No. 42. FRANCHISING: EVALUATION AND PERSPECTIVES

Published in REPORTS

D. Kazis, Th. Tsagouris. 2004. | ISBN: 960-341-052-7

 

The study is focused on the impacts of franchising on the greek economy and society. It is based on theoretical and empirical analysis as well as on field work.


Franchising involves mainly small and medium size enterprises and has brought about the most dynamic structural changes in retail and services in recent years. It creates strong brand names, employment, and induces transfer of knowhow, scale economies and higher standards. To a certain extent, franchisees are expected to act as franchisors’ employees but at the same time professional opportunities are given to young entrepreneurs and to experienced middle-aged managers.


An 85% of today’s franchise systems in Greece are of greek origin and ownership. As a rule, franchisee units of well organised franchise systems live considerably longer than similar independent businesses. However, several franchisors operate without clear business concepts, adequate infrastructure and preparation. At the same time, a low supply of suitable candidate franchisees is observed.


On the whole, financial results of franchise systems are more favourable than those of similar "independent" firms but not to the extent implied by the high rates of franchising expansion. Taken by branch, results may differ significantly. For example, franchisor firms involving manufacturing (especially clothing) and some retailing firms (e.g. household goods) are among the most efficient ones.


Prices of goods and services provided by franchise systems are not lower than market averages. However, benefits are reported by consumers in terms of product quality and improved service.
Regulatory measures proposed include disclosure by the franchisor of necessary information to candidate franchisees, seminars to be offered to candidate franchisees and registration of all operating franchise systems in Greece.