KFC franchise in Russia: how to open, how much it costs, what are the conditions

Brand history: how KFC developed

The history of the corporation began in 1952. Then retired American colonel Harland David Sanders, who had been in the restaurant business since the Great Depression, invented a special breading for chicken dishes. The recipe for this delicious, crunchy ingredient is a trade secret. But there is a corporate legend. It says that the reason for the unique hot-spicy flavor of chicken is a mixture of 11 herbs and spices. This feature became the starting point for the rapid growth of the KFC chain (read as “kiefsi”).

The KFS logo and Colonel Sanders himself

Then, over the next 12 years, Colonel HD Sanders travels around American cities. He offers catering establishments to organize the preparation of dishes according to their own special recipe. As a result, more than 400 cafes and restaurants operating under Kentucky Fried Chicken franchising began to do this. This was the name of Sanders' brainchild until 1991. Then it was officially shortened to KFC.

Franchising has become the main way of expanding the company. Since 1997, the rights to the trademark have been owned by the US corporation Yum! Brands. She is in the restaurant business. It also owns well-known fast food brands: Pizza-Hut, Taco-Bell. The KFS company became a subsidiary of this corporation. The company's headquarters is located in Louisville (USA, Kentucky).

Network achievements for December 2020:

• Kentucky Fried Chicken is the second largest fast-food chain in the world, second only to McDonald's;
• the brand's global revenue for the year amounted to $26.2 billion;
• number of own cafes and restaurants - 8 thousand;
• enterprises opened under franchise rights - 22651;
• KFS retail outlets operate in 134 countries;
• the company provides 820 thousand jobs worldwide.

The chain's signature dish, breaded chicken
To this day, KFC's signature dish is breaded chicken wings. Their portions are served in a branded cardboard bucket called a “basket.” It was developed by the company's first concessionaire, Peter Harman, in 1956.

Since 1992, the following have appeared on restaurant menus:

• chicken fillet burgers;
• wrap sandwiches;
• lettuce cuttings;
• potato-free;
• Pepsi-Co soft drinks.

A remarkable fact is that the largest KFS restaurant is located not in America, but in the city of Baku (Azerbaijan). This speaks to the popularity of the brand all over the world.

Benefits of a KFC franchise (KFC)

For those who want to open their own restaurant as a franchise, cooperation with this company can be useful. The combination of a low level of competition in the country and wide advertising coverage makes entering this business profitable.

If you decide to become the owner of such an establishment, you can be sure that competitors will not open in the next block.

You can also count on the following advantages:

• Constant continuous business development . This is obligated by the very conditions set by the company. Here, according to the franchising system, random people are not accepted: there are a lot of requirements. And not only for the start, but also for the continuation. We consider those candidates who can open several outlets within a relatively short period of time.
• High profitability . Such fast food restaurants, known for their active advertising, are noticeably popular. The average bill is not too high, but it cannot be called low either. The attendance is decent, the percentage of net profit is impressive.
• Gaining knowledge on promoting this business . The company provides information on how to attract customers and increase income.
• The well-known name of the company KFC is already quite well promoted in our country. A stream of advertising flows from television channels, so most people are familiar with the brand. You don’t have to convey to everyone information about what your establishment offers.

In general, all the advantages are a standard list for an ordinary franchise with a big name.

The main distinguishing advantage is that you will be constantly pushed to expand your business and reach new heights.

KFC in Russia: history of appearance and development trends

Russia was covered by the KFC chain in 1993. The brand collaborated with the Rostik-International company. Therefore, domestic enterprises operated under the Rostik's brand. The first of them opened in Moscow GUM.

In 1998, the network left the Russian Federation due to difficulties with financing. It reappeared in the country in 2000. Then a restaurant opened on Moscow's Arbat, owned by Talis-food, which bought the KFC franchise.

In the summer of 2005, Rostik-Group and Yum! Brands Russia entered into a cooperation agreement. According to it, the united brand Rostik's-KFS was created. The first retail outlet with such a sign appeared in the spring of 2006.

In 2011, the new brand bought the rights to the domestic segment of the network. Then it included 155 restaurants and cafes. According to data for April 2019, there are 761 Rostik's-KFS outlets operating in the Russian Federation.

