Expansion into Germany – entry into the German market

Franchising is an internationally successful business model. A multitude of companies are already running franchise networks in a variety of different national markets and by doing so, have been able to successfully position their brands. Nevertheless, there is still a great deal of potential available when it comes to expanding franchise networks into Germany.

The Federal Republic of Germany is home to the strongest and most stable economy in Europe. While many nations in the world experienced times of economic insecurity and the European Monetary Union suffered a crisis in the last decade in particular, Germany was able to prove the sustainability of its economic system. On top of this, Germany also demonstrated that it is a particularly ideal location for franchise systems in all sectors.

The German Franchise Association has set itself the target of supporting franchise systems from outside of Germany in entering into the German market and accompanying them in all stages of this process. The “International Committee” has been created within the Association to focus on this objective. The German Franchise Association itself boasts a tightly-knit international network.

We therefore invite you to come and discover and conquer the German market for your franchise system and to make the most of the outstanding conditions available in our country.

Are you planning to expand into Germany and need local consulting support? The Franchise Association will be happy to answer your initial questions. In addition, the Association has associated experts – consultants and lawyers – who provide specific support. An overview can be found here:

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THE GERMAN FRANCHISE MARKET IN OVERVIEW

The Deutscher Franchiseverband represents the interests of the German franchise industry in the area of economic policy – on both a national and an international level. It was founded in 1978 and is based in Berlin. The Franchiseverband is the quality community and represents franchisors and franchisees alike. The association currently has more than 390 members. In 2019, there were approx. 960 franchisors operating in Germany. Together with more than 133,000 franchisees and more than 716,000 employees, they achieved total revenue of around EUR 129 billion.

Deutscher Franchiseverband statistics show positive trend

The latest franchise statistics once again show a positive development of the franchise economy. According to these statistics, the approximately 960 franchise systems nationwide had a total of 133,424 franchise partners in the past year, an increase of 4.2% from the previous year. Overall, the 171,824 (+2.3%) franchise operations employed approximately 717,000 employees, which represents a slight increase of 0.2%. These figures attest to growth and ongoing development within the German franchise economy. This is demonstrated even more clearly by the development of total revenues: At 129 billion euros, this figure increased again by 5.1% compared to the previous year.

Growth in partners and revenue generate international interest

The surveyed franchise systems were again able to significantly increase partner development. While the number of franchisees was 128,000 in 2018, this group grew by 4.2 percent in the past year to over 133,000. Extrapolated to the entire franchise economy, this means that about 5,500 more people set up their own businesses under an existing umbrella brand than in 2018. The positive growth of total system revenue was even stronger. This figure grew once again in 2019, increasing 5.1% to reach 129 billion euros.

Service sector remains number 1

The service sector consolidated its ranking and increased by three percent to 43%. It is followed by trade, in second place with 29% (+4%). The restaurant and leisure sector declined slightly to its current standing of 20%. The craft sector, with only 8%, also decreased. The sector data indicates that there is a lot of momentum behind the unchallenged leader. Whether this ranking is sustainable will become clear in surveys for future years.

Franchise founders: Core target groups consolidate

The target groups sought out by franchisors to successfully multiply their business ideas are also surveyed in the annual statistics: At 25%, salaried professional and managerial staff remain in first place, followed by independent entrepreneurs (23%), existing franchisees (22%) and internal employees (13%).  The topics conversion, that is, the integration of existing companies into a franchise system, multi-unit franchising (one partner with multiple locations) and changing sides, i.e. employees becoming partners, remained the focus of expansion.