Franchising is on the up in Russia

Having signed an International Associate agreement with global franchise consultancy Franchise Development Services, Russian Ilya Mikhailov of the National Franchise Company talks about the expected increased in international interest in the Russian franchise market

National Franchising Company (NFC) started in 2004 as a partnership of professional consultants and has built a reputation as a results-focused organisation. A young company in the young Russian franchise market, we offer a wide range of services for our clients. From the very beginning NFC has positioned itself as an international franchise consultancy.

We are happy to join the Franchise Development Services community as an International Associate. Our goals are to bring new brands to Russian market assisting in the establishment of franchise networks using the best proven techniques. We have assembled a team of experts whose talents are coordinated seamlessly to serve the specific needs of our clients.

Based in Moscow, we focus mostly on international transactions. In our business plan for 2006 we expect the share of international operations to be more than 60 per cent (up from 30 per cent in 2005). Dealing with multi-national companies provides our experts with skills and experience that are necessary to educate the Russian franchise market.

Another major aspect of our activity is market research, which we conduct on a daily basis to help our clients adjust their businesses to fit our country's unique culture and laws. Many international franchisors would like to enter the Russian market, but they meet problems and questions with the country's laws, accounting rules, technology and trade mark protection. NFC assures that most problems can be solved by our experts.

Today franchising is on the up in Russia. The industry is developing most intensively in Moscow, St. Petersburg and some other big cities. The Russian capital accounts for about 90 per cent of the total franchising activity in Russia, although the number of franchisees in other regions is growing. Franchising operations are common now in retailing and fast-food, while the share of service business remains very small. We believe that service sector will show high growth as the market develops.

In 2005 Russia experienced enormous growth in the number of franchise offerings, mostly from local companies. The International Franchise Exhibition BUYBRAND (in Moscow) has presented its statistics for three years. Its participants grew in number from 67 brands in 2003 and 85 in 2004 to 138 brands in 2005. That shows the growth of franchising development in this country.

Still there are many problems remaining. We have many investors all over the country, but only a few of them are familiar with franchising. NFC plans to arrange seminars and education programmes for Russian investors in Moscow and other regions to address this problem. Another task for NFC is to advise our clients - both investors and franchisors - about proper franchising techniques and documentation. We want our clients to become qualified specialists in franchising as that will bring new projects and brands to the market and will delete existing barriers between Russia and Europe.

We see 2006 as the most promising year for our business and for the Russian market, and are building the leading national franchise development organisation in Russia.

Ilya Mikhailov earned his reputation as a finance and business consultant before becoming a franchisee of a retail brand to better understand the nature of the Russian franchise market. He started NFC in 2004, and now runs it with partners Ivan Hemmerling and Mikhail Eremin.