Business Flight Franchise Catalogue

3. business flight
Two Capitals Media Holding
presents a unique project —
the Catalogue of Investment
Opportunities business flight
business flight #1 Franchising: License to Fame has been prepared under
the auspices of the Russian Franchise Association. EMTG Company
has become a strategic partner.
We are grateful to the Franchise Associations of the Ukraine and
Kazakhstan for participation in the project.
We hope that the catalogue will be useful not only for the entrepre-
neurs which are pondering the issues on franchise buying but also for
the owners of successful companies who are going to sell their product
and service franchises. We also would like the information about the
national franchising state of affairs be interesting to the legislative
officials and region administration in Russia.
We are confident that franchising is one of the best mechanisms of
competitive recovery of the Russian business in terms of open mac-
roeconomics. And franchising development in Russia must become a
new trend and the locomotive of the Russian economics.
Project Partner — ROID Translation Agency — www.roid.ru
Project Team:
Project Coordinator: Polina Teplyakova
Managers: Elena Anisimova, Elena Golyshevskaya, Inna Ovcharova, Inga Sokolova
Editor-in-chief: Mariya Litvinova
Proofreader: Nadezhda Teterina
Designer: Artem Teruhov
Our address: 28/2, Tsvetnoy Bulvar, 127051, Moscow, Russia (office 201, 2nd floor),
2, Rastannaya Street, 192007, Saint-Petersburg, Russia (office 607, 6th floor)
business flight #1 Franchising: License to fame online — www.rusfranch.ru
The next issue business flight #2 Investments in the United Arab Emirates is to be brought out
in December, 2010. We would be glad to consider all variants of cooperation in the framework
of the project:
+7 (495) 6080212 +7 (812)6075007 +7 (499) 418-00-13
+ 7-(925)0343560 +7 911 912-33-55 +7 903 688-91-84
2stolicy@gmail.com tata_spb@bk.ru anisimova2capitals@mail.ru
Polina Teplyakova Tatyana Kichkailo Elena Anisimova
(in Moscow) (in St. Petersburg) (in English)
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4. #1 september 2010 >> franchising
4

5. business flight
Contents:
#1
4 Franchising: engine of progress
6 From Moscow to the farthest reaches
Franchising and Regional Economics
11 Franchising: a retrospective
13 Law&Order
right to the franchise
18 Endurance test
Franchising Buyer Test
24 Franchise Catalog
20 Where to start?
How to Become a Franchisor?
34 I need that!
38 Where to start?
43 Business Conversation
50 Franchising websites
53 Franchising associations
55 Franchising exhibitions
56 Franchise dictionary
69 Matter of life
Social investments in Russia
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6. #1 september 2010 >> franchising
Franchising: engine of progress
T
he global financial crisis caused rich not only in natural resources, and our
appreciable damage to the Rus- compatriots have already demonstrated
sian economy, and its regeneration their entrepreneurial grasp to the world.
now requires special measures. With our own distribution networks all
First of all, it is essential to preserve that over the world, we can promote innova-
class of successful enterprise which was tive Russian products and technologies,
formed before the crisis, and second, to especially if we are granted sufficient state
attract new businessmen to its ranks. It support such as given in, say, China. Un-
is important for entrepreneurial activi- fortunately, we cannot yet claim that we
ties to be perceived by society as prestig- have a normal legislative foundation for
ious and respectable, and to instill such franchising, and integrated government
attitudes from, so tonsay, a tender age. programmes have yet to be developed. As
And franchising, as one of today’s most hard as the state may try, it won’t succeed
Merab Elashvili widespread and economically effective without the help of the business com-
President and Chairman forms of business relationships, could munity, without a powerful, legitimate
of the Board of Direc- become a sort of trampoline into busi- organization to reflect the opinions of
tors of RFA (Russian ness for millions of young Russians. We all participants in the franchising mar-
Franchise Association), all understand that the time has come ket and promote the idea of franchising.
specially for BF to resurrect the entrepreneurial spirit This is precisely the sort of structure we
that was so strong in the Russian Empire are creating right now. The RFA (Russian
and which was unfortunately lost under Franchising Association) exists since
socialism. Franchising is an ideal means 1997, but is now facing bold questions of
to achieve this goal, and is also an engine modernization. In essence, we are build-
of progress: among other things, it can ing a new organization, which will meet
stimulate the non-oil-and-gas sector of the expectations of both business and the
our economy, and particularly in the state as closely as possible. The association
regions can become a platform for im- is now headed by successful businessmen,
plementing innovations. Franchising whose leadership qualities are evident
is a multiplication mechanism, that from the high ratings of their companies.
is, it increases businesses, and We have plenty of sources from which to
what’s more, we don’t just get draw inspiration – some members of RFA
weak, small enterprises, many have been in franchising for more than
of which are statistically likely 15 years. Our goals are to make the RFA
to go belly up in their first a recognized name in business circles in
year. We get technologically- Russia and the rest of the world, to get
equipped and highly profes- franchising into the media and under
sional teams which, after a discussion in various social groups, to lay
few years of working under the groundwork for changes to the legisla-
someone else’s brand, tion, and to begin forming government
will then go out and start programmes for developing franchising in
promoting their own brands. Russia. And, of course most importantly
Take for example Planet Hos- – to make the association useful for its
pitality: having started out members, both current and potential. The
as a franchise, with just one RFA will represent the interests of Russian
Sbarro restaurant, the com- franchising at all levels of state authority,
pany today has about 160 hold- and will promote and defend its members’
ings and three of its own brands. interests. We are counting on the fact that
There are currently about 500 compa- association members will participate in its
nies in Russia using franchise schemes, work: for indeed every civic organisation is
and we are able to create our own brands a living organism, in which each cell car-
quite quickly, and promote them around ries out its own important function. And
the world. At the end of the day, Russia is together they represent a serious force
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7. business flight
Strategic partner of the business flight project is
The Russian Franchising
Association
T
he Russian Franchising Associa- association serves as a centre to popu-
RFA tion was founded in 1997 by lead- larize franchising, the main source of
ers of the Russian franchising information for the media, and a centre
community, as a noncommercial to mold public opinion.
organisation for the support and protec- The RFA represents the interests of
tion of interests of its members, and Russian franchising at all levels of au-
with the goal of creating more beneficial thority, and in relation to civic organi-
legal and economic conditions for the sations, commercial companies, and
development of franchising in Russia. private individuals.
In its 13 years, the organisation has The association acts as a bridge, unit-
welcomed into its ranks the most fa- ing interested parties and consolidating
mous franchising companies, achieved their potential, and serves as an on-go-
international recognition, and prepared ing forum in which to exchange infor-
proposed changes to the existing legis- mation and ideas and conduct research.
lations. One of the association’s main goals is
To realize its developed strategy in to develop the institution of franchising
2010, the RFA fully modernised its in Russia, as well as to improve the le-
organisation. The list of fundamental gal and business environment in which
changes included reforming the Board entrepreneurs work.
of Directors, presenting the largest The RFA publishes informational
franchising companies in Russia, con- materials, conducts seminars, organ-
firming the plan to realize the strat- izes exhibitions and conferences, and
egy, and a significant expansion of the forms delegations of businessmen to at-
membership base. tend franchising exhibitions and other
For the practical realization of the events taking place outside of Russia.
named goals and tasks, as well as the The RFA is a member of the World
operational management of the organi- Franchising Council (WFC) and has
sation, a professional directorship was working contacts with most Russian
formed, basics of corporate manage- and foreign civic organizations of entre-
ment were implemented, association preneurs.
committees were created, and new The head of the Russian Franchising
financing principles were implemented. Association is the president and board
Today the RFA is a national franchis- chairman Merab Elashvili. Operational
ing association, a coordinated centre of management is the responsibility of
information for both existing and po- the managing director Yury Mikhaili-
tential franchisers and franchisees. The chenko
Address: 22 Marksistskaya st., building 1, office 208A, Moscow, 109147
Telephone/fax: +7 (495) 670-76-23
www.rusfranch.ru
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8. #1 september 2010 >> franchising
Catherine Soyak
General Director of EMTG
Company, Member of the
Board of Directors of the Rus-
sian Franchise Association,
Cofounder of the GOLDEN
BRAND National Award and
the BUYBRAND CLUB
From Moscow
to the farthest reaches
The development of franchising in the
regions of the Russian Federation as one
of the means of innovative reform and
integrated support for small business.
F
ranchising is a business for small business affairs in the US
development strategy that pays special attention to this format of
is widely used around the enterprise, and provides government
world, in which one com- support for franchising.
pany gives another limited-time Analysing the experience of build-
use of a trademark and accompa- ing ideal (both risk-free and socially-
nying set of services, technolo- oriented) economic structures in
gies, and business organisation developed countries, where the share
standards. As we know, one of the of small business in GDP reaches up
most important characteristics to 80%, we can conclude that fran-
of franchising is the significantly chising is one of the most important
reduced entrepreneurial risk. Accord- mechanisms for developing small
ing to statistics, 85% of all new busi- businesses.
nesses will shut down in their first Even a person completely unpre-
five years, but out of firms built on a pared in business, who wants to run
foundation of franchising this figure his own business, can with a high
is just 14%. degree of certainty open his own
According to research carried out by business using franchising. The very
the University of Louisville in 1991- essence of this form business is a
1993, the adoption of franchising in powerful system of training for small
the economy helped in due course to businessmen.
avoid economic crisis in the US. So it’s In many developed countries, fran-
not surprising that the management chising gets special attention and
8

