Dusan Sikimic, member of Executive Board of Serbian Franchise Association - Earning money from existing business

(Dusan Sikimic)

Franchising is another field of the economy in which Serbia lags behind the surrounding countries. In order for such situation to be changed, the Serbian Franchise Association (SFA - SURF in Serbian: Srpsko udruzenje za razvoj fransizinga) has been formed. Dusan Sikimic, a member of the SFA Executive Board, speaks in an interview for eKapija about how and why to take a franchise and the results of the first franchise expo in Serbia.

eKapija: People in Serbia know little about terms and standards of franchising. Do you notice any progress in the economic awareness development since the SFA was formed?

- It seems to me that the awareness is increased. In association with the Serbian Chamber of Commerce, we have organized about 60 seminars, which were attended by over 1,500 people. Maybe that number is not significant when compared to the overall population in Serbia, but the significance of our activities is greater if these people have managed to transfer the acquired knowledge.

The citizens' awareness of franchising is on a higher level, the proof of which is organization of the First International Franchise Expo in Belgrade. The fact that the Prime Minister and several ministers appeared at the opening ceremony also speaks about progress in this field. The state pays more attention to us and finally treats franchising as something that is significant for the economy.

eKapija: What are the most important activities of the Serbian Franchise Association?

- The Association was formed in April 2009, at the initiative of franchisers and franchisees and the Serbian Chamber of Commerce. In that way, an association was created to act independently of all political decisions made by any institution and to actually represent the interests of the industry. Our main activity is standardization and control of franchise concepts and presentation of key franchise terms to the market.

Of course that the European Franchise Federation already has certain standards that we are trying to rely on. Besides, we bring the establishment of standards in connection with the Code of Ethics for Franchising, which defines them very precisely.

eKapija: You are guided by the EU principles?

- We practically only follow the already developed franchise systems. Maybe that won't affect amendments to the legislation to a greater extent, but we are taking steps toward the market regulation and possible adoption of the Law on franchise operations. Concerning the fact that a large number of more developed European countries have not adopted such law yet, we are not lagging behind them that much.

eKapija: And what concrete steps is SFA taking to reach the level of these developed franchise systems?

- Primarily, our mission is self-regulation. We want certain standards to be met and that there are no frauds in the way that people are buying franchise concepts without knowing what they are purchasing. We don't want businessmen getting something that is not a franchise although it is represented as such.

Our other aim is to help Serbian entrepreneurs to make such formats of their businesses, if they are successful, original and adequate, so they can sell them as franchises, not only in our region, but also across Europe. In that way, we will stimulate export.

eKapija: Are there enough companies that may become franchisers?

- I first thought there weren't enough such companies. However, when we organized all those seminars in numerous cities, we met people and companies with really good ideas and well-developed concepts that work successfully. However, what they need now is only help so they can learn how to transform that into the franchise ownership, to sign collaboration agreements, create graphical standards, and then they will have a great potential to sell their franchise anywhere.

eKapija: What is more important in the process of transformation of an existing business into a franchise: education or additional investment?

- I think that the key lies in education. There are several options: one of them is to have a franchise concept for your business made by someone, which may cost you a lot. That is, indeed, an expensive service since the work is voluminous - you must study the process system, make an operative manual, graphical standards...

On the other hand, you can invest in your own education and slowly do everything by yourself. Additionally, you can attend a seminar to learn what you don't know already. You can pay someone 30,000 euros to do everything for you or pay, let's say, 1,000 euros to participate in an educational seminar. When you are transforming your own business into a franchise business, that does not require some big investments. The moment you have operative and graphical rules, you also have a ready-made product because you actually sell your "know how" packed in these rules.

eKapija: What is the basic reason for someone to buy a franchise?

- The main reason why someone should buy a franchise instead of starting an independent business is to maximally reduce the risk and increase the chances for success. The fact is that 80% of newly opened companies (non-franchises) are closed already within the first year of operations. The primary reason for such high rate of failure lies in the fact that the owners must first learn how to run certain type of business and gain the experience by trying and making mistakes. When you buy a franchise, you directly gain that experience. Also, the financial operations of a franchise can be thoroughly researched before some big expenses are incurred.

eKapija: Who are the members of the Association and who can become its part?

There were 17 companies at the constituent assembly, the full-right members of which are now E – Ducan, Delta sport, Diners Club International Beograd, Delta Maxi, Holiday Inn. We expect that number to grow by at least another 20 companies next year. Our next step is admission to the European Franchise Federation prior to spring 2011. When we succeed, other companies from the constituent assembly will join the SFA.

Members are franchisers and franchisees, but intend to make it possible for financial institutions, primarily banks, to become members. In that way, they could help those who would like to start or develop business by granting their start-up loans. Also, members can also be consulting companies and lawyers who deal with legal and, for example, tax issues.

J.Đ.