Bulgaria: Franchise MarketBulgaria: Renewable Energy Market Brief
Page 1 of 4
June 2010
Executive Summary
Country Statistics
Population: $7,148,785 (July 2010 est.)
Urbanization: 71% (2008)
GDP (purchasing power parity): $90.51 Billion (2009 est.)
GDP (official exchange rate): 45.3 Billion (2009 est.)
Per Capita GDP (PPP): $12,600 (2009 est.)
Currency: 1.956 BGN=1 EUR (Permanent Peg)
1.603 BGN=1 USD (June 2010)
Economic Summary
After several years of high growth averaging 6%, the Bulgarian economy contracted
significantly in 2009 as it was hit by the global financial crisis. The real growth rate shrank to
negative 4.9% and unemployment increased to 9.1%. The economy is expected to begin to
recover in late 2010 or early 2011.
The recent, pre-crash high growth rates were aided by political stability in Bulgaria and the
countries EU accession in 2007, which made significant amounts of money for development
available to Bulgaria and facilitated commerce with the European Union and the United States.
Bulgaria is generally very pro-American, and a number of US companies have been extremely
successful operating and exporting to Bulgaria. The two largest foreign investors in Bulgaria are
both American companies. Bulgaria has a number of desirable features for American companies,
including the lowest tax rates in the region (10% for both personal and corporate), relatively low
wages, and EU membership. Its geographic location in the Balkans between Turkey and Europe
gives it significant commercial importance and makes it a potential launching point for sales in
Europe, Russia, and the Middle East.
But while Bulgaria is attractive for investors in many ways, it also presents several significant
challenges. Despite significant growth, Bulgaria is one of the European Union’s poorer countries
and consequently disposable consumer income is limited. Other major hurdles American
investors are likely to face include a weak judicial system, an inefficient bureaucracy, organized
crime influence, and violations of intellectual property rights.
Let us help you export.
The U.S. Commercial Service — Your global business partner.
export.gov
800-USA-TRADE
Bulgaria: Renewable Energy Market Brief
Page 2 of 4
Franchising In Bulgaria
Information about franchising in Bulgaria is extremely limited, but the country appears to have
strong potential for U.S. companies. Recent years (excluding the financial crisis) have seen
significant increases in disposable income and the growth of a middle class lifestyle that is
receptive to western brands. Because of their western image, brands that compete in the United
States based on price can sometimes charge higher prices in Bulgaria. Although in recent years
several international companies have opened branches, the Bulgarian market for international
franchises continues to be largely untapped. As more and more Bulgarians engage in
international travel, recognition of American brands continues to grow. Because of their greater
name recognition, large international brands are especially attractive to investors.
The first international franchisers appeared in Bulgaria during the Soviet era, and included
Sherton and Coca-Cola. Despite this 30-year franchise history, most international franchises
have opened relatively recently, and between 2002 and 2007 their number more than doubled.
Since then, the market for franchises has grown even faster, and between 2007 and 2009 the total
number of franchise units (of both international and domestic companies) increased from 776 to
2156. While the financial crisis certainly hurt the industry, and forced approximately 8% of
franchisers out of business in the first half of 2009, predictions for future growth suggest that
even in 2010 the number of franchise units will increase. The recession hit real estate franchisers
hardest, thanks to their reliance on cheap credit, and had the least effect on fast food franchises.
Franchising Opportunities
Franchising by U.S. companies in Bulgaria generally operates through a Bulgarian intermediary
who has the necessary knowledge of local laws and business practices that American
corporations lack. This “master franchisee” pays the American company for the right to a
specific area, and then sells and oversees franchises within that area. Due to the small size of the
Bulgarian market, licenses are commonly granted for an area encompassing several countries or
the whole of South Eastern Europe.
While the time required for a return on investment in franchising varies considerably, between
2007 and 2009 investors reported an average period of 15 months, with 73% claiming a return
within one year.
Franchisers report having some difficulty finding high quality candidates, and reported that only
28% of their candidates understood the principles of the business model. Similarly, as of 2009
only 19% of Bulgarians running a business were familiar with the concept of a franchise.
On average it costs 15,000 EUR to start a franchise in Bulgaria, including a 2970 EUR average
franchise fee. Royalties are on average 4.9% of turnover, with contract duration of 5 years.
In addition to the favorable tax rates described in the Economic Summary section, Bulgaria’s
laws are quite favorable to franchisers. No laws specifically regulate franchises, and there are no
restrictions on repatriation of earnings, capital, royalties, or interest.
Let us help you export.
The U.S. Commercial Service — Your global business partner.
export.gov
800-USA-TRADE
Bulgaria: Renewable Energy Market Brief
Page 3 of 4
Major Franchises in Bulgaria
Below are listed a small sample of some of the largest franchises in Bulgaria. Many companies
have only one franchisee in the country, usually located in Sofia. There are also many foreign
chains in Bulgaria that do not operate using the franchise method. Additionally a large number of
hotels and gas stations have franchises throughout Bulgaria, and which are not listed below. A
few other companies, such as Domino’s Pizza, were planning to enter the market but backed out
in the wake of the economic crisis.
The largest foreign franchiser in Bulgaria is McDonalds (US) which currently has 28 restaurants
in Bulgaria and employees over a thousand Bulgarians.
-American: McDonalds, KFC, Dunkin Donuts, Subway, Pizza Hut, Berlitz, ERA, Century 21,
Remax, Wilson Learning, Hertz, Starbucks, Curves, GNC, Franklin Covey, Mathnasium,
Reader’s Digest, National Geographic
-Bulgarian: Happy Bar & Grill, Lakis, Chicho Hranko, Family Supermarkets, Foros, Address
Real Estate
-Other: Fornetti, Mr. Bricolage, Alfa Realty
Useful Information
Bulgarian Franchise Association: http://www.bulfra.hit.bg/index.html
Bulgaria Franchise Network: http://www.bulgariafranchise.com/
Franchising.bg: http://www.franchising.bg/index_en.html - report with average franchise
statistics and the results of surveys on problems and opportunities faced by Bulgarian
franchisers.
More Information
Emily Taneva
U.S. Commercial Service
16, Kozyak Str.
1407 Sofia, Bulgaria
Tel: 359-2-939-5770
Email: emily.taneva@mail.doc.gov
http://www.buyusa.gov/bulgaria
The U.S. Commercial Service — Your Global Business Partner
With its network of offices across the United States and in more than 80 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://www.export.gov/.
Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every
effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as
to the accuracy or completeness of information in this or any other United States government document. Readers are
Let us help you export.
The U.S. Commercial Service — Your global business partner.
export.gov
800-USA-TRADE
Bulgaria: Renewable Energy Market Brief
Page 4 of 4
advised to independently verify any information prior to reliance thereon. The information provided in this report does not
constitute legal advice.
International copyright, U.S. Department of Commerce, 2007. All rights reserved outside of the United States.
Let us help you export.
The U.S. Commercial Service — Your global business partner.
export.gov
800-USA-TRADE