Successful Franchise Development In Germany

Successful franchise development in Germany: How companies succeed in making the leap to the German market

High purchasing power and a large population make Germany one of the most popular European destinations for companies looking to establish an international presence. Therefore, numerous providers try to gain a foothold in Germany after success at home.

However, sometimes the German franchise gets off to a slower start than anticipated. Entrepreneurs should not be deterred by the disappointment of such cases, as Eugen Marquard emphasizes. In the following article, Eugen Marquard, a franchise expert and founder of 'Die Franchisemacher', explains why franchise companies in Germany often have start-up difficulties.

Take a close look at the market and plan test runs

There are a number of factors that determine whether a company will succeed in Germany. This includes the right marketing, but even more important are the right strategy and partners. The former should be based on the market analyses of an expert who is familiar with the German market.

The best way to sell the own product in Germany must be clarified in advance. Because it might not work in the big cities, and it might also be different than it worked in the home country—after all, consumer habits are very diverse. It is possible to gather initial findings in a test run in a less competitive part of the German sales market by opening isolated franchise branches.

Don't put franchise partners at the deep end

This approach has the advantage of putting the reliability of the franchise partner to the test at the same time. Instead of immediately granting a master license for the whole of Germany, the franchisor can retain control by restricting the partner to the selected region for the time being. If this partner is successful, he will be able to obtain more regional licenses and become a master franchisee.

For further protection, the German franchise company can be set up as a joint venture with the partner. The partner can be appointed as managing director and receive company shares back. The shareholder agreement allows the franchisee to be dismissed if he fails to achieve set goals or even damage the brand.

Mutual understanding and competent advice creates security for both sides

Another characteristic of the German economy is its attitude toward entrepreneurship: It is focused on security, which is reflected in the low number of new companies founded each year. For optimal system development, a concession from the franchisor is indispensable. For example, individual franchisees should be offered a German-speaking contact person, and the company managing franchise agreements should have its registered office and place of jurisdiction in Germany. Moreover, contracts should definitely be concluded in German.

At the same time, we must continue to work on mutual understanding. If a franchisor merely dictates terms and objectives, this inevitably leads to dissatisfaction. It is therefore preferable to have business relationships between international partners mediated by someone who is familiar with both cultures and can translate between the different mindsets on business management. In this way, it is possible to find solutions to the satisfaction of all parties involved that promote long-term and stable growth.