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A Guide to Franchising in the Nations of East and Central Europe

East & Central Europe: Country Overviews
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The flag of SerbiaSerbia

Capital City: Belgrade
Population (Millions): 7

ECONOMIC OVERVIEW

GDP Per Capita: US$
GDP per Sector:
Agriculture -
Industry -
Services -
Currency: Serbian dinar (RSD)
Ex.Rates:
Big Cities (>100,000): Novi Sad, Niš, Kragujevac, Subotica
Urban Population:
Languages: Official language: Serbian. Regional languages: Hungarian, Slovak, Romanian, Croatian, Rusyn, Albanian

LEGAL OVERVIEW

GENERAL OVERVIEW

The increase of developing of franchising, as an important impact for economic development, consists of three stimulating factors: the need for expansion, lack of capital and the need to overcome the distance. Franchising in the forms in which there is now developed in the U.S., where, during the 50s, 60s and 70s of twentieth century, shows its greatest potential to influence for development of an economy. However, besides positive effects, it has been showed and their negative effects, embodied in numerous attempts to light and rapid enrichment, fraud and other criminal activities, all in an effort to use the great popularity of franchising at the time.

Countries in Eastern Europe have been concurred in the late 80s and early 90s, mostly trough fast-food restaurants. Today, some countries in this part of Europe can boast a significant degree of development of franchising, such as Hungary and Romania.

Having in mind the need of sublimation of franchising in the world, International Franchise Association - IFA was founded in 1960 in the United States. In Europe, was established European franchise associations in 1972, made up of 17 national franchise associations (federations), expending with new members.

When it comes to the Republic of Serbia, the development of services was carried out in specific conditions and in various other indicators which did not follow current trends. Later expectations turned out to be real. Namely, in the transition process, service industries were provided with a more dynamic development in comparison with agriculture and industry. The place and role of the service sector in economic development of Serbia in this respect are strategically important issue.

In the context of franchises and franchise business in general in Serbia, the prevailing attitude of most citizens is that they do not share the same preference polls like those in Western countries. In fact, most people do not understand what a franchise business system or only know a little about it, not understanding the possibility of franchising as a form of assistance in the development of Serbian economy. Also, although the model franchise in huge steps enters Serbia, the advantage of this way of doing business in the Serbian business community still has the required level.

In this sense, the popularization of the concept of franchising in Serbia is one of the key aspects of faster economic development of Serbian economy and its integration into the world and European integration process and improves the competitiveness of domestic economy. The purpose of the research and analysis of the existing franchise business in developed countries, reflected in increasing awareness of the benefits and potential franchise business opportunities in Serbia, as well as promoting the free enterprise system by emphasizing the key role of franchise business in an open system companies.

PAST FRANCHISING IN SERBIA

Franchising in Serbia and the former Yugoslavia arrived very early, at the very beginning of its European expansion, mid-seventies, when it starts importing U.S. franchises. Foreign, mostly American franchise network entered first: Coca-Cola, Avis, Hertz, Diners Club International, Intercontinental, Hyatt, American Express, Delifrance, McDonalds. So some contracts carry the name of membership contract (Avis Autotehna), contract filling and distribution (Coca-Cola Slovin), Agreement on Technical Cooperation (Hotel Intercontinental-Espalanade), and one of the few franchise agreements entered into in those years under the own name was the agreement between Diners Club International, and General Tourists. However, despite the different names, all of these contracts represented the franchise agreements.

The new „wave” of franchise business in Serbia has brought and the second phase in the development of franchising. Domestic enterprises start to realize the benefits of expanding their systems using this concept, so that the second phase is realized through the construction of national franchises in the late eighties, and even more in early nineties. These were Montenegro Express, Tiger, Pekabeta, C Market, Yumco and others who started with more or less successful creation and sale of their franchise package. In early 90s when the franchise becomes fashion in the former Yugoslavia, there ware the need to establish a professional franchise association, so the first was - Serbian Franchise federation (May, 1991 based in Nis - but not active now). After that, in Novi Sad is founded Yugoslav Franchise Association as another national franchise association, whose purpose was active in relation to the business environment to promote the franchise concept. Unfortunately this Association is not active any more.

REAL START OF FRANCHISING

Real start of returning the franchise to Serbia marked was the entry of a few powerful franchise systems in the past few years, primarily in the fashion industry (Zara, Springfield, Mango, Oviesse et al.). In 2003, Office 1 Superstore entered in Serbia and also a Hungarian bakery franchises - Fornetti. In 2007, in Serbia has entered the American Re / Max, a world leader in the property market, which, with nearly 7,000 agencies and 120,000 agents in 70 countries is one of the ten fastest growing franchise concepts in the world. In 2007 entered the master franchise I Quit Smoking (IQS) offering an attractive program for smoking cessation. Increasingly popular service training, fitness and wellness as well as very attractive in the world - Contours Express International LLC, came in 2007.

