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German franchising remains resilient in the face of COVID-19

German franchising remains resilient in the face of COVID-19

The latest figures released by the German Franchise Association showcase the enduring nature of the country’s thriving franchise industry.

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Back in July 2020, the German Franchise Association published its bi-annual industry analysis report, which assessed the climate of the country’s franchise industry and its reaction to the ongoing COVID-19 pandemic.

At that time, franchise confidence was shaky to say the least. 56 per cent of respondents indicated that they had experienced negative effects overall as a result of the pandemic, with the gastronomy segment of the market hit hardest at 73 per cent.

“The support measures that have been launched quickly are good, no question. However, we urgently need further support for small and medium-sized enterprises – even beyond 2020,” said Torben Leif Brodersen, CEO of the German Franchise Association, at the time of the report’s release. “We have to assume that the effects of the corona epidemic will occupy us for years, not just a few months.”

The Association recently published its updated statistics for the end of 2020, however, and they paint a more positive picture. In December 2020, 930 franchise systems operated nationwide in Germany, with a total of 138,748 franchise partners – a four per cent increase on the previous year. The industry was also valued at €135bn, which marked a 4.6 per cent increase on 2019.

Looking at sectors that dominate the German franchise industry, services still remained a frontrunner with 38 per cent market share, but restaurants and leisure overtook trade, claiming a 30 per cent share for the former and 21 per cent for the latter.

Perhaps most crucially, industry optimism is gradually returning. The 56 per cent of respondents who had experienced negative effects in July fell to 37 per cent in this latest report, with 35 per cent of respondents saying that they had now experienced positive results throughout 2020.

“Despite the surprisingly positive assessment among some respondents, the pandemic has evidently left its mark and will continue to do so,” said Broderson. “However, the fact that the figures reflect a truly stable climate in these systems demonstrates a remarkable resilience, that is, the strength to persevere against negative influences, to find solutions and emerge from the crisis stronger than before.

“We see this attitude among the majority of franchise enterprises – whether franchisors or franchisees. This is evidently not only in personal contact with our members but also reflected by the numbers in the statistics, which confirms the stable immune system in our sector of the economy.”

Finally, when questioned about the ability of the franchise concept to weather crises, 96 per cent of the respondents assessed franchising as a particularly crisis-proof business model. This is nine per cent more than in the past summer.

“Once again, it has been demonstrated that the concept of systems and networks is also successful in economically turbulent times and that we can rely on the principle of mutual solidarity,” said Broderson. “This makes the established concept of franchising a reliable strategy for the future in a post-COVID age.”

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