9. business flight
support from legislative and executive
authorities. Indeed, opening a fran-
chise is synonymous with job creation
and the further legalization of busi-
ness activity, which increases tax rev-
enues. Any franchiser, based on his
own contractual interests, thoroughly
controls his franchisees on the subject
of financial transparency of the opera-
tion and reliable accounting. This is
especially important in our country,
in connection with a significant num-
According to research carried out by the
ber of non-transparent companies, University of Louisville in 1991-1993, the
‘uncivilised’ standards of conducting
business, and connected factors of adoption of franchising in the economy
insignificant investment activity by
foreign players.
helped in due course to avoid economic
crisis in the US.
Why do the regions
need this?
The adoption and development of
franchising in the regions could en-
able assistance for investment de- create a system of standards that economic sector), and also on a wider
velopment, implementation of new meet modern market conditions, and level (the gradual leveling of the eco-
business technologies, standards of organise control mechanisms for the nomic development divide between
business organisation, and the im- services provided. The demands put the regions and the centre, a quality
provement of the business culture in to the franchisee expand the entre- transformation in the region’s devel-
these regions. preneur’s personal opportunities, opment as a whole, and especially in
The regional expansion of practical- changing their view of the quality infrastructure services, goods, and
ly every large franchiser and a subse- of professional knowledge, enabling work).
quent rise in competition has called implementation of their abilities and In addition to the above benefits,
for development and implementation professional skills, which enables the the presence of large franchisers in
of innovative business standards from distribution of innovation both inside a given region will significantly in-
local businessmen, needing to adapt a specific franchising network, and crease its investment attractiveness,
to a new level in the quality of their outside of it. including for foreign investors, and
work. As the business of most large fran- those quite significantly aimed at
With the appearance in the re- chisers is constantly developing to the presence of famous brands in the
gions of the top brands, the majority take into account the ever-increasing regions.
of small regional enterprises have customer demands for service qual-
encountered the need to adopt in- ity, the very presence of the franchiser
novative methods of work, with the in the regions changes clients’ con- Why do franchisers
goal of long-term development of sumer demands, which forces the need this?
their own business projects. The use use of new working methods even by
of franchising reduces risk, increases those market participants who have The attractiveness of a region for
the efficiency of advertising and the never planned to work in franchis- a franchiser is determined not only
implementation of technical improve- ing. This way, the appearance on a by the market and financial indica-
ments, and increases sales volumes given regional market of a franchising tors, but also by the macroeconomic
and profit, which all together enables scheme will quite significantly alter situation in the region as a whole, as
the development of the economy as the structure of that market. For the well as a number of other factors that
a whole. In addition, franchising region, the presence of large franchis- directly influence the development of
networks play a role as channels for ers is extremely profitable both on franchising in the regions, such as:
transferring innovations, in which purely economic grounds (the creation 1) Objective factors (the number of
the franchiser company develops the of a significant number of jobs, the large cities in the region, the pres-
innovation and the franchisee is the attraction of wider sections of soci- ence of formed market outlets for
consumer and implementer. For stable ety to modern economic processes, goods and demand for services, the
development the franchiser must the development of the region’s third economic and geographic conditions)
9