In comparison with other fast food giants (McDonald's, Burger King, etc.), the brainchild of H. D. Sanders showed the best results in 2020. To attract new network members, the KFS franchise is widely used.

Currently, of the nearly 800 food establishments, 70% are franchisees. The general director of the Russian branch of the brand, Oleg Pisklov, claims that the proportion will remain until 2022.

Top 10 global franchises represented in Kazakhstan

Coca - Cola

Soft carbonated drink

It was thanks to this famous drink that people in Kazakhstan started talking seriously about franchising. The Kazakh-Turkish joint venture Coca-Cola Almaty Bottlers, created in 1994, opens a plant for the production of carbonated soft drinks in Almaty. Due to constantly growing demand, the company opened a new plant with much larger production capacity within 11 years. Today it occupies a leading position in the market of carbonated soft drinks in the republic and plans to open another plant in Astana.

The Coca-Cola brand is the most expensive and recognizable brand in the world.

Baskin — Robins

Ice cream

Baskin Robbins can easily be called one of the progenitors of the entire global franchising system. The first ice cream parlor was opened by the Robbins brothers in 1945 in California. Since the business was quickly gaining momentum and required a lot of attention, soon the brothers could no longer cope with it on their own, and therefore made the right decision at that time - to sell cafes and shops under special conditions. All new partners were required to work under a single brand and sell ice cream only to this company. The first establishment in Russia under the Baskin Robbins franchise appeared in the early 1990s, and in Kazakhstan the first ice cream parlor opened in 2000 under the Russian subfranchise.

Burger - King

Fast food restaurant

Founded in 1954, the company now operates more than 12,500 restaurants in 83 countries and is the second largest fast food restaurant chain. The first restaurant of the American chain opened in Russia only in 2010, and in Kazakhstan in 2012. At the beginning of this year, Burger King was represented in Almaty by six restaurants, and at the end of April the outlet appeared in Astana. Burger King's partner in Kazakhstan was the investment group Verny Capital, and the franchise holder was QSR LLP. The cooperation agreement was signed for a period of 20 years.

Hardee 's _

Fast food restaurant

The first Hardee's restaurant appeared in America back in 1960 and immediately began to be very popular among the local population. The volume of revenue received in the first months exceeded all expectations. Just three years later, restaurant founder Wilbur Hardee made the first public offering in the entire fast food industry of 37,500 common shares worth $4 and bonds worth $150,000. In 1983, Hardees opened his 2000th restaurant, and four years later his 3000th. In 2011, Hardee's opened its first location in Almaty. By that time, the network was already represented in 11 countries.

KFC

Fast food restaurant

In the midst of the depression, Garland Sanders opens his first small restaurant at a gas station in Kentucky. Seven years later, the restaurant expands to 142 seats. The birth date of the original Kentucky Fried Chicken recipe is considered to be 1940. The first KFC franchise was sold in 1952. According to the agreement, its owner was obliged to pay 10 cents from each portion of chicken sold to Sanders. Seven years later, there were more than 600 KFC franchise locations in the United States, Canada and England. Now the network is represented in more than 100 countries with 15,000 branches. In Kazakhstan, the first restaurant was opened in 2010.

Planet Sushi

Chain of Japanese restaurants

The first Planet Sushi restaurant was opened in Moscow in 1999. The owner of the trademark is . The Planet Sushi restaurant chain is widely represented in many cities of Russia, as well as in Ukraine, Hungary, Poland, Azerbaijan, Moldova, Belarus and Kazakhstan.

TONI&GUY

Beauty saloon

TONI&GUY is one of the world leaders in the hairdressing industry with a 50-year history. In 1963, the first salon under this brand opened its doors in south London. Now the brand is represented by 420 salons in 42 countries, including Kazakhstan. The first and so far only beauty salon was opened in Almaty eight years ago. This year it is planned to open a second salon in Atyrau.

