444 new retail franchises were opened in Israel in 2004. Israel now has 4,760 franchises of retail chains, amounting to an average of 23.8 stores per chain, according to a survey by the Israel Franchise Promotion Center among 200 retail chains operating franchises in Israel.
The survey found that 139 retail chains operating through franchises (69.8% of the sector) expanded during 2004. Among the fastest growing chains in 2004 were Four Seasons Fashion, Jack Cuba (lingerie chain), Women Only (plus-size lingerie chain), Cafe Hillel, and Re/MAX Israel.
In addition to the increase in franchises, 2004 was also characterized by strategic decisions by about ten franchise-operating retail chains to open stores overseas, mostly in Europe, continuing a trend begun several years ago. Retail chains now expanding overseas include Matim Li, Isha Isha, and Four Seasons Fashion.
The Israel Franchise Promotion Center is based near the Small Business Development Center (MATI) in Jerusalem and Israel Small and Medium Enterprises Authority (ISMEA). It predicts that 2005 will be a record year for the opening of new retail franchises. Figures from retail chains indicate that 95.3% of them plan to expand and open 1,228 new stores during the year, an average of 6.4 stores per retail chain. If the retail chains' plans are carried out, the number of franchises will increase by 25.8%.
Israel Franchise Promotion Center director Michael Benin believes that actual growth will be about 20% in 2005. The Israel Franchise Promotion Center and large franchise-operating retail chains are concerned about the sector's expansion, because new franchise-operating retail chains lacking economic and operational wherewithal are liable to cause the sector to fail. An Israel Franchise Advisory Council subcommittee discussed the matter last week, and concluded that it was necessary to act quickly to establish criteria for measuring the seriousness and trustworthiness of the franchise-operating retail chains.
Israel Franchise Promotion Center chairman Uri Scharf said there were plans to summon 20 owners and managers of large franchise-operating retail chains for a joint meeting to establish criteria, in order to protect entrepreneurs and franchisees from complications arising from contracts with weak retail chains.
Published by Globes [online], Israel business news - www.globes.co.il - on January 10, 2005