The Basics
Franchising has taken the world by storm and franchising in Cyprus is no exception. During the early stage of its development, franchising was the domain of very few companies, but this is no longer the case. Companies of all sizes, and active in every industry sector imaginable, have now recognized that franchising offers outstanding opportunities for sustainable growth.
It is now a recognized and reputable way of doing business in Cyprus. Franchise systems are resent inmost industry sectors, and the economic impact of franchising is substantial and growing. It is hard to think of take-away food without thinking of a product produced using franchised format, and impossible to imagine a shopping center without franchised stores.
Franchising in Cyprus may have initially provided a means for Cypriots to benefit from foreign products and systems we are optimistic that franchising may now become the chosen format for many Cypriot entrepreneurs to expand and develop their business. The great majority of franchise systems operating in Cyprus are international brands but home grown franchises are increasing in numbers.
Franchising as we know it today originated with the Singer Sewing Center developed by Isaac Singer in 1858. After he had invented the sewing machine, Singer encountered two problems when he took it to the market. The first was that customers had to be taught how to use the new invention before they would buy it. The second was that Singer did not have enough capital to manufacture his machine in large numbers. He then came up with the idea of selling the rights to local business people to sell the sewing machine and train those who bought it. Once he embarked on this route, his enterprise expanded rapidly. Fees earned from the license rights helped to fund his manufacturing costs and, because each franchise was self-financed, Singer was able to tap into the entrepreneurial attributes of his franchisees.
This franchise model was reproduced in several industries. Coca-Cola was able to expand throughout the United States by shifting the burden of manufacturing, storing and distributing its product to local business people who acquired bottling rights. Car manufacturers who had been spending enormous amounts of capital tooling their assembly lines found they could develop retail distribution networks using capital provided by independent dealers. Oil companies such as Standard Oil and Texaco granted franchises to convenience stores and repair mechanics across the US. In the 1950′s Ray Kroc saw the potential in franchising a successful hamburger stand. He has been compared to Henry Ford for bringing the assembly line to the fast food industry. Be they coffee and sandwich bars, fried chicken or pizza outlets, many food outlets are now franchised worldwide.