Adidas

Sports shoes and clothing

The history of the concern dates back to 1920, when the Dassler family decided to open their own shoe-making business. Already in 1938, the company produced about 1000 pairs of shoes daily. In 1948, after the death of their father, the Dassler brothers separated and created new brands, one of which was Adidas. Over time, Adidas gains wide popularity and becomes one of the most popular brands in the world. However, during its existence the company experienced not only ups and downs, but also downturns. Adidas is a regular sponsor of various major sporting events. In Kazakhstan, the first Adidas franchise store was opened in the 1990s.

Inter Continental

International hotel chain

The first hotel under the Inter Continental brand opened in Brazil in 1946. The international hotel chain, owned by the British company InterContinental Hotels Group, is currently represented by over 4,600 hotels in more than 100 countries. About 3,500 of them operate under franchise agreements. In 1999, the Ankara Hotel was opened in Almaty, which is now a franchisee of the InterContinental hotel chain.

Marriot

International hotel chain

The Marriot company dates back to 1927 with the opening by the Marriot spouses of a small bar selling non-alcoholic herbal carbonated drinks. In 1957, the company opened its first hotel, the Twin Bridges Marriott Motor Hotel, in Virginia. Today the chain is represented by 3,700 hotels in 73 countries. In 2012, more than 150 new hotels were opened in the United States alone. Last year, annual revenue was $12 billion. At the moment, three Marriot hotels in Kazakhstan are represented in two cities - Aktau and Atyrau.

How is the KFC chain spreading in Russia?

To expand its network of enterprises in Russia, KFC management uses the franchising method. This is a specific form of commercial contract. Its essence is that the owner of a commercial brand, for a set amount of money, gives the buyer the right to use the brand to carry out trading activities.

Franchising scheme

The parties to the agreement are two legal entities:

1. Franchisor. The owner's company or the founder of a business or brand. He sells a franchise - this is the right to use the franchisor's trademark.
2. Franchisee. The company of the merchant purchasing the franchise. She gets the opportunity to use a well-promoted brand, as well as production technologies and business methods.

For the buyer, the benefits of the transaction lie on the surface. He gets the opportunity to use a popular trading “name”, launch a profitable business, and become part of a famous corporation.

The seller also does not lose money. Franchising allows him to quickly develop and expand his business, increasing the number of enterprises under his brand in his own country and around the world. He regularly receives money from the franchisee in the form of monthly payments (royalties).

Basic rules of cooperation with a brand

Rostik's-KFS gives Russian entrepreneurs many guarantees. The corporation has developed some rules for itself. According to them, there are responsibilities that the brand assumed when selling a franchise to an entrepreneur:

• The company provides comprehensive assistance in organizing the business. Its specialists advise aspiring franchisees on a full range of issues.
• The corporation discloses all confidential information to the new network participant. For example, production secrets, recipes for making chicken dishes.
• The brand assists in carrying out promotions. KFC helps maintain social networks on the Internet. Provides the franchisee with advertising materials to the required extent using the official logo of the brand.
• FSC helps in resolving the entire package of legal, financial aspects and problems.
• The company provides assistance in the procurement of products and delivery of ready-made meals.
• The brand helps to find, hire, and train workers.
• KFC provides the new member of the chain with branded items: booklets, food packaging, branded uniforms, etc.

After successfully obtaining a franchise,
all these preferences are a guarantee of the successful operation of the franchisee, as well as the rapid development of his business. Especially if you are just a new entrepreneur.

KFC will open an innovative restaurant without cash registers in Moscow, where orders will be given by robots

Moscow-Live.ru / Akishin Vyacheslav

KFC will open an innovative restaurant in Moscow without cash registers, in which orders will be given out by robots Moscow-Live.ru / Vyacheslav Akishin

The fast food restaurant chain KFC will soon open the first digital restaurant in Moscow with contactless payment and a robotic hand for issuing orders.

“In response to new challenges of the time, KFC is preparing to open its first-ever “restaurant of the future”, the concept of which is based on minimizing contacts indoors. Contactless service is ensured by the absence of traditional cash desks with cashiers (instead, digital kiosks), as well as by using a contactless automated order issuing area and a biometric identification system for paying and receiving orders. The new restaurant will also become an incubator for innovative ideas and digital solutions for KFC,” TASS quotes the company as saying.

