Chain reaction

If I say franchise in Hungary, nine out of ten people think of catering. Truth is that in catering most are not aware of the advantages offered by franchising. Franchising could be called the multiplication of successful ideas: franchise partners can use an established brand name and enjoy the benefits of being part of a chain. On the other hand, guests do know what they buy, as technological standards guarantee the level of service. Nevertheless, the average Hungarian restaurant owner is difficult to convince to buy a brand name – which is often not very well known in Hungary – he believes that he can do things better. He is often convinced that instead of paying for good ideas it is better to ’adapt’ them. Often he also finds it hard to cope with the restrictions posed by the franchise.

Those who take out a franchise have to open their restaurants using their own resources, following instructions concerning the design, the menu, uniforms, etc. They even have to pay a commission to the franchise owner, but the system is still advantageous for them because economic data proves that the chances of survival for a restaurant operated as part of a franchise are better than that of independent units. If someone decides to buy franchise rights they should not forget about market research. Dunkin Donuts, Wendy’s and Quick used bad concepts and did not survey the market well – no wonder that they disappeared from the Hungarian market. A couple of years ago the owner of a Subway unit in WestEnd quit the chain and continued business under the name Submarine, with the same profile, using his own ideas…and his revenues fell drastically.