VerSous News

Ekaterina Soyak about relocation and trends of franchising 2023

– Ekaterina, EMTG has hundreds of partners, with many of whom EMTG has a long history of cooperation. What can you say about their relocation experience?
– EMTG’s business interaction experience is really tremendous. The company was established in 2002, and in 2003 we held the first international franchise exhibition Buybrand Expo. Our 20-year history of market presence covers 46 international exhibitions in Russia and abroad, 2,800 participating companies from 50 countries, and over 18,000 new businesses as a result. Today, we are the largest franchising development platform across the former Soviet Union.
Based on our experience, I can say that business relocation is not a new phenomenon: September 21 just drove the momentum. Speaking about relocation formats, three of them can be loosely singled out. 
First: the company is able to compete in a different country thanks to its business specifics. Those are mostly companies operating in high-tech fields and having experience of cooperation with foreign partners. Retaining their business in Russia, they relocate their parent company, including specialists of a venerable age category, to a different country. 
Second: Russian companies which understand that in the event of relocation, Russian nationals will need certain services, and form an offer based on the demand, from realtors and business consultants to educational and entertainment projects for the arriving persons’ children. 
Third: those who have relocated and are looking for a business, including franchising, in order to develop it in the new country. This category often includes restaurant concepts and startups.
– How can one find a business in a new location, in a new country?
– For this category, we will hold a franchise congress Buybrand Central Asia in Kazakhstan in May 2023, with participation of over 1,500 acting and prospective franchisors and franchisees, as well as investors, company owners and top managers. This is a platform for business selection and an opportunity for communication, an opportunity to pool or establish a representative office in a country.
– What countries are most popular with Russian nationals and promising for development?
– From the point of view of geography, the so-called friendly countries are main destinations for relocation. This is first of all the United Arab Emirates with their obvious advantages of location and loyalty to businesses relocated from other countries. Turkey has a similarly convenient location and friendly attitude towards Russians. Russian nationals actively use it for parallel import. Kazakhstan and Uzbekistan are promising and actively developing destinations. This fall, there were numerous attempts to promote restaurant and tourist business in Cyprus. Some entrepreneurs are trying to operate in Vietnam, Thailand and Brazil. There are contacts with China, which are mostly related to maintenance of existing business cooperation due to certain challenges resulting from different mindsets and the market specifics.
– What to expect from the franchising market in 2023?
– According to our internal rating, exhibition activity and information from our partners, the following trends can be identified.
First, we traditionally see the highest demand for franchises requiring investments up to 3 mln rubles.
Second, in 2023, no doubt, the import substitution agenda will be popular, so the increasing number of production franchises can be expected. This is evident based on the situation in the wine industry. According to average estimates, the share of Russian wines on the domestic market achieved 55%, and next year, the production is going to increase by 15–25%. In this context, the producers are expanding supply and developing both their own retail capacities and franchising networks. 
Farming is expanding, including small cheese dairies, mushroom farms, production based on wild harvest is growing. In general, it is all about substitution of the sinkhole on the market due to irregularity or interruption of supply of certain products not just in retail, but also for catering which has started paying attention to local products and even introducing national specialties, i.e. using products growing within easy reach to cook instead of those which have to be delivered, for example, from France.
Third, previously popular segments will face “cooling” of demand. In the service sector the craze about barber shops and cyber clubs has already died down (for the latter, equipment is either missing or too expensive). The boom for pickup locations has also decreased: the market is saturated, and it is getting more and more difficult to find suitable premises, as many stores impose tough requirements. Moreover, major retailers prefer to combine the local small store format with pickup locations.
– Where can entrepreneurs seek for growth points?
In the future, we can expect the growth of digital franchises (involving operation on a unique IT platform). It may be anything: from digital self-service dry cleaner’s to kids taxi operating via an app. Medical laboratories will be in demand as before, which are also expanding the range of services and bringing innovative technology. In general, as we can see, non-standard franchises with original concepts are emerging on the market more frequently: the franchise business is occupying and sometimes opening new niches.