Franchising Advices

Franchising Is The Next Civilisation Level


It cultivates wild behaviour but at the same time it deprives you of some of your freedom, Mr. Svetoslav Bilyarski, founder of, said for the Regal Magazine.


What is your definition of franchising?

The franchising is a product and service distribution scheme where a franchisee uses a tested business model, complies with it and pays a fee. The franchise systems are quite diverse and the initial franchise fee varies and it may be BGN 2,000 or BGN 200,000 or even there may be no such fee. In the Bulgarian conditions, due to the fact that the level of financial discipline is not very high, the percentage of turnover is usually calculated as “Х% of the turnover but not less than BGN Y per month”.


There seems to be a boom of franchising in Bulgarian recently?

Franchising is on the rise globally, too.  Some analysts forecast that in 20 years about 50% of all retail sales in the world will be realised using this model. It is not so familiar in Bulgaria as it is in other developed countries and now a trend of catching up in all sectors can be observed.

I cannot estimate precisely to what extent the interest is due to the fact that franchising has not been so popular so far, and also to the fact that in the crisis the people search for greater stability. From civilisation point of view, franchising is the next level of doing business and this is why it develops regardless of the crisis. It cultivates wild behaviour but at the same time it deprives you of some of your freedom.


What trends can be outlined in this respect?

One of the main trends globally is the introduction of franchising in new territories through the provision of the so-called master franchising. This is when somebody undertakes to develop a franchise chain in Bulgaria from another country and receives the right to re-assign the franchise to other entrepreneurs for particular points of sale or cities.

Another direction is related to the restructuring of the economy. In the construction sector for example, there appear free resources and the entrepreneurs are trying to reallocate them elsewhere. This way a person who has free capital at their disposal can start working under a particular brand and use the tested business model within 2-3 months.

Thirdly, the conversion franchise practices are being developed. If I, for example, have a small grocery shop I will not be competitive because of my limited purchasing power that would enable me to negotiate lower supply prices with the suppliers. That is why it would be more advantageous for me to start working under a well-developed brand and use the economies of scale that it offers.

The fourth trend is represented by the large number of Bulgarian companies with a proven business model and traditions that want to develop by offering franchising to other entrepreneurs.


What is the position in this context of the franchise offered by commercial chains, as the current trend is?

For sure, being a distribution channel, the franchise absolutely fits these chains. First of all, because this way they save time. Let’s assume that within a certain period a company can construct five shops using own resources. But it may also sell the rights to an entrepreneur from Varna who can open five other shops for the same period, and in Burgas – additional six shops. Another advantage is related to the investment and the risk. In case the business does not have a run of luck or some natural, political or economic cataclysms occur – the main part of the risk, as well as the main part of the profit remains with the franchisee. Thirdly, the franchising is a solution for management problems. After granting the site under franchise, the head office is no longer a supervisor of the person X. The latter becomes engaged with the property one has acquired, he/she is personally interested, works day and night and is cannot steal.


How to determine whether a franchise is successful?

The criteria may be different – how many points of sale have been established, how much their turnover is, how much the franchisee earns – in absolute figures and as a percentage of the investment, the extent to which the franchisors train and take care of their franchisees and also how popular the brand is... There may be different winners according to every parameter of the franchise of the year ranking that we are going to organise during the next Franchising Expo. But as a whole, the more successful the business of the individual franchisees is, the stronger the foundation of the franchise chain will be.


Svetoslav Bilyarski has long experience in media and advertising. He used to be a copyrighter at Ogilvy&Mather, creative director at Publicis and chief editor of the Manager Magazine. He has a company operating in the service area and leads a course in brand building at the New Bulgaria University. He is the author of the book “Franchising Business”. In 2008, he established the Bulgarian franchising media