The restaurant, which is planned to open near the Butyrskaya metro station after restrictions on the operation of catering establishments are lifted (we are talking about June 23), will offer visitors almost the full KFC menu. Visitors will be able to pay for their order using a biometric identification system, a bank card, or a smartphone with Apple Pay or Android Pay. Those wishing to pay for their order in cash will be able to do this using a special terminal. If a client needs the help of a manager, he can be called through a special SOS kiosk, Rozetked clarifies.

The first contactless KFC restaurant will appear in Moscow. Traditional cash registers will be replaced by digital kiosks, order pickup areas will be automated, and a facial recognition system will be used to pay for orders. You can try the service from June 23. https://t.co/mwBSTjfpbN pic.twitter.com/wbnsInfivF— Rozetked (@rozetked) June 10, 2020

Another feature of the digital restaurant will be a partially open kitchen: guests will be able to watch as orders are formed and move along a conveyor belt, and then, using a special robotic arm, are placed in a storage cell before being issued within a maximum of 10 minutes. “The cell opens automatically using a facial recognition system, which is also installed on automatic hot drinks dispensers. Thus, the first hands to touch freshly cooked chicken are the hands of the guest,” KFC said.

The company emphasized that increased sanitary and hygienic measures will be taken in the restaurant to prevent the spread of coronavirus. Thus, in the area of ​​digital kiosks, special markings will be applied to maintain social distance, special signs will be placed on chairs warning visitors about the need to maintain distance, tables will be disinfected after each guest, and self-service kiosks and other surfaces that guests often touch - every half hour.

What requirements must a franchisee meet?

FSC pays special attention to the goal of buying out a franchise by an entrepreneur. A chain restaurant should be his life's work. Otherwise, if the businessman’s goal is simply to obtain additional benefits, the contract will not be concluded.

At an interview with the franchisor

Basic requirements of Rostik's-KFS for franchise applicants:

• Untarnished personal and legal reputation. The brand management pays special attention to the entrepreneur’s ability to conduct business. If his past businesses failed, the deal will not be concluded.
• Personal characteristics that make it possible to act as both a leader and an ordinary employee. The KFC principle is that a businessman must be able to do everything: take orders at the counter and coordinate the work of the entire enterprise.
• Experience in the restaurant business. At the same time, the franchisor needs not only him, but also respect for the business and a desire to do it.
• Important conditions are the diplomatic and commercial qualities of the applicant. He must be able to successfully negotiate and conclude profitable contracts and deals. Franchisees also need dedication, activity, and initiative. The applicant must be sensitive to market trends, invest money and increase the company’s revenue.
• KFS employees check for sales and marketing experience. A future network participant must be able to organize employees, understand the rules of marketing, and the nuances of working in the selling segment of the market.

One of the main conditions is the financial reliability of the franchisee. Solvency will give him the opportunity to buy out the franchise and open a fast food business.

Important nuances

Unlike most large chains, KFC management is not interested in the “piece” sale of franchises. That is, if you are thinking about how to open a KFS in a small town, most likely you will be refused. The company is more interested in the development prospects of the region. That is, management expects that the franchisee will reinvest the profits in opening new outlets. Ideally, 3-4 restaurants should be opened within two years. Thus, the company makes its management task easier. Instead of maintaining contacts with a large number of small investors, management prefers to entrust the development of each individual region to large, reputable entrepreneurs. And perhaps this is the right approach. If you have the potential to work in the catering industry under the conditions set by KFC, fill out the questionnaire for potential franchisees on the official website of the organization and wait for it to be reviewed.

KFC franchise cost

When answering the question of how much a KFC franchise costs, several factors are taken into account. These are the costs of the start-up fee, royalties and investment capital.

All franchisee fees

KFC franchise: contract price

The new network member gives to the franchisor:

• initial fee (lump sum) - $48,400*;
• royalties (monthly payments) - 6% of profit;
• deductions for current advertising and organizational events - up to one percent of profits;
• contribution to the marketing fund - 4% of revenue.

When concluding an agreement, KFS employees provide the future franchisee with a list of what needs to be purchased or paid.

