As one of the strongest economies in the world, France is a perfect introduction for international franchisors looking to enter Europe.
Words by Kieran McLoone, deputy editor for Global Franchise
FRANCE IN NUMBERS
• Population: 66 million
• Size: 547,030 sq. kilometers
• GDP: $2.79tr
• Franchise market value: $69.94bn
Renowned as having a rich cultural tradition and for producing some of the world’s most beloved artists, France is also the European hub for franchising, on account of the country’s strong economy and its unfaltering embrace of the business model.
From strength to strength
France’s history with franchising stretches back many decades, with the French Franchise Federation being founded in 1971 to advocate for sustainable, healthy development within the industry. The franchise industry almost doubled in recent years, with the 1,228 franchises existing in the country in 2008 growing to 2,004 by 2018.
The French franchise industry has naturally grown financially, to now represent revenues of around $69.94bn, and employ over 700,000 people, both directly and indirectly. French franchises make up the majority of the market, with only seven per cent of businesses in the country originating from abroad. Of that minority, the U.S. has the highest slice of the French market, representing 22 per cent of international brands within the country.
In fact, McDonald’s – one of the most recognizable American franchise brands – has found France an especially rewarding market. With over 1,200 French locations, France is McDonald’s’ largest market outside of the States.
All this being said, France can still present some challenges to international franchisors who cross the North Atlantic unprepared.
“France has some of the highest fiscal taxes in the world,” says David Borgel, area director Europe for Franchise World Link, an international franchise consultancy. He adds: “In general, French people are not fluent in English, which could be an issue when trying to find good investors.”
France also has a very high hourly labor cost of €36, compared to €35 in Germany and €27 in the U.K. This sometimes means that food franchises close from 2 pm until 7 pm, to avoid paying wages during relative downtime.
Then there’s Doubin Law that franchisors must comply with, which states that disclosure must be provided by the franchisor at least 20 days prior to the signing of any documents or payment of any funds. Failure to comply with this law can result in a contract becoming void, and will require the franchisor to compensate the franchisee for any fees incurred.
Vive la franchise
Approached correctly, France can be a hugely successful market for any franchise brand. The most common method of franchising from an international perspective is a single, national master franchise agreement because while the country may be more than double the size of somewhere like the U.K., the French railway network allows for seamless logistics.
And while the entire country has strong potential, Paris, where 70 per cent of the country’s decision- making is said to take place, should be the prime target for incoming brands: “When you find a premium location in Paris, you could be profitable with whatever you’re selling, because the purchasing power is high and there is always large demand,” says Borgel.