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The Franchise Economy in Germany Country Report
Rolf G. KirstDFV board member international
affairs
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• Demographic Data Germany
• Current Industry Data
• The Work of the DFV
• Acquisition of Franchisees
• Financing of a Franchise System
• Developments and Opportunities

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• "Cooperation is not a ritual or a special form
  of grassroots democracy it is a declaration of
  intent with regard to joint success in business.
  If there is none, its finished.
• (Study carried out by the BBE-Unternehmensberatu
  ng GmbH)

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1. Demographic Data Germany
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1. Demographic Data Germany
Population 82 millionTotal area 357,114
km²Population density 230/km²GDP 2.4 bnGDP
per capita 29,464 PPP(Purchasing Power
Parity)   21,170 Sources Federal Statistical
Office, Eurostat
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1. Demographic Data Germany

• Third largest economy and industrial nation in
  the world
• Worlds largest export nation
• Automobiles, mechanical engineering and chemical
  products constituted 1/3 of Germanys external
  trade in from 1995 to 2005
• 11th in the ranking of GDP per capita in the EU
• 22nd in the world for the standard of living
  according to the Human Development Index.

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2. Current Industry Data
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2. Current Industry Data
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2. Current Industry Data
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2. Current Industry Data
Franchisors
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2. Current Industry Data
Franchisees (x1000)
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2. Current Industry Data
People Employed in Franchising (x1000)
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2. Current Industry Data
Franchise Turnover (in bn)
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2. Current Industry Data
ABC analysis of the composition of the franchise
systems according to the number of franchisees
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2. Current Industry Data
Summary

• Continuation of steady growth
• Franchise economy is consolidating in parallel
  and growing, especially with existing systems
• Fluctuation in franchisor figures
• Due to good general economic conditions
• foundation euphoria is weak

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2. Current Industry Data
Current Economic Situation

• Global economic crisis not yet perceptible in
  Germany
• Franchise economy is anti-cyclical If the
  economy is doing well, managers will find a
  good job more easily, so from this it follows
  that
• Quantity of or demand for franchise licences
  declines
• Quality of applicants rises
• The quality of the systems is rising due to
  current work of the Association

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3. The Work of the DFV
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3. The Work of the DFV
Deutscher Franchise-Verband e.V.

• 285 members (franchisors)
• 20,000 (franchisees)
• founded in 1978 as an association for
• franchisors and franchisees with
• affiliated experts
• Member of European Franchise Federation (EFF)
  World Franchise Council (WFC)

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3. The Work of the DFV
Main Tasks

• Increase level of awareness and create positive
  image
• Promote training and further education
• Representation of interests in the
  economic-political area
• Quality management

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3. The Work of the DFV
Services for Members

• Acquisition of franchisees
• Exchange of experiences and training
• Trade fairs or events for founders of new
  businesses
• International cooperation and network
• Industry information, advice, mediation

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3. The Work of the DFV
The DFV System Check

• Test procedure for franchise companies
• Codification and monitoring of minimum quality
  standards
• "Approved Member" seal stands for
  respectability and transparency in the franchise
  economy

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3. The Work of the DFV
DFV Member Companies (extract)
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4. Acquisition of Franchisees
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4. Acquisition of Franchisees

• Deutscher Franchise-Verband e.V.
• Franchise Pool International Deutschland
• Initiat GmbH
• Deutscher Franchising Service e.G.

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4. Acquisition of Franchisees

• Franchise-net GmbH
• Franchise-Portal GmbH
• Unternehmerverlag/Franchise-Erfolge
• Trade fairs
• (for dates go to www.franchiseverband.com)

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5. Financing of a Franchise System
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5. Financing of franchises

• Bottleneck for the expansion of the system?
• Offer "customised" solutions
• through Deutsche Bank AG
• Leasing as an alternative to classic
• start-up financing
• (e.g. UVW, FLicence Lease AG)

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6. Development and Opportunities
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6. Development Opportunities
Development in the Medium Term

• Further increase in
• franchisors and franchisees
• Continuous but weak course of expansion
• Expansion on existing area
• Greater significance of hybrid systems
• Conversion of branches of other distribution
  systems into franchise outlets

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6. Development Opportunities
Growth Trends

• Health care system
• Doctors' surgeries
• Opticians
• Chemists'
• Nursing services
• Emergency services for pensioners households

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6. Development Opportunities
Growth Trends

• Services/outsourcing
• Education
• Language schools
• Technical training courses
• Environment/energy sector
• Internationalisation

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6. Development Opportunities
Growth Potential Through Liberalisation

• Liberalisation of basic legal conditions.
• In the Crafts and Trade Code
• In the health care system
• In competition law
• In the Employment Protection Act

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"There are only two forms of cooperation the
quick and the dead." (Study carried out by the
BBE-Unternehmensberatung GmbH)
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Thank you very much for your attention!