KFC franchise: investment amount

In addition to mandatory payments, a network participant needs initial capital. KFS specialists have calculated that to open a Russian Kentucky Fried Chicken restaurant, the franchisee must have at least 4,655,000 rubles or 700 thousand dollars. This will be enough to organize, equip the enterprise, organize work and pay staff.

Financial aspects of the KFC franchise in Russia

The cost of a FSC franchise and the initial investment are high. However, all this is calculated and justified. In addition to mandatory payments to the brand owner, this is 20% of the total amount, the franchisee’s costs are distributed as follows:

• construction, installation - 35% of the total monetary contribution;
• purchase of licensed equipment - 25%;
• paperwork, purchase of computer software - 15%,
• selection and training of employees - 10%;
• designer activities, decoration, tiling work in a restaurant - 13%
• installation of equipment - 5%;
• purchasing, arranging furniture - 7%.

What options does the franchisor provide for free?

The brand does not charge money for some types of assistance.

The brand helps decorate the restaurant in the KFS style

This:

1. Maintenance of equipment provided by Yum! Brands.
2. Assistance in marketing developments and events, informing about new trends.
3. Disclosure of business management and control methods.
4. Consulting on the construction, layout of the hall, its decoration.

Free training for the network participant, his managers, and employees. This is done based on the franchisor’s own standards, as well as world analogues.

Profit calculation

KFS specialists have calculated that their franchise will pay for itself in 2-3 years. They estimated the profitability of their fast food businesses to be 350%.

The brand reports that the restaurant will break even and start making a profit after 36 months. And this, at a minimum, is 1,100,000 rubles. Which is more than any other deal brings in, for example, a Las Fritas (street food) franchise.

Steps to becoming one of the KFC franchisees

Becoming a member of the KFS network is not difficult. The process is divided into three stages. They are executed sequentially.

Stage No. 1. Register as an entrepreneur

First, the applicant registers as a businessman with government agencies. This can be done in two ways - by opening an LLC or an individual entrepreneur. The choice depends on the scale of future activities. When the project has 1-2 retail outlets, an individual entrepreneur is registered. If you plan to open a chain of restaurants, an LLC is registered.

Differences between an individual entrepreneur and an LLC

Stage No. 2. Prepare the amount required to pay for the franchise and a business project

Next, a business plan is written for opening a retail outlet. It must be provided to FSC representatives. Without convincing documentation, there will be no franchise transaction.

In addition, the entrepreneur needs to prove solvency. To do this, the possibility of paying for the contract is confirmed. It is worth considering that 51% of bank funds must be the property of the applicant.

Stage No. 3. Apply for a KFC franchise

Lastly, the application is submitted to company representatives for consideration. The franchisor's employees will review it and make their verdict. You can find the brand's contacts on the official website of Rostik's-KFS.

Basic requirements for franchisees

If you are thinking about how to open a KFS in your city, first of all check whether you meet the requirements that the organization puts forward for franchisees. Here are the main parameters:

What are the advantages of purchasing a KFC franchise for an entrepreneur?

There are the following advantages of working with a franchisor:

• KFS is a well-known and rapidly growing brand. It will help an entrepreneur create a competitive, profitable business in any city in Russia.
• The conditions of the copyright holder for the applicant to start working are gentle - they are not difficult to fulfill.
• Compared to its competitors, KFC helps the businessman more. This includes legal support, marketing, advertising, provision of branded items and equipment.
• A franchise pays for itself very quickly - it is believed that it takes no more than 3 years.

By purchasing a KFC franchise, an entrepreneur devotes himself to an exciting and profitable business. Its profitability depends on the talents and skills of the applicant. In addition, the businessman is gaining experience in the restaurant business.

*Amounts are current as of December 2020.

Franchises in Central Asia. What experience of Kazakhstan should be taken into account?

The turnover of the franchising market in Kazakhstan is estimated at $2.5 billion, but the growth of new brands is quite slow - about five transactions per year. Development is hampered by the crisis and lack of finance. However, “tasty” brands are slowly but surely entering Kazakhstan. President of the Eurasian Franchising Association Beknur Kisikov spoke about the successful and not so successful experience of Kaktakto .

— Beknur, first of all, tell us how many franchise transactions in Kazakhstan go through the Eurasian Franchise Association?

