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Europe focus: Spain – Europe’s historical franchise hotbed

Europe focus: Spain – Europe’s historical franchise hotbed

Spain presents a popular European market for international franchisors, both from the EU and beyond.

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Words by Kieran McLoone, deputy editor for Global Franchise

SPAIN IN NUMBERS

Population: 46.94 million
Size: 504,782 sq. kilometers
GDP: $1.419tr
Franchise market value: $34bn

A deeply historical country steeped in Roman heritage, Spain is one of Europe’s key franchise markets due in part to its openness to foreign brands, which are equally as valued as the country’s home-grown concepts.

The country is currently home to 1,381 brands, according to the Spanish Franchise Association, and the franchise industry has a turnover of roughly $34bn. Of those franchise businesses, 249 are of foreign origin, with the majority coming from France (56), followed closely by the U.S. (46). The market has a rich cultural diversity that extends beyond these two frontrunners, however, with the rest of the international brands coming from 26 different countries.

Historically successful

Spain’s history with franchising dates back to 1957, when French clothing retail brand Rodier first opened in the country. The Spanish Franchise Association later formed in 1993, and now analyzes the market on a yearly basis while providing essential information to Spain’s many franchise networks.

Spain’s journey with franchising may have begun with retail, but the food industry is now by far the biggest sector in the country, with a yearly turnover of $9.03bn. This sector also employs the most people at 66,878, followed by hospitality at 36,910, and then restaurants/hotels, at 23,103. Overall, the Spanish franchise industry employs upwards of 294,231 people; a figure steadily growing by around 0.13 per cent year-over-year.

Do your homework

The methods that brands use to successfully franchise throughout Spain can vary depending on the industry and origin of a business, but as always, preparation is the most important aspect when gauging if this market is best for your brand.

“The most common method of franchising for foreign franchisors is the master franchise format,” says Santiago Barbadillo, founding partner and CEO of Barbadillo y Asociados, a Spanish franchise consultancy. “However, British franchisors seeking to enter the Spanish market often opt for the regional master formula, diving the country into four geographical areas.”

When it comes to challenges within the market, Barbadillo is clear: “The main challenge for a foreign franchisor is to adapt its business model to the characteristics of the internal market. This isn’t exclusive to the Spanish market, but it remains a pending issue for most foreign franchisors who intend to transplant their business directly, without paying any attention to local adaptation.”

Finally, while it might seem like the primary Spanish cities of Madrid and Barcelona are natural priorities for incoming brands, with populations of 5.5 million and 4.9 million, respectively, Barbadillo advises that other targets could pay off: “The potentially most important markets, by far, are obviously Madrid and Barcelona, but areas such as the region of Valencia or cities such as Bilbao, Seville or even Zaragoza or Malaga, are markets with high levels of franchise implantation.”

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