This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/6/2019

Franchising

Overview
Franchising in Hungary started in the 1990′s, after the collapse of the old political regime in 1989, by the opening of important hotel chains and by the entry of the most iconic fast food multinational, McDonald’s. Since that time, franchising has been developing swiftly throughout the country.  There are Hungarian franchisors known in the region such as beauty salons, fashion outlets, real estate agencies, and more.
The Hungarian franchise community consists of approximately 350 companies, half of which are foreign-owned. The number of franchisees is approximately 20,000 and more than 100,000 employees work in the franchise sector including suppliers. With these numbers Hungary is ahead of its neighboring countries. These networks, some of which have only a few members and some which link thousands of businesses, have combined revenues running into the billions of dollars. 26% of the foreign-owned franchise networks in Hungary are owned by US companies. The U.S. hamburger chain McDonald’s can be considered the leader of fast-food franchisors in Hungary and Central Europe, as it has pursued a very successful transnational strategy, and has almost 100 stores in the country. Others that have found success in the Hungarian market include Kentucky Fried Chicken, Burger King, Subway, Starbucks (AmRest), Curves, Hertz, Avis and Budget.
Local franchises offering a wide range of services are also surging. Hair salons (BioHair), pharmacies (BENU, Alma Pharmacies), bakeries (Fornetti, P&P Pékáru, Pékpont), wine shops (Borháló), real estate chains (Duna House, Otthon Centrum) and food supplements are among the most successful ones.
There have also been some franchising exits from the Hungarian market, due to different tastes and practices. Dunkin’ Donuts, Dairy Queen, Wendy’s and New York Bagel are examples of U.S. companies with a short-lived presence in Hungary.

Sub-Sector Best Prospects

According to industry experts, adopting local characteristics, selling sub-franchises, providing financing, setting lower master franchise fees and/or using foreign master franchisees are keys to success in the Hungarian market. Franchising is still relatively underdeveloped in certain segments such as home healthcare, elderly care and automotive services, compared to American or Western European standards. As a proportion of the retail sector, Hungary lags considerably behind the United States, Japan, and the rest of the EU. Relatively inefficient delivery of goods and services and a developing middle class suggest that there are significant, growing opportunities in franchising.
Opportunities
  • Food (family casual, fast food, and ethnic food)
  • Home Healthcare
  • Automotive Services (quick oil change or auto tuning)
  • Hair and nail services
  • Janitorial services
  • Mobile pet grooming
  • Dry cleaning and laundry
  • Education such as coding and language
  • Elderly care
There is a large number of franchise companies operating in Hungary, primarily because of the country’s favored location in the heart of Europe, its relatively cheap workforce and the growing demand for quality products and services. Local Hungarian businesses are not known for good customer service, so a franchise system with good customer service in almost any sector can find opportunities in the Hungarian market.  Potential franchisors should observe local market characteristics, conditions and taste (in case of food franchise).
Hungarian consumers tend to prefer innovative products that fit local traditions and taste too. IT-related franchises are becoming more and more popular, and so are clothing brands, but there are also blank spots on the map of fast food too (there are no doughnut or pie chains operating in the Hungarian market). It is also a huge plus if the customer is familiar with the name of the brand.
Web Resources

 

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