— The turnover of the franchising market in Kazakhstan is now estimated at approximately $2.5 billion (turnover of operating companies. – Ed.). This is a very rough estimate. We as an association do not focus on transactions. Our task is to form a single franchising space for Kazakhstan, Russia, Ukraine, and Central Asia. The association consolidates all information on franchises in the Eurasian space. Mostly Kyrgyz, Tajik, Uzbek and Russian companies turn to us for help. This is a project designed to last for decades, because in Kyrgyzstan and Uzbekistan, for example, franchising is still very poorly developed. We are taking our time and establishing communications with the Central Asian republics.

— How many franchises were offered and how many were purchased in Kazakhstan in 2020 and in 2020?

— Every year we create a catalog of franchises. Now there are about 50 offers from franchisors. Last year there were less than 40 of them, the year before – 20. Gradually, more and more proposals are being received. If we talk about purchasing, then out of 100% of the franchises offered, only 10% find their franchisees. But three years ago there were even fewer transactions - 1-2%. Businessmen began to pay more attention to franchises, and they realized that it was convenient to buy a ready-made business. For some reason, entrepreneurs in Kazakhstan used to find it more interesting to break into business “with their foreheads.” Although statistics show that 80% of startups do not survive. And, conversely, 80% of franchises operate successfully.

— Which franchises are selling best this year?

— These are, for example, mental arithmetic franchises for teaching children. Franchises of small restaurants, including street ones, such as Red Dragon, or the fast food chain brand Pchelkin Good Food in Astana, are selling well. The hotel brand Park House is in demand. Basically, these are inexpensive franchises that you can quickly launch and start making money from.

Fast food chain Red Dragon in Kazakhstan

— Can you identify the top 3 sectors with the lowest percentage of franchise business “survival” in Kazakhstan?

- Hard to tell. A franchise can die in any industry. But in general, since most franchises are sold in the restaurant business and among clothing brands, we can name them simply because of their quantity. There the turnover is high and there are more bankruptcies, and in some industries there may be only one franchise operating. There are now a lot of bankruptcies in the construction and real estate sector, as well as in the financial and banking services sector - these are factoring, auditing, and accounting companies. These industries are going through difficult times right now.

— Which franchises can be called the biggest success and biggest failure in Kazakhstan in recent times?

— In my opinion, a major success is the emergence of the H&M clothing brand franchise in Kazakhstan this year. Well, the launch of the French hypermarket chain Carrefour, which had to close its hypermarket, can be called unsuccessful.

— Do you know the details of how and by whom the negotiations on the arrival of H & M ?

— Usually, the management of such points is carried out either by the shopping centers themselves, or by the operators of clothing brands. I can’t say who exactly started H&M, but these are Kazakh entrepreneurs. They negotiated with H&M directly.

— It’s strange, both the clothing sales sector and the household goods sales sector in Kazakhstan have dropped noticeably, but Carrefour has left, and H & M is doing great. What is the reason?

— The most important thing in franchising is effective technology. For effective technology, a crisis is not terrible. These are reasonable prices, good approach to clients, and professionalism. Carrefour chose a not entirely successful location and did little marketing. We heard that the hypermarket had opened, but it didn’t attract us anymore, unlike the same Magnum, which constantly runs advertisements about discounts. And it felt like the prices at Carrefour were higher than at Magnum. Although in France, Carrefour is considered an affordable store where people go to buy goods at discounts. In Kazakhstan, little was said about its benefits.

— Is the pricing policy a failure of the Kazakh management or are European hypermarkets too expensive for Kazakhstan?

- I guess it's a management issue. They started well, but could not stand up to the competition. The fact is that in Europe Carrefour does not chase big profits, setting a margin of 5-6% and relying on high turnover. But in Kazakhstan, I think, the effect of “laziness” has worked; here they set a higher margin, reducing the turnover. There can be many reasons for this, and one of them is operational management. A lot in Kazakhstan depends on suppliers. Carrefour is used to standardizing supplies. Unfortunately, it is difficult for us to discipline suppliers. I myself have worked in this area and I know that it is very difficult to build a pricing policy with suppliers.