10. #1 september 2010 >> franchising
The presence of large franchisers in a
given region will significantly increase
its investment attractiveness, including
for foreign investors, and those quite
significantly aimed at the presence of
famous brands in the regions.
2) Interest from the regional ad- training centres, retraining centres, Cooperation between local large en-
ministration in the development of and improving the qualifications of terprises with the goal of expanding
franchising, in particular: employees of local enterprises, creat- their presence in other regions using
— legal initiatives, both those in ing personnel services and creating franchising.
cooperation with federal authorities specialised databases — Searching for foreign franchisers
and independent ones (for example, — improving the relationship of with the aim of attracting addition
local tax discounts for franchisers or federal and regional schemes for sup- investment to the region and choos-
franchisees) porting small business which will ing potential franchisees for them.
— offering discounted credit op- undoubtedly increase the competi- Organising subfranchising and help-
portunities to franchisees from local tiveness of regional franchisees in ing to launch pilot franchises in the
banks, regional discounts from large relation to businesses leading their region. Helping to organise technical
state and commercial banks, con- regional expansion by opening corpo- questions, for example, logistics and
ditional investment appeal of the rate affiliates banking services for regional fran-
region or targeted programmes for — the presence in the region of rep- chisees.
development resentation from the Russian Fran- — Organising forums, conferences,
— cooperation between regional chising Association, local franchis- and seminars highlighting the devel-
administration and franchisers on ing association, and/or franchisee opment of franchising
information provision (analysis of the association. — The presence of discounted rental
marketing and economic situation in terms for manufacturing or retail
the region by the authorities, search
and selection of regional partners,
What is to be done? space for franchisees, as well as op-
portunities for long-term renting,
consultations between franchisers Some measures taken by regional leasing, or privatisation.
and local franchisees, cooperation in administrations to develop franchis- Franchising is one of the most
maintaining technology ing could include: up-to-date development trends in
— assistance in successfully adapt- — Making contact with those large the Russian business activities and
ing franchising schemes to the franchises that are not represented in economics. The representatives of the
conditions of the specific region in the region, with the goal of attract- most successful Russian franchisors
question ing them to the region and/or jointly are discussing the problems of na-
— cooperation in human resources developing standard documents on tional franchising, the prospects and
for local franchisees: organising organising franchising in the region. business adaption practices
10

11. business flight
Ukraine Franchise
Association
The Ukraine Franchise Association has been engaged in franchising
development since 2001. Our main task is to represent the interests
of franchising market players assisting them in the promotion and
establishment of partnership.
Franchising events: Development of market infrastructure:
— specialized exhibitions, — hot line for prospective franchisees
conferences, seminars — market research and analysis
— delegations to foreign — market research and interview with market players
exhibitions and meetings with — establishing a legal framework of franchising
foreign franchisors and investors
Seminar Centre Team Vision^
holds the seminars dedicated to — works out franchises
franchising, business, and self- — advises franchisors and
development issues franchisees
Rich Up: Publishing Centre MORS:
— promotes franchises in the — Chain Development
market Magazine
— chooses franchises for — Catalogue of Franchises
prospective franchisees — Specialist literature
— manages franchising chains — Franchising reference aid for
— carries out the audit of — franchisees — hot off the press
separate store units, shopping — «Buy a Successful Business»
centres and distribution networks with the 7th Catalogue of
— chooses brands for gaining Franchises
a conceptual framework of
shopping centre
All that the franchizer needs!
+380 (44) 233 0361 info@franchising.org.ua
+380 (44) 592 8615 www.franchising.org.ua
+380 (67) 291 9771
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12. #1 september 2010 >> franchising
Franchising: a retrospective
from the Middle Ages to the present days
How it all began history — documents that would
eventually serve as the basis for mod-
and left their franchisees with noth-
ing. And there were cases of fraud,
It’s generally held that the founder ern franchising contracts. At the too: sticky-fingered companies sim-
of franchising was American Isaac turn of the century, franchising was ply collected money from trusting
Singer, who invented the famous developing, settling into new forms souls, and then vanished into thin
sewing machine. At least, it is his and new markets. Monopoly fran- air. In order to prevent these sorts of
name that is mentioned most fre- chises appeared in the areas of tram problems and abuses, the Interna-
quently when the topic Iis touched. building and energy commodities. tional Franchising Association (IFA)
But in fact the very concept came Oil refineries and the companies of was created, with the main goal of
about long before Singer was even the incipient automotive industry regulating franchise relationships.
born. Actually, the idea of fran- realized that this way they could sell In the US, the IFA works in close
chising comes to us from Medieval
France: at that time, the word meant
the holding of certain privileges and
rights that the local feudal lord could
grant to his vassals. Such privileges
included for example the right to The idea of franchising comes to us from Medieval
hold trading fairs or auctions, and
the right to build markets. Later this France: at that time, the work meant the holding
practice was adopted by kings: they of certain privileges and rights that the local feudal
granted the chosen few the rights
to brew beer or build roads. And of lord could grant to his vassals
course the territorial expansion of
churches could easily be seen as just
another form of franchising.
The evolution of
franchising their products to a wider audience, partnership with Congress and the
and launched their own franchising Federal Trade Commission (FTC). In
In the 1740s, several German ale pro- schemes. A short time later, all of 1978 a document called The Uniform
ducers granted taverns the right to America was riding around in cars Offering Circular (UFOC) was devel-
sell their products. This step was the and, as a logical next step, fast-food oped. In 2008 the UFOC was amend-
first towards the type of franchising networks sprang up. To whit, the ed, modernised, and renamed the
with which we became familiar in famous brands we all know — KFC FDD – Franchise Disclosure Docu-
the twentieth century. The idea then (Kentucky Fried Chicken) in 1930, ment. The franchiser is obliged to
crossed the ocean, settled in the US Dunkin Donuts in 1950, Burger King enter detailed information about his
and kicked off the development of in 1954, and McDonald’s in 1955. business on a special form, and give
chain shops which were to become it to the potential franchisee a mini-
the foundation of North American mum of 14 days before the conclusion
franchising. Recent history of any agreement. In this way, the
But let us return to Isaac Singer future franchisee has the chance to
and his sewing machine. In the The rapid expansion of franchising
make an informed, thoughtful deci-
mid-19th century, Singer begins to in the 1960s and 70s brought, in
sion. In other words, we can see that
distribute his product using fran- addition to progress, a number of
in the US, the franchising business
chising, signing written agree- problems. Some franchisers, miscal-
is regulated by legislation. The way
ments with distributors. He creates culating their own strength in assets things stand with us – well, that’s a
the first franchising agreements in and in management, went bankrupt completely different story
12

