Discusses opportunities for U.S. franchisers and legal requirements in the market.
Last Published: 8/15/2019

U.S. Franchising in Europe
The U.S. is a leader in the franchising market, with U.S. companies ranking in first place among foreign firms. Food, beverage, and restaurants formulas and large hotel chains appeal to local businesses which are highly receptive to U.S. franchise concepts and enthusiastic to be identified with well-known American brands. The main factors determining successful market penetration are brand name recognition, strong promotion, competitive prices, product quality and, most recently, a multi-channels strategy. Other important considerations are promotion in mass market events, newspapers, radio and TV advertising.

The Legal Frameworks and Regulations
U.S. businesses looking to franchise will notice that the international market of the European Union (EU) is characterized by a few key elements, of which openness towards franchising is significantly important and there are several laws governing the franchises within the EU. These laws and regulations are fairly broad and generally do not constrain the competitive position of U.S. businesses. Franchising companies have greatly benefited from these mitigated-risk trade agreements, expanding into foreign markets. Nonetheless, the potential franchiser should take care to look not only at the EU regulations, but also at the local laws concerning franchising. More information on specific legislations can be found on the website of the European Franchise Federation.

More specifically, in 2004 Italy enacted a general law on franchising and an implementing regulation in 2005. The relevant laws are: Act No. 129 of 6 May 2004 (the Franchising Act), Ministerial Decree No. 204 of 2 September 2005 (the Franchising Regulation), Act no. 287 of 10 October 1990 (the Italian Antitrust Law), Commission Regulation No. 330/2010 (EU Block Exemption Regulation on vertical restraints), and Act. No. 192 of 18 June 1998 (the Anti-Economic Abuse Law). As a Code of Ethics and/or a standards-based accrediting system the EFF Code of Ethics is followed.

Franchising in Italy
Franchising is widespread throughout Italy and is dramatically growing. With a turnover of approximately $28.5 billion in 2018 (+2% compared to 2017), Italy is the fourth largest market for franchises in Europe, after France, Germany, and Spain. In 2018, the number of Italian franchises reached more than 53,800. In 2018, the Italian market experienced a growth rate of 3.4% in terms of active franchising networks. Of the 961 network and 3 retail stores, 861 were Italian. Also, the number of foreign master franchisors in Italy went from 61 in 2016 to 72 in 2018 (+7.5%). In fact, employment in this sector now totals 206,791 (+3.8% since 2016).

The highest concentration of franchise networks can be found in Northern Italy (Lombardy and Veneto), primarily in city centers, commercial districts and shopping malls. With Lombardy leading, making up 16.5% of the total franchising turnover outcomes, Lazio and Veneto follow closely behind. Traditionally, new franchise concepts have launched in large cities, such as Rome and Milan. Nevertheless, the creation of franchising business opportunities has also been successful in smaller cities. This trend is mainly due to the presence of a relatively large middle class with strong demand for new and sophisticated goods and services. During the past four years, in fact, more and more franchises have opened in airports and train stations in addition to their traditional presence in malls, department stores and main streets.

As for industrial franchising, which involves the transfer of industrial production to the franchisee, it is more complex than distribution or service agreements. This is because they require the use and licensing of trademarks, patents, technical and commercial know-how as well as significant capital outlay. For these reasons, industrial franchising arrangements are less popular in Italy than the distribution (consumer products, clothing and food) and services (real estate, hotel chains, personal and senior care) franchises. Most franchise activities come from the service segment (25%), the clothing industry (19%) and the food segment (18%). In particular, the food segment registered revenue of more than $9 billion, representing 32.2% of the annual franchising turnover in 2016. Moreover, due to its adaptability, flexibility and low initial financial investment, the service sub-sector has grown quickly over the last few years. In 2018, the restaurant franchising led the sector with 20% growth.

Ultimately, U.S. firms interested in entering the Italian market should be aware of the challenges for new entrants. With its unique cultural and entrepreneurial spirit, the Italian market presents opportunities for franchising ventures as well as some challenges. Despite Italy’s structure of family locally-owned businesses and small-scale operations, there is an opportunity for franchising, in a way that preserves quality. Success depends on finding the right partner. Potential franchisors must have the ability to adapt their franchise concept to that of the Italian market and have a strong organizational structure. 

We recommend that American companies do the following: conduct extensive market research; commit to building a sound, long-term business plan with enough flexibility to adjust their business model to accommodate differences in the Italian market; have a legally-binding franchise agreement, detailed operations manual, good training program, and relevant support system in place; have a well-defined master licensee candidate profile to aid the search process; and work out a development schedule realistic to the master licensee. Furthermore, consider that Italian banks often evaluate first the franchisor before the potential franchisee.

Most important communication platforms:

  • AZFranchising: Magazine and communication agency that promotes growth of enterprises through development of franchising networks, providing industrial and operative know-how. www.azfranchising.com.
  • Beesness: Quarterly magazine focused on franchising, retail and entrepreneurship for young entrepreneurs, professionals and businessmen. www.beesness.it.
  • BeTheBoss.it: Franchising search engine to help find the best franchising opportunities in Italy by industry, investment, territory or company name. www.betheboss.it.
  • Millionaire: Magazine and web platform dedicated to new business trends and franchising. www.millionaire.it and www.franchisingicity.it
Most important trade shows and events:
  • Salone Franchising Milano – Oct. 24-25-26, 2019: a professional distribution trade fair to support the encounter among franchisors, franchisee and potential franchisees and to develop supply chain innovation, focusing on retail, franchising and e-commerce. www.salonefranchisingmilano.com/en.
  • Bologna Licensing Trade Fair - April 1-3, 2019: trade fair dedicated to the business of subsidiary rights for companies and professionals, with the participation of the main Italian and international licensors and licensing agencies. http://www.bolognalicensing.com/home/923.html
  • Franchising Nord - September 25-26, 2019, Piacenza: B2B matchmaking event between franchisors and franchisees in a variety of industry sectors. www.fieradelfranchising.it.
Most important associations, organizations:

For more information on franchising opportunities in Italy please contact Commercial Specialist Elisa Martucci: Elisa.Martucci@trade.gov.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.