— Already this year, a large construction goods store under the OBI brand will open in Almaty, and construction of Leroy Merlin (one of the largest European DIY retailers) will soon begin. Will these be franchises? Usually, after these brands, IKEA comes to the country. Do you think we should count on her coming? And how good is the moment to introduce such brands to Kazakhstan?

— If these brands operate under a trade license, then it will be a franchise, that is, certain payments will be provided in any case. As for timeliness, I think everything is fine with management, marketing and, most importantly, costing. And don’t look at one unsuccessful example with Carrefour, which entered the retail market, where there had been several bankruptcies in Kazakhstan before. There’s no way they can build retail in our country; it’s unprofitable in itself in Kazakhstan.

Magnum, which operates quite successfully, does not pay anyone, and the franchisee pays royalties and other things that burden the brand. Therefore, the first thing OBI and Leroy Merlin need to do is work out a pricing strategy. Otherwise, they first buy a brand from us, purely emotionally or politically - as long as we have this brand, and no one considers how it will work later.

Leroy Merlin chain of stores

— Maybe the problem is in the speed? There are only 18 million residents in Kazakhstan, about 2 million in Almaty, where the stores will open, but they are used to buying building materials on the market...

— The mentality is still changing. I myself, as an average peasant, always bought everything for building a house at the Salamat, Sultan Korgan and other markets. But we are already tired of this, everyone wants to buy goods in a civilized manner. Even if OBI is a little more expensive than Salamat, I think people will go to OBI. Comfort, delivery, installation - this is what Kazakhstanis are waiting for now. And OBI positions itself as a store of maximum comfort.

— Do you know anything about IKEA’s plans in Kazakhstan?

— No, IKEA does not comment on its plans. It now comfortably supplies goods from one of its Ural stocks to us. Moreover, now we are in the EAEU and there are no customs problems. However, I am waiting for IKEA to officially open here. This depends on the political will of our development and business management centers, which are actively importing brands to us.

— It seems that store franchises selling popular brands of cell phones and other gadgets would sell well? Are there any such examples? For example, the Chinese Xiaomi, whose store recently opened in Dostyk Plaza in Almaty, and the previously visited Apple resellers are definitely not franchises.

— Such companies, as a rule, do not choose to work under a franchise, but open authorized dealership centers. Most often this is a network managed by the corporation itself. They don’t give it away to franchises, because there must be certified craftsmen, the company itself must guarantee quality, service, etc. So this is a sensitive topic for manufacturers, unlike, for example, Euroset, which simply sold phones.

— If we break it down by country, which franchisors offer the largest number of franchises for Kazakhstan and which ones are actually sold?

— More than half of the franchises represented in the pool are Russian, but American brands are also known on the market. At the same time, the peculiarity is that foreign franchises most often enter Kazakhstan through Moscow, because it is more convenient for them - this is how the brand is adapted, the business itself is adapted. And the mentality of a resident of Karaganda or Almaty is not much different from the mentality of a resident of Novosibirsk or Omsk. Some of the most famous American franchises already operating in Kazakhstan are Burger King, MacDonald's, Pizza Hut, Fast Track Kids, KFC, Hard Rock Cafe, Coca-Cola, Pepsico, Marriot, Hilton, Intercontinental and others.

Many of the American franchises come to us through Russia, such as Baskin Robbins. Some agreements on the import of franchises of world-famous brands are reached at the government level. When MacDonald's came to us through Moscow, we did not participate in the negotiations, although before that we had been at their factory, called them for a long time through our association and wrote letters to them.

— What franchises can we expect to come to Kazakhstan this year?

— In addition to OBI and Leroy Merlin, I think several South Korean franchises in the field of trade and technology, Japanese and Chinese franchises in the restaurant business and children's education will come. Naming brands before they arrive is a thankless task. For example, when I told the media that MacDonald's would come, I received comments that they would not come, but literally a year later the company entered the Kazakh market.

— Which franchises sold in Kazakhstan were the most expensive?

— We don’t know the entry price of the same MacDonald’s or KFC. Officially on the website, a franchise can cost $100 thousand, but the construction of a complex can take $1-2 million. The average prices of Kazakh franchises are $20-50-100 thousand. This is only a lump sum fee and a fee, the rest depends on the investment in the construction of a retail outlet .

