Doing Business in Hungary 2010 - International Franchise Association

Franchising (FRA)
Overview Return to top
The Hungarian Franchise Association estimates that there are about 400 franchise systems in
Hungary, representing approximately 10 percent of the retail sector. About half of the franchises
are foreign owned; about 25 percent of foreign-owned franchises are American, while EU
countries, especially Germany, hold the remainder. According to the Franchise Association, the
share of retailing franchises is increasing, up 10 percent in recent years. Currently, fast-food
establishments are the leading sector in Hungary. McDonald's, Burger King, Pizza Hut,
Kentucky Fried Chicken and Subway are well-represented with approximately 150 restaurants,
mainly in Budapest. Other American franchises include Kott Koating’s porcelain finishing,
Eastman Kodak, Curves, car rental companies such as Hertz, Avis and Budget, CrestCom
(management training), FasTracKids (children education) and Dale Carnegie. Best Western,
Holiday Inn and Marriott are also present in the market. The Re/MAX real estate franchise
began building its Hungarian network in 2006 and is expanding rapidly. It had 45 affiliate
members by the end of December 2009. The most successful franchisor in Hungary is
McDonald’s, with 100 corporately-owned and franchised units countrywide, including 52 in
Budapest.
Major third country franchises include those from Germany (Alois Dallmayr vending machines,
OBI do-it-yourself chain, High-Care cosmetics), Belgium (Photo Hall, photo development and
electronic equipment), and France (hotels Mercure and Ibis). Costa Coffee (UK) and
Coffeeshop (Austria) are in the phase of expansion in Hungary.
Best Prospects/Services Return to top
Franchising will likely play a key role in modernizing the service sector. It is a relatively new
concept in Hungary that could bring needed improvements in different services, i.e. property
management, home maintenance, parking facilities, laundry services, passenger and cargo
transportation, and travel and tourism. Industry experts suggest that the best franchising models
for the Hungarian market are home-based, lower capital franchises that focus on well educated,
highly motivated Hungarians who have a natural inclination toward entrepreneurship but lack
financing. They might be well adapted to such businesses as equipment and home
maintenance, and laundry and cleaning services, among others.
Opportunities Return to top
The greatest opportunities are available in the service sector because the Hungarian
government encourages small and medium size enterprises (SME) to play a major role in its
development. As part of Hungary’s National Development Plan, SME development and growth
is a priority. Within the SME development program, some subsidies are available indirectly from
EU funds to both franchisors and franchise licensees. To apply for funding, the franchise partner
and master licensee can be a local entrepreneur, an American-Hungarian joint venture, or
foreign owned company, and must establish a company and register with the Court of
Registration.
There are various franchise-related exhibitions to promote U.S. concepts, including the annual
International Franchise Exhibition and BuyBrand Show, taking place in November 2010.
Resources Return to top
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