“Russians like foreign concepts because they’re interested in quality and standards” | Global Franchise
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Monday 28th November, 2022

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“Russians like foreign concepts because they’re interested in quality and standards”

Insight

“Russians like foreign concepts because they’re interested in quality and standards”

Franchise World Link works with entrepreneurs, franchisors, and various kinds of franchisees to help businesses grow all around the world. As the area director for Russia, Vitaly Sorokin has a deep immersion in the market and understands what makes it tick

Franchise World Link works with entrepreneurs, franchisors, and various kinds of franchisees to help businesses grow all around the world. As the area director for Russia, Vitaly Sorokin has a deep immersion in the market and understands what makes it tick.

Interview by Kieran McLoone, deputy editor for Global Franchise

Why do you think many Russian brands have only developed within the past five years?

VS: I think it’s mostly because people are now communicating more than ever thanks to the internet. When I worked at DHL, we used internal mail and sent messages in a paper envelope; now, Russians can find everything they need in a minute. They can find franchises and compare which models work best for them; outside of that, though, there isn’t much advertising for the franchise model within Russia.

Are Russians receptive to international brands?

VS: Russians like foreign concepts because they’re interested in quality and standards, which all emerge from the West. There’s not a single franchisor I can think of that wasn’t backed by international concepts taken from the West. That’s not necessarily America, but we see franchising as a western way of doing business. After all, we cannot reinvent the wheel when the model came about over 100 years ago.

What are some of the main appeals of Russia for franchisors?

VS: The opportunity in Russia is huge. People here aren’t spoiled when it comes to service, which means that a potential franchisor can bring its high standards of service and really stand out. There’s also a very strong labor force within the country, and there are many segments of the market which are yet to be developed by a leading brand.

And what about the challenges of the market?

VS: The main challenge is the absence of the term ‘franchising’. Officially, it’s not recognized, and all contracts are called ‘commercial concession contracts’.

In Russia, we also have a unique property system, where property belongs to the government. This is different from the West, of course, and I used to handle a project between Germany and Russia where there was a lot of unfamiliarity with our system. That being said, I’d certainly like to see many more western franchises in the Russian market.

Do you have any advice for entrepreneurs looking to penetrate Russia?

VS: You can’t take a model from one country and apply it directly to Russia. There are different consumer categories and rental rates which set the market apart. Trying to introduce a franchise without any kind of adaptation could result in a high risk of losses.

If approached properly, though, the return on investment is considerably high. Find the right approach, recognize the differences, and there’s success to be had. The Russian market could be second to America – trust me.

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