France is the leading European country in terms of franchise networks, with 2,049 franchisors and 78,218 franchisees in 2019, generating revenue of 67.8 billion euros (+9.3% compared to 2018 (1)). The business model, which emerged in 1972, remains popular among the French, even amid the health crisis. Here’s an overview, backed by the numbers!
Franchises that are constantly growing
“It’s true that franchising is a very dynamic sector—a leader in Europe!” says Michel Bourel, president of the French Franchise Federation (FFF).
And for good reason: the franchise phenomenon has been steadily growing in France since its inception in the 1970s. The number of franchisees and franchisor networks has even doubled over the past decade. In 2019, the franchise market once again saw strong growth:
- +9.3% in revenue,
- +2.2% increase in the number of stores opened,
- +4% increase in the number of open retail locations,
- +8.7% increase in direct and indirect jobs created.
There’s no doubt about it: the franchise model is a hit with French entrepreneurs! Entrepreneurs see it as a great way to get started while benefiting from the brand recognition of a well-known company, the resources of the network, and support to grow their business. Franchise headquarters, for their part, collect increasingly higher royalties and boost their brand recognition with every new store opening.
In short, a win-win relationship that is more important than ever in the context of the global health crisis we have faced this year. In fact, 76% of franchisees say they are better able to weather the crisis than an independent retailer by being part of a network. Furthermore, 64% of franchisors believe that the growth and sustainability of their network depend on the quality of the franchisor-franchisee relationship.
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Promising traditional sectors
The first franchise networks to emerge in the 1970s were in the personal and home goods, hospitality, food, and hair care sectors. These sectors have continued to grow over the years and still account for a significant share of the franchise economy today. These long-standing networks are reaffirming their appeal by increasing the number of their retail locations in 2019.
- Food (+3.6%),
- Personal care products (+6%),
- The automotive sector (+6.2%),
- Other retail businesses (+0.2%),
- Hairdressing and beauty services (+0.4%).
While established franchise networks remain dynamic, they must now contend with the emergence of new, up-and-coming networks specializing in automotive services, real estate, travel, and cleaning.
Digitalization is well underway
The franchise industry seems to be racking up the good points: in fact, it is quite advanced when it comes to digital adoption. This is welcome development, as the benefits of new technologies in boosting business growth are well established! Furthermore, according to a study :
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- One in two franchisors has implemented a multichannel sales strategy (sales via the Internet and mobile apps).
- Nine out of ten franchisors have implemented at least one feature on their website to encourage customers to visit the network’s retail locations.
- 91% of franchisors have incorporated social media into their communication strategy.
And these digital franchises are seeing the results. Another survey reveals that 9% of their revenue is generated by e-commerce and that the conversion rate, typically 2.5%, rises to 4%.
The franchisor-franchisee relationship: the key to success
For both franchisees and franchisors, the experience of the COVID-19 pandemic has shown that the lack of communication between these two independent business owners was a source of misunderstanding and, consequently, a decline in performance. Communication tools and sharing platforms are essential to ensure effective communication between franchisors and franchisees, particularly to:
- Enable the franchisor to communicate easily with the entire network and track how franchisees are responding to the information,
- Provide franchisees with the ability to submit a request to the corporate office,
- Secure and track transactions to better organize the network.
In short, everything is looking up for French franchises! They’re attractive because they offer security for entrepreneurs, they continue to attract new franchisees—with well-defined profiles—across most industries. The growth of franchise networks is driven by digital technology, which is integrated into the majority of franchise headquarters.
(1) Source: French Franchise Federation (2019)
(2) Source: French Franchise Federation (2019)
(3) Source: Banque Populaire in partnership with the FFF (2018)
(4) Source: Banque Populaire in partnership with the FFF (2018)
(5) Source: French Franchise Federation (2019)
(6) Source: CSA (2015)
(7) Source: Territoires et marketing (2016)
(8) Source: Officiel de la franchise
(9) Source: Officiel de la franchise
(10) Source: Officiel de la franchise