The lump sum fee is the cost of the franchise itself, how much a person must pay to become a partner of the franchisor.

— What franchise would you personally buy now to open in Kazakhstan?

— I would like to buy Kumon - this is the world famous Japanese child development system. The emphasis in teaching is on mathematics and literature.

- Very unexpected. There are many examples of bankruptcy of children’s education businesses in Kazakhstan...

— Because it’s difficult to open a school. This market is crowded. Therefore, we need to offer something special. This teaching approach, as in Kumon - the simultaneous use of mathematics and literature, no one uses in Kazakhstan. They want to make us all mathematicians, probably so that it will be easier for them to later become entrepreneurs. But linear mathematics can develop a rather stereotyped personality, while literature develops a child’s imaginative thinking, helping him to be successful and liberated in life. This is a principle of the Aristotelian school, which was adopted, for example, in Oxford. I wrote to Kumon and found out that a franchise costs about $100 thousand, but the company is not yet ready to come to us.

— What systemic problems prevent franchisees from developing in Kazakhstan and Central Asia in general in 2020? There is a solution?

— First of all, this is a lack of financial resources. Banks in Kazakhstan lend poorly to franchising. We have created a franchising lending program with the Damu Fund.

Second, there is still very little knowledge of the basics of franchising. Few local businessmen think strategically; emotional thinking predominates when a brand is bought, as in a store - if they like it. How will the brand benefit society? How much will you earn? How comfortable will you be working with the brand? Don't ask yourself these questions. An entrepreneurial philosophy has not yet been formed in our country.

— Even among the Kazakh oligarchs?

- What are you talking about? (smiles). For example, we have not yet developed such business philosophers as Bill Gates, Steve Jobs, Mark Zuckerberg... Only at this level can you be a business guru. Who is a franchisor? This is, in fact, a guru for his entire network, for his flock of thousands. We do not yet have entrepreneurs who could lead others.

There are good entrepreneurs. But the lag compared to foreign franchisors is very large. Just remember the Russian Oleg Tinkov - this is a whole business philosophy, he is a star. And people buy a franchise because of its star power. Why do we buy MacDonald's? Because Ray Kroc made it part of a cult, and the bearded Colonel Sanders made KFC a legend. Creating a franchise means creating a whole philosophy; unfortunately, we still lack this.

— What Kazakh franchises have appeared and are preparing to enter the market?

— The most successfully selling Kazakh franchises now are the medical chain and the street fast food chain Rad Dragon, which have already entered the Russian market. Uzbek and Kyrgyz companies are interested in our franchises, but I have not heard about contracts.

Network of medical

Every year certain franchises appear that claim to be such. But we’ll see how successful they will be and how they will sell.

For example, this year the franchises of the social center for rehabilitation of disabled people “Kenes” and the hostel business Sky Hostel are ready to launch. In the near future, the famous restaurants Rumi and Madeni, I think, will become franchises. Possibly Becker. We are currently negotiating with Kazpost. The state company wants to switch to a franchise. This is great!

- Kazpost? How will it look like?

— The company has numerous post offices. Instead of budgeting for all this, it is better to give each post office to a franchise, the holder of which will effectively manage it and make it commercially successful. can be brought into the private sector. Sales of newspapers, stamps, courier and financial services - there is scope for business there. It works in India, in England, in Germany. In villages, the post office can generally become a center of culture and business with this approach and will replace banks.

One of the Kazpost branches

— Did Kazpost itself come up with such an initiative?

- Yes.

— Are there any government programs expected in Kazakhstan to support franchisees? For example, through the Damu Entrepreneurship Development Fund?

— Not yet. There is a franchise lending program at Damu, but its conditions are quite ordinary - 14% per annum. There is no grant system, no subsidies from the state (only grants from akimats, but not specifically for franchises, but in general for SMEs). The program was launched last year, and ten projects were financed. In addition, every month we hold Franch Day, where we offer free educational programs for franchisees, trainers and useful speakers speak there. This also works out well. This year we are going to hold the KAZ Franch exhibition and forum. The crisis has stalled many of our initiatives.

Elena Britskaya.