Franchising in Sweden
A business model on the move. Survey of the Franchise Industry by the Swedish Franchise Association
The concept of franchising is sometimes perceived as being somewhat diffuse, mainly due to there being a lack of a uniform definition and official statistics. The fact that franchising is on the increase and companies are reporting an increase in turnover that is above the average in the economy indicates a change in the situation. Female entrepreneurs are more common here than in other types of business and there is a low bankruptcy rate, while the rate at which new companies are being established is high. It is also estimated that franchise companies have a turnover of around SEK 80 billion and employ around 100,000 people, which means that this business model is extremely important to Swedish business, employment and of course the Swedish economy.
It is estimated that the total number of franchise companies in Sweden is around 300. In a recent survey 68 per cent of the responding companies started business during or since 1990, and as many as 28 per cent started their business during the current decade.
The survey also revealed that franchising is present in many sectors. It is most common in the retail sector, with (39 per cent), while other common categories are consultancy, hotels, restaurants and various service industries. Franchising exists in far more places than the fast-food concepts with which it is often associated. In fact, the biggest franchise company today is the Swedish Post Office (Posten) with 2,800 franchisees. The other largest franchise brands are Svenska Turistföreningen, McDonald's and 7-eleven.
It is clear that the future looks bright for franchising in Sweden. No fewer than 87 per cent of the franchise companies in the survey stated that they will be increasing the number of franchise units. The most positive response comes from the smallest companies, of which 93 per cent aim to expand their chains with the aid of new franchisees. Against the background of this study, franchising should not be something that is considered diffuse. The results indicate instead that this is a business model that is more efficient than others.
Franchising employs a large number of people and generates high levels of turnover. Franchising is also on the increase, which indicates that companies have started to understand the benefits of the franchising model.