Staying ahead of the curve and tracking forecasts are always relevant in business. On whom and what should we “bet” this time? What are the most profitable franchises of 2018 that will definitely be included in the new TOP list? Which niche will be most in demand? Is a major power shift possible? It is expected that next year the continuity of the trends of recent years will remain, but the leading positions in the franchising market will now be occupied by concepts with more advanced, refined consumer models.
The secret of success
Winning franchise projects are not only those franchises that are based on a strong, well-promoted brand. Those companies that have a well-thought-out and effective marketing program, thoroughly developed communication with the end consumer, and whose product or service is necessary, accessible and understandable to the buyer are at the forefront. Definitely, those franchises that have a sales market and a wide, high-quality audience win. Large market participants are taking the path of “rebooting” existing franchise formats and creating new ones, creating more compact options, which allows them to reduce investments.
How to choose a profitable franchise
In 2018, when negotiating with franchisors, it is important to ask questions not only about the cost of the franchise, the composition of comprehensive support, related options and consulting at the launch stage, but also carefully study the actual product or service that the franchisor offers. The title of the most profitable franchise of 2018 can be attributed to a franchise offer in which the emphasis is on the low cost of the product offered, and training in tactics for working with consumers, a management system and staff motivation is built. A brand promotion strategy has been developed, performance is monitored and there is the possibility of adaptation for any city in different regions of the country.
When selecting the most reliable franchises, carefully study the size of the franchisor's own network, the number of opened and closed locations over the past years. Only truly experienced franchisors who managed to go through the millstones of the crisis and kept their own network at the same size, or even increased it, adapted their product to the new realities of the economy, will be able to convey to their franchisees an effective anti-crisis franchise model. In an environment of declining incomes and rising prices, customers have become more demanding, attentive and stricter. When choosing the most profitable and profitable franchises of 2018 in Russia, analyze the quality of the final product or service that the franchise network sells.
Franchise catalog 2018
Interest in franchises continued even during the peak periods of the economic downturn. In recent years, there has been a particularly intensive development of domestic franchising in two areas - catering, as well as services for business and the population. And most of the requests from potential entrepreneurs are concentrated in these market sectors, and the increase in the number of franchises was 40 percent. For comparison, in 2014, 176 franchise packages were offered in the catering segment and 347 in b2b services, and today their number has increased by an average of 1.5 times. At the same time, the share of the considered segments on the franchising site has undergone minor changes over the same time. If in 2014 the catering sector was 14%, now it is 16%, and in the business services sector, accordingly, it was 30%, and now it is 33%.
New directions
Many franchises from the business services segment that have entered the market in the last few years specialize in a service that no one had seriously considered until recently. For example, outsourcing of financial and legal services, rental of personnel, hiring of general workers. The popularity of the service itself is due to the fact that many companies are seeking to reduce costs by eliminating full-time employees and transferring some responsibilities to a third party. For this reason, the next ranking of profitable franchises in 2018 will definitely include franchises from the business services sector.
Consistently profitable franchises
During a crisis, the cost of a mistake increases, which is why many entrepreneurs are focused on so-called anti-crisis franchises. These are the areas that are in demand under any conditions and at all times. The niches insured against risks include: food sales, medical services, including laboratory diagnostics, child development and education. In particular, they don’t save on children, or they save them last. The niche of educational services, kindergartens and development centers remains capacious, and the demand among the population is high. According to some data, in current conditions the waiting list for state kindergartens in Russia is about 2 million children. Network franchisors keep up with the times, improve their product, invest in increasing the quality of franchise offers and focus on training teaching staff, for whom they create their own training centers.
Measure seven times
Franchising remains one of the most optimal ways to start in business. This is a proven technology that allows you to avoid total mistakes, radically reduce or prevent losses and reduce risks to zero thanks to the creation of individual financial models with detailed calculations for a specific partner. In order to make the right decision, weed out weak concepts and acquire a truly profitable franchise, develop your competence and study the market situation. We recommend building a competent dialogue with the franchisor before concluding a contractual relationship, clarifying in detail the marketing strategy and the procedure for its actions in various situations, including critical ones.
To compile the rating, we requested information from financial analysts at Altera Invest. They monitor the franchising market, advise the company's clients and... You can trust these experienced guys! We also interviewed franchisors and franchisees to form an objective opinion.
You will learn about the best small business franchises and their benefits. The main criteria we relied on: payback, accessibility, relevance in 2017 and the reputation of the franchisor.
Pay attention! Franchise profits are indicated after the business reaches its design capacity.
7th place: Coffee to go “Coffee Fresh”
A brand franchise does not require large investments at the start and pays off within six months. The franchisor is guaranteed profit from the first month of operation.
Merits of the franchise that allowed it to be included in the top:
- The founders of the company do not overestimate profit figures and payback periods; everything promised to the franchisor is real
- The business is easy to manage - following the franchisee book, even a novice entrepreneur can cope with it
- The project is easy to scale and has good growth prospects in 2017
- Low start-up costs
Franchise in numbers:
- Cost (including lump sum): 450,000 RUR
- Royalty: 1% per month
- Payback: up to 6 months
- Profit: from 100,000 ₽
6th place: Beauty salon “Mellow’s”
The chain of beauty salons offers all types of hairdressing, beauty and cosmetology services, as well as manicures and pedicures. A wide range of services, affordable prices and high-quality materials are the secret to the popularity and rapid development of the salon network.