13. business flight
beboss.ru
Catalogue of Franchises #1
in Russia
13

14. #1 september 2010 >> franchising
Law Alexey Abdulgazin (A. A.): Because
&
the franchising agreement creates
mutual rights and obligations for
the parties, it is considered a civil-
legal deal and, consequently, must
comply with the standards of the
corresponding field of legislation.
In Russia this is, of course, the Civil
Code. Just imagine: an entrepre-
neur and future franchisee (user
of franchising), attracted by the
prospectus offered by a large fran-
chiser (rights holder), picks up the
Order
Civil Code of the Russian Federa-
tion and begins flipping through it,
in order to personally get to grips
with the legal environment and
the details of the proposed deal.
And he can’t find a single men-
tion of the word ‘franchising’. The
problem is that Russian legislation
really does not recognise the term.
Instead, Russian civil law is aimed
at an understanding of ‘commercial
the right to franchise
concession’.
In accordance with article 54 of
the Civil Code (CC) of Russia (which,
with a few changes, has existed
since 1996), under an agreement of
commercial concession, the rights
holder offers the other party (user)
the right to use in entrepreneurial
activities a set of exclusive rights
F
belonging to the rights holder, in
ranchising has recently been developing actively in exchange for a specified payment.
Russia, and there are quite a few wishing to use this This set of rights may include a
convenient scheme. However, the growth in the num- trademark or service mark, as well
ber of franchising deals is consistently below global as the right to other objects of exclu-
sive right as laid out in the agree-
levels. A key reason for this situation are problems with legal ment, in particular to commercial
regulation, as Alexei Abdulgazin of Expotrade legal consult- knowledge and production secrets
ing firm and Pavel Arievich, senior attorney at DLA Piper Rus (know how).
will tell us. It is clear that the aim of sign-
ing such an agreement for the user
of the franchise is the systematic
deriving of profit by utilising speci-
fied property (in this case the word
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15. business flight
‘property’ denotes a quite specific
item of intellectual property). In
contrast to a normal licensing agree-
ment, the parties in a franchis-
ing agreement can be commercial
organisations or individual persons
registered as independent entre-
preneurs, as for non-commercial
organisations the opportunities to
engage in entrepreneurial activi-
ties are significantly limited, and in
some cases forbidden.
The object of the agreement also
determines the specific details:
the results of intellectual activi-
ties named in four articles of the
CC. From this it follows that those
rights which are transferred under Russian legislation does not recognise
a franchising agreement must fall
into the category of rights named the term ‘franchising’: it is aimed at an
and protected in accordance with the
law. So, for example, in order to in-
understanding of ‘commercial concession’
clude a trademark or service mark in
the set of rights granted to the user,
the rights holder must first carry
out legal registration of those marks
or even as specific as the actual sales should pay particular attention to
with the state registration service of
points), the user has the opportunity the fine details regarding the obli-
the Russian Federation (on the basis
to participate in analogous agree- gations of each side, as well as the
of national or international proce-
ments (taking into account limits listing of procedural (assignment
dures). In other words, in relation to
and requirements of anti-monopoly of notification, pre-trial resolution
each element included in the set of
legislation), the form of using the of arguments and complaints, and
rights, it is necessary to take into ac-
rights can be specified as far as so on) and technical (for example,
count the demands of legislation and
specifying the location of the user’s requirements for the commercial
regulation of the same, for example
commercial installations and their space, exterior advertising, form
patent law.
form, the length of time for which and content of the sit, and so on)
P. A.: From the points made above,
the rights are afforded can be speci- elements. The main thing is to not
it is obvious that franchising re-
fied, and so on. forget that for effective execution
quires a significant level of formali-
In addition to limiting of the par- of each obligation, the agreement
sation, and in order to afford rights
ties’ rights, as well as the obligations must specify the responsibilities to
under franchising it is not enough
of the rights holder and the user, di- be born by the party who is guilty
to simply transfer the rights to a raft
rectly envisaged in articles 1031-1033 of nonfulfillment of the obligation.
of unidentified, abstract objects,
of the CC, on the basis of the general Otherwise all detailed rules in the
for example ‘all distinctive slogans
provisions of civil legislation, in par- agreement will be ‘dead’. And then
and trademarks of the rights holder
ticular agreement with the principle you get a situation like this: “You
(without specification)’, ‘the exterior
of freedom of contract, the parties of haven’t upheld this point of the
appearance of the product’, ‘recipes
the agreement of commercial conces- agreement!” “So what? Why don’t
and technologies’, and so on.
sion have the right to codify in the you take me to court!” And court is a
agreement any rights and obliga- notorious waste of time and money
We don’t look for the tions, as long as they do not contra- when vaguely worded agreements
are the issue.
easy way out dict mandatory rules of the law.
A detailed and thoroughly con- Usually a franchise is offered for
A. A.: In addition, discretionary rules structed agreement allows many a given term, which is not limited
give the parties a sufficient toolkit to problems connected with imperfect or set by Russian law. However the
create a flexible system of relations. legislation, that is open to inter- term can be unspecified. When
The territory for use of the afforded pretation, to be avoided. Because of signing an agreement it is also
rights can be limited (all of Russia, this, each party to a future agree- worth paying attention to this – the
specific regions, separate localities, ment of commercial concession procedure of terminating the agree-
15

16. #1 september 2010 >> franchising
ment depends on it. If the term is that the object of the agreement is a to use broad, foreign experience in
not fixed, each party has the right registered trademark (service mark), implementing franchising.
to unilaterally terminate the agree- the signed agreement is subject to
ment by giving the other party at mandatory state registration with
least six months’ notice. But if it the Federal Service for Intellectual America
is a fixed-term contract, unilateral Property, Patents, and Trademarks A. A.: Let’s look to the example of the
termination is not possible, unless (Rospatent), and – particularly USA, where franchising in its mod-
it is specifically enshrined in the important – is considered concluded ern form has existed since the 1950s,
agreement. only after this registration. This and similar deals – the precursors
P.A.: A very important mandatory must be brought to attention when of franchising – were signed even
rule of the law is the prerogative signing the agreement, as there are earlier.
right of a bona fide user to extend a frequent cases in which the parties, The most interesting thing to look
fixed-term franchising agreement. or, worse, one party, begin to use the at is the Franchise Rule, which came
Specifically, the user, as long as the signed agreement, not realising that into force in October, 1979, with
party has fulfilled all of its obliga- it has no legal force even though it changes made by the Federal Trade
tions under the agreement, has has been signed. Commission in January 2007. The key
the right at the end of a fixed-term By the way, the requirements for document in the American franchis-
contract of commercial concession mandatory state registration of ing system is the Franchise Disclo-
to sign an agreement for a new term these agreements raise a hue and sure Document (FDD), also known
on the same terms. The rights holder cry from the participants in fran- as the Uniform Franchise Offering
has the right to refuse to sign an chising deals. For indeed, instead Circular (UFOC).
agreement of commercial conces- of being able to start work on the It is a rather voluminous (some-
sion for a new term if, for a period of basis of a freshly-signed deal, the times 200 pages long) document
three years from the date of expiry of parties must first determine which that contains the most complete
the current contract he does not sign side will take on the responsibility information about the franchise on
analogous contracts of commercial of registration, and who will pay which the franchiser is offering an
concession with any other parties for it, and then prepare the neces- agreement. The form and rules on
and does not agree to sign analogous sary set of documents, including completion are established by the
contracts of commercial subconces- stamp duty, before applying to the Federal Trade Commission, and the
sion that cover the same area as the authorised body and… waiting until information presented by the fran-
expiring agreement. the registration is complete. Due to chiser is confirmed and checked by
In the event that within the three- current administrative regulations, registering the completed document.
year period the rights holder wants the term for checking the docu- The basic section of information is
to offer someone those rights which ments is two months. Plus ten days published and for the entire period of
had been afforded to the user under for a formal check of the received the franchise is freely accessible.
the expired agreement, he is obliged documents. Although, since Rospat- The form is composed of the follow-
to first offer the original user the ent’s demands for certain agreement ing sections:
chance to sign a new agreement, or elements to be corrected (both sig- 1. Information about the fran-
compensate him for his losses. If a nificant ones and mere formalities) chiser, his partners, and affiliated
new agreement is signed the condi- have recently become more frequent, parties;
tions must be as favourable for the which often leads to the need to re- 2. Information about the profes-
user as the conditions of the expired submit the agreement, the registra- sional experience of the head of the
agreement. tion process can take up to half franchiser’s organisation and other
This condition is not characteris- a year. key employees connected with the
tic for many other civil legal agree- P. A.: In the future, the registra- franchise (for example, franchising
ments, in particular the standard tion requirements may be liberalised directors);
licensing agreement. Both parties in as a result of Russia joining the Sin- 3. Information about specific legal
franchising need to remember this. gapore Agreement, which abolishes proceedings in which the franchiser
A. A.: Finally, it is worth remem- the need to submit the agreement and parties detailed in sections one
bering the necessity of completing for registration and replaces it with and two have participated;
the agreement in the proper form. a requirement to submit notice with 4. Information about any bank-
Of course, a commercial conces- fewer formalities. Although it’s still ruptcy;
sion cannot be made as a verbal too early to talk about a timeframe 5. Information about the size of the
contract. The parties must register for such liberalisation. initial payment and how it is paid;
their will in writing, indeed prefer- A. A.: These and many other prob- 6. Other payments and expenses;
ably by signing a single document lems could be eliminated by perfect- 7. Valuation of the volume of initial
and not, say, by exchanging emails ing the legislation. Especially since franchise investment;
or faxes. In addition, due to the fact we have a wonderful opportunity 8. Information about the require-
16

