Ukraine - Franchising Ukraine - Franchising
Franchising is one of the popular business models for entrepreneurs and companies interested in diversifying into other business in Ukraine. Franchises are available on a per license basis for a specific city, region, or the country. For a complete report describing the opportunities and challenges for U.S. franchisors, please see the U.S. Commercial Service in Ukraine’s Franchise Sector Overview Supplemented Report “2016 Franchise Indicator – Ukraine”.
Domestic franchises currently dominate the Ukrainian franchise market, controlling 74 percent of market share. The origin of the foreign franchises that control the remaining 26 percent of the market includes 93 companies from countries such as Belgium, France, Poland, Belarus, Germany, China, Finland, Russia, the U.S., Italy, and Hungary. Most Ukrainian franchises operate in the services and restaurant subsectors.
Small and medium-sized entrepreneurs are beginning to express greater interest in franchises because, in an insecure macroeconomic environment, franchises offer more security and remove considerable uncertainty in business operations. Plus, as a result of the recession, undercapitalized businesses in various sectors have exited the market, leaving attractive locations to rent or buy at affordable prices for franchisees.
Potential foreign franchisors should be aware that due to the overall weakness of the economy, the demand for franchise licenses denominated in local currency has increased, while the demand for franchise licenses in hard currencies has declined. Similarly, the demand for franchise licenses that do not obligate franchisees to purchase foreign equipment in hard currency has increased. The macroeconomic reasons for this are a series of sharp local currency devaluations in 2015 - 2016 that nearly tripled the prices for foreign franchises and foreign equipment.