Editor’s note: This article was first published in November 2012, and its growth figure of more than 6% compared with 2010, the credit squeeze in Spain and the saturation of beauty franchises describe the market at that time.
Franchising is still on the rise in Spain despite the crisis, with growth of more than 6% compared with 2010. This business model is shaping up as a good alternative, though of course it still calls for thorough research on the entrepreneur’s part.
As we have said in previous articles (even at the risk of sounding repetitive), in times of crisis you have to expand, but at the same time you have to keep debt under control. Growing your business by developing a franchise system gives your company the chance to be present in many other places, financed by the franchisee. At the same time, the franchisee joins a business model that has already been tested, with its foundations already in place.
The problem some entrepreneurs are running into when acquiring a franchise is the lack of credit in Spain, so many companies often choose to develop their franchise system outside the country, and use it at the same time as a way to go international.
That said, you have to choose the type of franchise carefully, because some were very profitable in their day but are now starting to show signs of saturation, as may be the case with beauty franchises.
Although when we set out to open a franchise the company makes sure there is no other franchise from its network nearby, the franchisee should do their own market research so as not to make the mistake of opening a franchise where there are already others offering a similar service, even under a different brand.
The Spanish Franchisors Association (Asociación Española de Franquiciadores, AEF) reminds us that a franchise is not sold but granted, on the basis of a series of studies, analyses and requirements. This is something some brands are forgetting, offering franchises without any prior study, where the only requirement is that the entrepreneur has enough capital.
Today franchises cover a huge range of products and services, and there are even many franchises for professionals. One example is Infolegal, a franchise offering legal services, and therefore an option for lawyers; another is Aloha Mental Arithmetic, a franchise focused on extra tuition for students that, in principle, doesn’t need commercial premises.
There are restaurant franchises modeled on American eateries and, above all, clothing franchises offering good-value fashion, such as the Diez Euros franchise.
Any company, whatever product or service it offers, can develop its own franchise system, always with some kind of expert advice before taking the leap. And if at some point the Spanish market doesn’t live up to expectations, Latin America and Asia are where Spanish franchises are gaining the most ground.
Further reading
Featured image: Connor J Williams, CC BY 2.0, via Wikimedia Commons.