17. business flight
unites the national franchising as-
sociations of the EU countries. There
are currently 19 member countries in
the EFF, including France, Germany,
the United Kingdom, Belgium, Italy,
Poland, and others.
The EFF’s activities are governed by
the Franchising Code of Ethics. This
document contains detailed descrip-
tions of the very idea of ‘franchis-
ing’, as ‘a system of distributing
goods, services, or technology, that
is based on the on-going partnership
of two independent subjects – the
franchiser and the franchisee – in
which the first grants rights and
responsibilities to the second to run
The basic rules of franchising are already a business conceived by the franchis-
well-developed and proven in world-wide er’. In addition, the Code determines
the basic principles of implementing
practice, and there’s nothing to stop them franchising activity, the responsi-
bilities of the parties, including the
being brought to life order for concluding franchising
agreements, which also envisages
the franchisee being made familiar
with all the information relating to
the franchise.
Each EU member state has the
right to implement its own (nation-
ments (limitations) on sources (sup- (annual financial reports); al) amendments to the Code, which
pliers) of goods and services; 22. Franchise contracts; may change some conditions, and
9. Obligations of the franchisee; 23. Notification of receipt. which must comply with agreements
10. Information about the organi- In other words, from this docu- about franchising signed the juris-
sation of cash flow in the franchise; ment a potential franchisee can get diction of the state.
11. Obligations of the franchiser; almost all the information he needs The Code together with national
12. Franchise territory; to make an informed decision. It is additions is the basic document
13. Information about registered the achievement of this main goal regulating franchising in the given
trademarks; — the protection of the interests of country. For example, the German
14. Information about patents, small and medium business and the Franchising Association has on the
copyright, and the holders; presentation of maximally accurate basis of the national Franchising
15. Information about the fran- information – that is provided by the Code of Ethics developed recommen-
chisee’s ability to directly (person- American system. By the way, this dations on the disclosure of informa-
ally) participate in and/or control the goal is served by yet another interest- tion by franchisers, warning them
running of the business; ing standard – a person or entity that that concealing or distorting infor-
16. Limits on the franchisee in has received this document as part mation offered to franchise buyers
terms of types of goods (services) of a franchise offer, may not sign will warrant compensation for losses
that he has the right to distribute in an agreement sooner that 14 days incurred.
the franchise; from receipt – a period long enough A similar system functions in the
17. The renewal, termination, and to carefully study the document and other EFF member states.
transfer of the franchise and resolu- make a decision about which there The inadequacies in our system of
tion of arguments; won’t be any regrets. regulation for franchising are obvi-
18. Information about famous ous, as are the changes necessary
media celebrities connected with the
franchise; Europe to improve things. The basic rules
of franchising are already well-
19. Information about the expected A. A.: In the European Union we developed and proven in worldwide
financial results of the franchise; would have to say that the main practice, and there’s nothing to stop
20. List of units (authorised sales integrated body is the European them being brought to life. Sooner
units); Franchising Federation (EFF) – a or later this will happen – preferably
21. Franchiser’s annual statement non-commercial organisation that sooner rather than later
17

18. #1 september 2010 >> franchising
Endurance
decision-making is important to
you, then franchising is probably not
for you. Most franchisers maintain
tight control over their franchises,
and you might find it difficult to
establish a good relationship.
test
5. Are you expecting help from the
franchiser in solving all your own
problems?
Although the franchiser will of
course help you, don’t expect to be
micromanaged through all the little
Franchising is not for everyone — it is a great journey which demands difficulties and working moments.
If you want that sort of relationship,
not only material, but also moral preparation. This brief text will help choose a franchiser who has a long
you highlight key points when making a decision. and successful history of working
on the market with a thoroughly
worked-out programme.
1. What’s your health like? Do you
have any chronic illnesses? Or any
disappoint you. Make sure that that
isn’t the case, that he or she truly 6. In your opinion, the business could
medical problems that could require shares your goals and has as much be much more effective if, say, the
large expenditures to treat? enthusiasm for the new project as business plan, logo, or global adver-
you do.
If you have serious health problems tising slogan were changed. Will you
then franchising, unfortunately, is
not for you. 3. How many hours on top of the
insist on these changes, and defend
your opinion?
normal 40-hour week are you willing
2. Can you count on support from to devote to the new business?
As a franchisee, you must play by
the rules and not try to make your
your spouse? Is he or she aware that Franchising will demand a lot own: as they say, when in Rome…
you are undertaking a risky enterprise? more time from you than the stand- In all likelihood, the franchiser will
ard Monday-to-Friday, 9-to-5. Let’s skewer your attempts to ‘personal-
How do your loved ones react to the say that right now you’re thinking ise’ the business. If you’re the sort of
fact that the normal way of life will that you can work 20 hours per week person who cannot live without ‘ra-
change, that you will have less time overtime. But are you certain that tionalising’, then you should think
to spend with them, that you will be you could last more than a week long and hard before purchasing a
doing those hours? Or let’s take a dif- franchise.
staying at work until late, miss family ferent approach: you are not willing
meal times, and trips away for the
weekend?
to increasing your working hours
by more than two-three, or at most
7. How do you feel about doing
four, hours per week. In which case, unskilled labour, for example stocking
At the first stage of establishing
even the most successful business, what do you need to start this new shelves or clearing tables?
there will inevitably be difficult undertaking for? A franchise is your This might be the first time that
times. When you discuss the idea of business, you take responsibility you find yourself responsible for the
buying a franchise with your family, for everything, including your own dirty work. If this is unacceptable
be as open as possible and ask them time management. In other words, to you, you will need to take up the
to voice their doubts and concerns. you need to spend as much time at challenge of finding specialised
Carefully weigh the pros and cons, work as is required to develop the staff right away, and this requires
think about whether or not your business. But not die like a martyr, resources.
family will survive this endurance either.
test, because the beginning of any
new business always requires a cer- 4. Are you prepared to follow the 8. How often have you had to make
tain amount of sacrifice. Even if your serious financial decisions?
franchiser’s instructions regarding the
spouse assures you that you have two The franchiser will undoubtedly
thumbs up, there is a chance that he running of the business? be interested in your experience in
or she is only saying that so as not to If a high degree of freedom in financial matters. Are you sure that
18