Why is the franchise included in the top best
- This is a turnkey franchise, that is, the franchisor himself will prepare everything for an easy start for his partner
- Guaranteed operating profit from the first month of operation
- In-person training for salon technicians
- Monthly service quality checks
In numbers:
- Cost (including lump sum): 2"000"000 ₽
- Royalty: 25,000 ₽ per month
- Payback: 11 months
- Profit: from 210,000 ₽
5th place: Network of fitness clinics “BBClinic”
BBClinic fitness clinics offer a unique concept of comprehensive weight loss: psychological work, proper nutrition, physical activity and hardware weight loss. The BBClinic franchise actually brings in a profit of 1,500,000 rubles. We couldn't help but include her in the top 7 best!
Advantages:
- The new format for Russia fits well into any city with a population of more than 300,000 inhabitants
- Unique weight loss techniques on the Russian market
- Training of franchisees and staff on the basis of an existing clinic
- Discounts on supplies of equipment and products
In numbers:
- Cost (including lump sum): from 4"770"000 ₽
- Royalty: 20,000 ₽ per month
- Payback: from 4 to 8 months, depending on regional conditions
- Profit: up to 1"500"000 ₽
4th place: Service center for equipment repair “Mobi03”
This is a network operating throughout Russia. 25 representative offices have been opened, and the same number are planned to open in 2017! The network is growing rapidly and gaining popularity.
- Service repair of equipment is a popular service.
- A centralized advertising campaign has been created, it works great and provides an influx of customers
- The franchisor distributes orders across all representative offices
- There is a single call center
- Own supply service - all the necessary parts are in stock, and representative offices receive them very quickly
In numbers:
- Cost (including lump sum): from 1"130"000 ₽
- Royalty: 5% per month
- Payback: up to 6 months
- Profit: from 470"000 ₽
3rd place: In the top three ranking - “WaffleYogurt”
In third place in the ranking of top franchises in 2017 is the turnkey offer of WafliYogrut. This is one of the most stylish offerings in the fast food industry. You've never seen Belgian waffles like this before! The franchisee's profit is more than 100,000 ₽.
The franchise is in the top three thanks to:
- Franchise offices are open throughout Russia and are in great demand everywhere
- The franchisor’s team prepares a turnkey business in just a month
- A unique design is developed for each franchisee
- Equipment is supplied at reduced prices
- The franchisor transfers unique recipes
In numbers:
- Cost (including lump sum): from 1"550"000 ₽
- Royalty: 5% per month
- Payback: 8 months
- Profit: from 120,000 ₽
2nd place: Silver top - vape shop “SafeSmoking”
In Russia, SafeSmoking became one of the first vape shops. In six years, 52 retail outlets have been opened on the market. The franchisee's profit is more than 200,000 ₽. Deserved second place in the TOP of the best franchises for small businesses.
- A franchise will allow you to start a business in a sought-after market segment: demand growth forecast for 2017 is 20%
- At SafeSmoking; there are 7 own lines of vaping liquids
- Several franchise packages have been developed, they differ in format and volume of investments
- A personal advertising campaign is being developed for each region of Russia
In numbers:
- Cost (including lump sum): from 1"050"000 ₽ (minimum package of options)
- Royalty: 2% per month
- Payback: 6 months
- Profit: from 210,000 ₽
1st place: Leader of the franchise rating 2017 - coffee to go “Pravda Coffee”
The Pravda Coffee franchise is the undisputed leader of the TOP 7 franchises of 2016-2017. She literally blew up the Moscow market!
20 franchise offices have already been opened. The payback period for the business is six months.
- Philip Leites, one of the founders, is a world champion coffee brewer. He knows the secret of delicious coffee and teaches it to franchise baristas
- Only high quality Arabica beans are used
- Coffee beans are roasted in our own workshop
- The franchisor supplies all franchisees with its branded coffee at a reduced price
- The retail price of products is significantly lower than that of competitors. This attracts the audience. Even with a small markup, the profit remains very high!
No one can argue with the fact that the Russian economy has been stagnating over the past few years. In a difficult economic situation, it becomes extremely difficult for entrepreneurs to independently develop a business - their own financial and other necessary funds are not enough, therefore, in order to maintain their position in the market, many companies that previously did not even look towards selling franchises are now actively using them. As a result, franchising in the country is developing quite dynamically even in this difficult period.
Important! Subject matter experts note that in the coming years, franchising may surpass regular startups in terms of success.
Trends in the Russian franchising market in 2017
Before considering the development of franchises in Russia this year, it is necessary to determine the main trends of the past. In 2016, the number of transactions concluded in this market decreased. Rospatent noted that compared to 2012 - the peak of issued licenses and commercial concession agreements (about 12 thousand) - in 2016 their number decreased by almost half.
Last year, in order to attract potential franchisees, franchisors provided various discounts, promotions, and loans for the development of their network. In addition, when choosing a franchise, entrepreneurs were guided by the required amount of capital investment, and not by the industry.
The Russian Academy of Franchising, analyzing market development in 2017, noted slow but stable growth, which is projected at 15% by the end of the year. There are several prerequisites for this:
- Increasingly, both medium-sized and small companies are showing interest in franchises, since it is easier and less risky to buy a working model than to promote it “from scratch”;
- Loyalty of creditors to such businessmen is higher, especially if a well-known brand is involved in the transaction;
- interest in franchises with minimal investment is growing.
The Academy also noted that in 2017, young entrepreneurs (under 30 years old), who have 3-4 million capital at their disposal, are increasingly trying to enter the franchising business. In addition, experts predict that in the near future banks and financial organizations will offer potential franchisees new favorable lending conditions and reduce requirements for borrowers to the minimum possible level.
Franchising structure in Russia
Criteria for selecting the best franchises
Although it is generally accepted that building a franchise business is easier than starting from scratch, when the question arises of which franchise is best to buy, it turns out that it is very difficult to independently determine the prospects of the proposals. Fortunately, there are many rating agencies that determine the top successful franchises in Russia.
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