Beside the imports of foreign franchise concepts, new quality in the development of franchising in the market of Serbia is building national franchising system in various areas: AMC (Afrodite Mode Collection) in the field of women’s fashion, DIS in the field of wholesale, ComTrade distribution of computer equipment and software, E-Shop in buying over the Internet, DVE ŠMIZLE, Mini Maxi, Rakia Bar, Krofna Bar... These developments provide the right claims, under which exports of domestic franchise and really should become the next, not so far, phase in the development of franchising in Serbia, although until just a few years this possibility was hard to imagine.

Concerning Republic of Serbia, developments at the institutional level are important as well as developing the regulations on franchising de lege. Beginning of a return of franchising in Serbia was marked by two franchising conference in cooperation Serbian Chamber of Commerce with Commercial Department of the U.S. Embassy.

First Conference on Franchising in Serbia - Challenges and Opportunities - was held on 11 April 2007 in Belgrade, while the second conference on Franchising - A further step towards business success - on 18 December 2007, also in Belgrade.

At the end of the year the FRANCHISE CENTER was founded in Serbian Chamber of Commerce. With his promotion, education, mediation and advisory activities, the newly established Center for the franchise has filled a gap caused by fading of the activities of existing, but not active franchising associations that were established during the nineties.

The next necessary step of development of franchise business in Serbia was the establishment of an independent Serbian Franchise Association. Serbian Association (SURF) was founded in May 2009 with the aim to gather the franchisors in Serbia and to introduce franchising in Serbia to the European Federation of Franchising (EFF) and thus to the final adoption of the European Code of Ethics for franchising as a model of proper behavior in franchising.

The most significant moment regarding the developing the franchise issue in Serbian is activity of Governmental Working Group on economic agreements on the Draft Civil Code, by late 2006. To the Working group was presented the Draft of Discloser Low with attempt to create rules that would regulate the de lege franchise agreement. This was the first step in the efforts of local lawyers to conceptualize franchise agreement as a designated contract of domestic law, but the only model of regulation that provides contractual rules for the contractual relationship.

In Serbia from 2007, active and very important role in the rising the mindset on franchise have Franchising Center of Serbian Chamber of Commerce, SURF - Serbian Franchising Association and U.S. Commercial Service. Informal analysis conducted by Franchising Center showed that Serbia employs approximately over 20,000 persons in the franchise business (it is difficult to determine the exact number, because there is a problem to identify and confirm who actually works in franchise networks in Serbia). In relation to the working age population of Serbia and rate of unemployment, this is a small figure.

Centre for Franchising in Serbia SCC notes the growing interest of entrepreneurs and the unemployed for the purchase of franchise concepts, and increasing knowledge and education on modern trends of development of this business, as compared to previous years. On the other hand, Serbian companies have recognized the franchise as a highly effective and easy way to spread the existing work, which is conducive to raising industry awareness of the benefits and possibilities of developing a franchise business in Serbia.

In Serbia now operates more foreign franchises networks than national, over 25 (Office One Superstore, Fornetti, Top Shop, Pizza-hut, Holiday INN, Costa Coffee, WalkToWalk, I quit Smoking, Century 21, Remax, Helen Doron Early English, KFC, Lollipops, Accessorize,.....). On the other hand, there just a few Serbian franchise brands (which has been determine trough the work of the Centre for Franchising: Delta Maxi (retail), Com Trade (IT equipment), AMC (fashion), Rakia bar (brand café), E-shop (internet sale), DIS trade (retail), Dve Smizle (accessorize),.... Even the Roma Company (retail- paints and varnishes) at one point opened a franchise single kid, Jolly Travel (tourist agency), and others.

Also, the Public Post Service of Serbia uses the Canadian model of franchising in the performance of their services. In any case, there is great interest in Serbian companies to expand existing business through the franchise system. According to many recipients and providers of franchise, Serbia lags behind many countries in Europe and the region, and it is the difference between domestic and foreign franchises. In Serbia there are a small number of high quality franchise concepts in relation to the potential and interest, a number of foreign is much higher. Also, one of the differences from other countries is the lack of legal regulation of franchise business in Serbia.

At the end, what is important is that the all actors of developing franchise in Serbia have affected change the awareness on the benefits and opportunities franchise business in Serbia, through a number of education, conferences, and round tables. A large number of potential franchisees come to the meetings and start a business through franchising. Also, day by day there are the increase of the interest of Serbian companies to expand through franchise and developing the quality franchise concept for national and international spreading. An international franchise and has no intention of spreading.

 

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