19. business flight
you have enough of the necessary
knowledge and skills?
A franchise is your changing market conditions?
business, you take
9. What do you think, do you have responsibility for every- 12. How do you feel about stabil-
what it takes to promote a product or thing, including your ity, a benefits package, guaranteed
service on the market? What about own time management. wages? For some people, these are
successful sales experience? In other words, you need life essentials, while others are more
interested in the game, movement,
In other words, would you be able
to successfully enter the market in
to spend as much time and changes.
your chosen business? Are you crea- at work as is required If you find guarantees and stabil-
tive enough for that? The franchiser
is not going to be thrilled about the
to develop the business ity the most important things, then
don’t rush into buying a franchise.
fact that you’ve got little experience It’s hard to turn down a comfortable
in sales and marketing. life, when you’ve got your salary
10. Can you motivate personnel? 11. Do you change employment often? coming in every month, your medi-
cal insurance includes dental, and
the company pays for your mobile.
Let’s say that you’ve had problems If you answered yes, then are you
in the past with subordinates, and sure that franchising is what you It might take quite a while before
you think that you were just unfor- want? Maybe you just feel it’s time you’d be able to regain your previous
tunate. Are you sure that it was their for another change? From the other levels of comfort. But if that doesn’t
fault, and not a problem in your side, if you have spent your entire frighten you, and you’re absolutely
relationship? Sometimes the best working life with one company, then certain that it’s worth weathering
business ideas fail at the develop- would you be able to adapt quickly some hardships for the sake of future
ment stage purely because of poor to new working conditions, to an success, then off you go, reach for
management. unusual lifestyle, to constantly- the stars, and good luck!
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www.terra.su 19

20. #1 september 2010 >> franchising
Where to start?
6 steps to a successful franchise
Based on materials from www.buybrand.ru
Step 1: Сhoose your Goals. Do you need a certain level of
income? Is there a specific area you’d
can you afford to lose in the event of
misfortune? Are you buying the fran-
area of business like to work in? Are you interested in chise independently or with part-
retail sales or in the service indus- ners? If you need to obtain additional
You can choose from all sorts of
tries? Would you like to have several financing, will you be able to do so?
work, including food service, retail
units, or just one? Do you want to Can you obtain credit? Do you have
sales, services, and manufactur-
manage the business yourself, or additional income on which you can
ing. Each has its pros and cons. For
would you prefer to hire a manager? live until the business starts turning
example, services involve a small
Will the revenue from the franchise a profit?
capital investment, but can have
be your primary source of income, The answers to these questions will
problems with selecting staff, retail
or is this just additional income for help you evaluate your financial op-
sales have a high turnover but prob-
you? Will you be happy to work in portunities thoroughly.
lems with surplus. Don’t get stuck
this business for the next 20 years?
on one area. Something else could
The answers to these questions will
spark a genius idea and deliver an
help you make the right choice. Step 3: Analyse This
unexpected result. Look at your-
self, analyse your own abilities and Just like any other investment,
goals. Step 2: Let’s count the buying a franchise is always a risk.
Thoroughly investigate all the factors
Abilities. Do you have technical
experience or specialised education? money that could influence this risk.
For example, knowledge in auto Demand. Before buying a fran-
You must understand that the cost
repair, building renovation, or office chise, analyse the demand for the
of the franchise is just one part of
redecoration? Or will you have to product or service the unit would
the expenses of building a business.
pay for courses? What do you know offer. Evaluate the demand and how
You must invest resources in equip-
how to do? Perhaps you’re good at ac- much there is: how many people
ment, permissions and documenta-
counting or have specific technical are prepared to buy this product or
tion, preparing the space, and the
skills? Do you have any specialists service regularly and in large enough
first purchases, wage payments,
among your acquaintances, whom numbers? Analyse the nature of the
and promotion. Expenses for setting
you could attract to your business? demand – is it seasonal, cyclical,
up, training, design project, and
Have you ever had your own busi- or stable? Businesses with seasonal
various other things are included in
ness? Or have you managed a busi- demand have problems forecast-
the cost of the franchise. How much
ness? ing sales and potentially with cash
are you willing to invest? How much
20

