Doing Business In - International Franchise Association

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• Franchising (FRA)
• Aircraft/Parts (AIR)
• Airport and Ground Support Equipment (APG)
• Defense Industry Equipment (DFN)
• Education/Training Services (EDS)
• Sporting Goods/Recreational Equipment (SPT)
• Apparel (APP)
Franchising Return to top
Franchising has become a well-known, successful and popular concept in the Czech
market and it is poised for further growth. After a rather moderate start in the 1990s,
franchising has seen rapid growth especially after the Czech Republic’s accession to the
EU in 2004. Czechs have seen the success of the foreign franchising systems and are
founding domestic franchising concepts and expanding abroad. There are currently over
150 franchised brands on the Czech market and the number is rising annually. Around
50% of the franchised brands are of Czech origin. Most franchise businesses operate in
the hotel and hospitality sectors. Fast-food establishments are very popular with a strong
U.S. presence. The most successful franchisor in the Czech Republic is McDonald’s,
using multiple franchising techniques. The bulk of franchises are also found in the retail
sectors, including clothing, cosmetics, gas stations, car rentals, photo processing,
training and other services. Most recently, the real estate sector has seen rapid growth.
Thanks to its advantageous geographic position and rapid economic development, the
Czech Republic is an ideal starting point for expanding a franchise into Central and
Eastern Europe. Many foreign franchise networks operating in Europe are still missing in
the Czech Republic and they are expected to enter the market soon. There is still a lack
of U.S. firms present, so U.S. franchisors should not miss the opportunity to enter the
booming Czech market. Another key point for U.S. franchisers is that their licenses are
comparatively cheaper given the weakness of the dollar. For that reason, Czech
investors may find investment in this sector especially profitable at the moment.
With a total population of 10.3 million inhabitants, the Czech Republic represents the
second biggest market out of the 10 nations that joined the European Union in 2004.
The highly educated workforce, the relatively low costs of labor, and effective advertising
are other benefits for foreign franchisors deciding to penetrate the Czech market. The
implementation of a friendly service that attracts the customers also represents a great
competitive advantage.
Hotel franchising, though it is more widespread than other types of franchising, is still
waiting to take off in the Czech Republic. Most franchised hotels are clustered in Prague,
and the Czech Republic’s second and third tier cities are hungry for internationally
known hotel brands.