indicated in the previous answer, there are over 200 franchise brands in Lithuania. Vast majority of them are international franchises. Currently there are over 20 known Lithuanian franchise brands.
Which are the best Franchises by growth, branch and demand? What makes them different?
Based on our experience with clients and number of franchises established, restaurant and apparel sectors are the most popular. A lot of prospective franchisees are looking for well known or unique restaurant franchise concepts to develop in Lithuania, due to availability of different concepts as well as the charm of owning a restaurant.
Apparel franchise sector is dominated by few large companies that have accumulated a large portfolio of famous apparel brands as well as few other companies that have several clothing brands in their portfolio.
What is the average startup investment in money and time for a franchise?
Average start-up investment varies greatly. Since we work with franchise concepts from around the world, some can be established under 100.000€, while other bigger concepts require a more substantial investment. The good thing about Lithuanian market is that the average price level is relatively low so the costs of starting the same franchise in Lithuania and, let’s say, in Germany, could vary significantly.
Which branches experience a lack of franchises?
We believe that there is an unexploited opportunity for well-developed service (B2B and B2C) franchises to capitalize on the situation of growing demand from investors in this sector.
What is the profile of the people who choose to buy a franchise?
Even though we receive inquiries from various prospective franchisees interested in franchise concepts from different industries, majority of prospective franchisees that turns to real franchisee already have established a business or have professional experience in the business world. These prospective investors tend to have serious intentions towards a franchise and qualify for master or territory development franchise.
What should a franchisor know before coming to your country? Any specific requirements, legal restrictions.. etc?
The Baltic states do not have any specific implications or requirements towards franchising and create a fairly flexible ground for development of franchise concepts. As any development into a new market, it is important to have experienced consultants and lawyers to ensure smooth entrance.
Baltic market, although is quite small compared to other regions, offers a lot of potential for foreign franchises due to stable economic situation after the economic recession, growing consumer demand for foreign products/services, and European Union membership to make development into European market easier for franchises from other continents.
A research on attractiveness of Lithuania and Latvia for international franchises was carried out in 2011 by ADVANCED ADVICE. The report of this research is available online and is helpful for any franchise planning on entering Baltic markets. For more information on franchising environment of Baltic regions and business sectors, we suggest to visit www.brand4baltic.com or contact ADVANCED ADVICE for a more comprehensive consultation.