21. business flight
21

22. #1 september 2010 >> franchising
reserves as well, especially during
the off-season. For example, land-
scaping and gardening, and building
and servicing of swimming pools,
are only profitable in the spring and
Questions
summer.
The final point to analyse is the
longevity of the demand. Temporary
to ask the franchiser
D
businesses lose interest very quickly
uring your first meeting — Are there prepared manuals
and must be able to start making a
with a potential franchis- for franchisees?
profit in a very short timespan. Will
er, you should get answers — Is there a marketing pro-
this product or service be popular
to the following questions: gramme at a national level, and
not just today, but in the long-term
—When did the first unit open? how is it carried out?
future as well? Would your business
—How long has the company — How often does the franchis-
have room to expand in the future?
been working as a franchise sys- er visit the franchises? Is there
Competition. What is the level of
tem? a personal franchising manager
competition in this area of business?
— How many company-owned assigned to deal with questions
How many units does the franchiser
and franchised units are currently from specific units?
have in your region? How many
operating? — If the franchisee experiences
competing companies are offering
— How many units have closed, problems in the future, with the
similar products or services? Are they
and why? franchiser help solve them?
popular? Are they offering the same
— How many company-owned — How does the network pur-
goods and services at the same prices
and franchised units does the chasing centre work?
as your potential franchiser, or are
company plan to open in the next — Which additional services are
their prices lower?
12 months? offered to the franchisee in open-
Trademark. The basic reason to buy a
— What is the profile of an ideal ing and operating the unit?
franchise is the right to start trad-
franchise network? — Can the franchiser provide
ing under an already well-known
— Has the franchiser been taken a list of all the franchise units
and trusted trademark. The more
over by anyone? Has it filed for with contact information for the
popular the brand, the more clients
bankruptcy? Have its managers or franchisees?
you will be able to attract. Therefore,
directors previously taken part in a — What sort of training does
before you buy a franchise, you need
bankruptcy or take-over? the company offer, and what does
to think about how well-know the
— Has the company had com- it consist of?
franchiser’s company name is, and
plaints lodged against it with the — How many support person-
whether it has its own, registered
court or local consumer-protection nel are assigned to your region?
trademark.
department? If necessary, can someone from
The franchiser’s experience. Most fran-
— How much of its own resources the support staff provide personal
chisers are successful enterprises,
has the company invested in creat- support in your area?
who have built a profitable busi-
ing the system? — Are there qualification
ness themselves. However there is
— Is the business seeing stable courses available for franchise
not guarantee that this successful
growth? personnel?
entrepreneur is capable of properly
— Is the franchiser making its — Can you count on support
managing a franchise system. Find
primary income from the selling from head office if problems arise?
out how long the franchiser has been
of new franchises or from on-going Precisely what kind of help?
managing a franchised business. If
periodic payments from existing In addition, ask the franchiser
he doesn’t have a lot of experience,
franchises? to name for you:
then his promises may not be worth
— What is the company’s organi- — The suppliers from whom you
a lot.
sational structure and what are can purchase goods, raw materi-
Growth rates. An expanding system
the plans for development in the als, and equipment,
of franchises increases trademark
next 5-7 years? — Goods or services that you can
recognition and helps attract more
— Which banks work with the offer for sale
clients. But growth alone isn’t
network, its accounts, and auditor — Clients to whom you can offer
enough to guarantee successful
evaluations? your goods or services
franchises. A company that grows
— Does the franchiser aid in — The area within which you
too quickly isn’t able to provide the
choosing a space for the unit? How? can sell your goods or services.
promised help to its franchisees.
Make sure that your potential fran-
22

23. business flight
23

24. #1 september 2010 >> franchising
chiser has the staff and the financial which will determine the scale of chises aren’t giving good feedback
assets it needs to be able to support your business as a result of business problems, and
its franchisees. — Space requirements potential franchisees look else-
— Demands from you as a future where. Or the problem may be that
partner the franchiser does not have enough
Step 4: Evaluate the — Financial aspects of the busi- personnel. Or the personnel are not
franchiser ness sufficiently competent. One way or
— Feedback from working fran- the other, too few new franchises
Your relationship with your poten- chises could mean that the company isn’t
tial franchiser will probably begin — Direct contact information for a thriving.
with a telephone call or a letter. Pay point person. At your first meeting with the
attention to the customer service. Familiarise yourself with the franchiser, you should receive all
How did the secretary respond to management of the franchising the necessary information about the
you, and to whom did she trans- department or the development franchise, which should answer all
fer the call? How quickly did you department. Evaluate their style, your concerns. A situation in which
get a response to your email? If the professionalism, and competency. the potential franchisee’s questions
franchiser is interested in potential If they are rushing, and can’t spend are left unanswered is absolutely un-
partners, then each of his employees enough time with you, it’s possible acceptable: the franchiser is obliged
will be working as part of the team. that the franchiser does not have to answer all questions, and to pro-
Even at this stage, you can evaluate enough staff to cope with future vide the franchisee with additional
the competency of the managers, growth. The growth rate of systems information about which he hasn’t
and their desire to work with you. is an important indicator of the fran- managed to ask. It’s very important
Pay attention to the franchiser’s chiser’s health. The system should be to speak with existing franchisees.
commercial offers. Looking over the growing quickly, indicating that it’s Ideally, you should get in touch with
offer and understanding it complete- attracting new people, but not too as many franchisees from the system
ly is the most important part in the quickly, in order to avoid problems in as possible. And pay particular at-
search for a franchise. In the descrip- managing the growth. Clarify how tention to the comments from those
tion of the offer you should be able to many new franchises are popping up who joined the system recently.
find the following: each year and how many employees
— Concept there are to support new franchises.
— A history of the brand, and its If the system has been working Step 5: Looking for a
potential
— The advantages of being in the
for a few years, but has only added space
a handful of franchises, it pays to
network be cautious. It may When analysing the location, the
— Opportunities for the fran- be that the basic things to look at are demo-
chiser to support the fran- existing graphic information (age, income,
chise, and the services fran- family size, and so on) about the
that are covered in local population, transportation
Trust,
the joining pay- provision, and the type of competi-
ment tion in the area. For a small retail
— The for- unit in its first year, when there’s no
mat of the money for advertising and product
fran-
chise
unit,
but double-check promotion, selling location can
be a very important factor in
the fight for survival.
You can protect yourself when buying a franchise with the help of The attitude of the land-
a few simple actions. They might require a little bit of extra expense, lord to the tenant’s needs
but it’s not worth economizing on your sense of security in the future. is also important. Unfor-
— Get a copy of the certificate of registration of the franchiser’s trade- tunately, some landlords
harm tenants’ businesses
mark (absence of the certificate should set serious alarms bells ringing). You
more than they help.
can check the certificate with the search-information system on the Rospatent Your rental agreement
site at www1.fips.ru has a direct bearing on
— Having thoroughly studied the proposed agreement, give the documents to your business. Does the
a lawyer to be checked over, one who specialises in franchising agreement allow for
— If you have any doubts, contact a company that offers competition investi- extension of the ten-
gation services, to check out the company and its founders. ancy after a specified
24

25. business flight
period? (If the agreement has a fixed outdoor lighting to illuminate Step 6: The final
term, it may be worth it to look for evening shoppers. Don’t forget
another place). Does the agreement about the importance of easy analysis
fix the rent, or could it be changed parking and proximity to major You’ve analysed the numbers, spo-
without warning? Does it protect you roads. Evaluate the foot traffic (the ken with existing franchisees, met
as a tenant? Does the agreement take average number of people walk- with employees from the franchiser’s
into written account the landlord’s ing by the façade in an hour) and company, evaluated their competency
promises regarding repairs, con- what direction it’s headed in, the and professionalism. Now analyse
struction and renovations, decora- distance from bus stops and busi- your own impressions. Have you
tion, alterations, and operations? ness centres (in minutes’ walk), gotten enough information? Does
In addition, evaluate whether the number of parking spaces, the everything suit you from a financial
there is enough space for the retail shop window area (in meters), and perspective? Is everything in order
area, an office, storage, and utility the shopping capacity of the region with the documents? Were the staff
areas. Is there adequate parking? and zones of competition. friendly and ready to help? If you are
Will you need any special lighting, Think about yourself: will it be sure that you will enjoy working with
heating, or cooling, or other specifi- easy enough for you to get to work? these people, then get ready to sign
cations? Is everything in order with If you have your own space for the contracts.
the fire safety and security systems, conducting business, you need to But bear in mind that franchising
are there any problems with the analyse it just as carefully. Maybe is not a simple purchase-and-sale ar-
plumbing or other systems? it would be more profitable for you rangement, but a long-term partner
Try to figure out how much your to rent it out and lease a different relationship. The process of negotia-
advertising expenses will increase if space in which to run your fran- tions can take half a year, sometimes
you choose a remote location. Pay at- chise. And of course, consult with even longer. And you need to consider
tention to how well the area is served the franchiser – he probably has not only the economic aspects of fran-
by public transport, if it is accessible recommendations for the location chising, but the psychological peculi-
enough, and if there is sufficient of a new unit. arities of the relationship
25

26. #1 september 2010 >> franchising
ТONUS-CLUB®
TONUS-CLUB® is the first and largest chain of modern well-
ness centers for women, which already includes about 60 clubs
in 36 Russian cities.
T
he chain’s growth rate dem-
onstrates the high attrac-
tiveness of the TONUS-CLUB Basic information
franchise for investment: in Legal name: OOO TONUS-CLUB
2009, 17 clubs opened, despite the
Company brand: TONUS-CLUB
economic instability in the coun-
Full address: 13 Dybenko ulitsa, St. Petersburg, 193230
try, and the chain doubled in size.
Dozens of TONUS-CLUBS are already Telephone/fax: +7 (812) 610-05-88 (St. Petersburg), +7 (495) 780-50-59 (Moscow)
working in more than 30 Russian E-mail: otkroy@tonusclub.ru
cities: from Kaliningrad to Yuzhno- Website: www.tonusclub.ru
Sakhalinsk, and openings are im- Country of brand origin: Russia
minent in Kazakhstan, Ukraine, Type of service or product: consumer services, wellness centers for women
and Belorus. The effectiveness of Year of brand creation: 2002
the business is clearly shown by the Beginning of franchising: 2005
repeat opening figures: one in four Number of company-owned units: 2
franchisees is developing his own
Number of franchising/subfranchising units: 59
chain under the TONUS-CLUB brand
Initial payment (investment): 350,000 roubles
and opening more units. In addition
to the right to use the TONUS-CLUB Essential start-up capital: 2.5–5.1 million roubles
brand and discounts on equipment, Advertising share: none
the TONUS-CLUB system also offers Royalties: 170 roubles per square meter
everything needed to manage and Number of personnel per franchise: 3-5 people
develop the franchise business: Support offered: The right to use the TONUS-CLUB brand, discounts on equipment, training for
the existing and effective business management and line personnel, marketing and consultative support. The franchiser has more
concept, marketing and consulta- than 30 employees who are dedicated to providing qualified support.
tive support and on-going support Targeted areas: Russia, CIS
from qualified specialists both at the Requirements for the franchisee: Experience of managing or running own business.
launch phase and going forward. The Readiness to comply with the chain’s unified standards and technologies. Possession or rental of a
space 100-200 square meters. Electrical capacity at least 8 kW, with telephone line, plumbing, and
TONUS-CLUB system is always being the potential to fit showers.
improved – the company regularly
Essential criteria when choosing the location for the future business: A convenient
implements new services and tech- location with regards to foot and transport traffic streams
nologies. TONUS-CLUB franchisees
have access to all the new ideas and
developments, and there is regular
training. Since 2008 the company
has been a member of the Russian
Franchising Association. Based on
2009 results, TONUS-CLUB won the
international health and beauty
prize Grazia, in the category Brand
of the Year
26

27. business flight
Elki-Palki,
Malenkaya Yaponiya
The tavern chain Elki-Palki is brand №1 in the
national Russian cuisine segment.
T
he Elki-Palki brand has become the
symbol of high quality and healthy
eating. It reflects the best traditions Basic information
of the Russian cuisine in combina- Legal name: ZAO LUNCH
tion with the modern requirements to the
Company brand: Elki-Palki, Malenkaya Yaponiya
technological process.
Full address: 27/29, Pavlovskaya Street, Moscow, 115093
There is a cottonwool surroundings in
the Elki-Palki taverns decorated in the Telephone/fax: +7 (495) 995-95-94, 221-88-78
colourful Russian style. The population of E-mail: rustraktir@mail.ru
the chain and the main principles of work Website: www.elki-palki.ru, www.littlejapan.ru
are based on legendary abundance of the Country of brand origin: Russia
Russian table, excellent dishes at afford- Type of service or product: foodservice industry
able prices, quality service and hearty Year of brand creation: 1996
welcome. Beginning of franchising: 2003
The most popular choice of the constant Number of company-owned units: 55
tavern visitors is the famous “Telega”.
Number of franchising/subfranchising units: 22
There is a plenty of snacks, various pickles,
Initial payment (investment): 2,500,000 roubles
salads, fresh vegetables and trimmings
here. Essential start-up capital: $ 500, 000
Taking into account the successful chain Advertising share: none
development in Moscow which is proven Royalties: 50,000 roubles
to be viable we are developing according Number of personnel per franchise: 30 people
to franchise system at regional level too. Support offered:
More than 20 taverns have been opened in — Provision with a ready-made business model
the cities of Russia. — Consulting on selecting the optimum location for a restaurant, providing assessment
criteria
Besides, we are actively developing the — Development of an individual design project in accordance with the corporate standards
Malenkaya Yaponiya brand, which in 2007 — Skilled consultation and maintenance during the startup time as well as operation of
was recognized, according to the TIME business
OUT magazine estimates, as the best — Consulting on personnel selection
chain project — Training of personnel and management development
— Recipes and methods of specialty cooking
— Participation in advertising and marketing events
— Favourable terms of cooperation with suppliers
— Presence of personal manager and head chef
Targeted areas: All Russian regions and the CIS-countries, the cities with a population of
at least 100,000 people
Requirements for the franchisee:
— Desire to develop your own business successfully
— Experience of managing or running business
— Possession of necessary financial resources
— Readiness to follow the standards, technologies and corporate culture of our company
Expected pay-back period: 2-2.5 years
Essential criteria when choosing the location for the future business: the central
part of town, convenient road approach, busy transport and foot traffic streams, the 1st
floor (big display windows are preferred), there must be space for parking and summer
veranda.
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