As Poland Embraces The Franchise...A Master Baker Cooks Up His OwnPeggy Simpson
Surly waiters. Empty shelves. Clunky, low-tech equipment. The service sector was hardly Poland's strong point under communism. But check out ComputerLand's eighth-floor suite above Solidarnosc Street, with a brightly lit showroom of IBM, Compaq, and Hewlett-Packard systems. In the corner office, President Tomasz Sielicki talks about how ComputerLand helped jump-start the computer revolution in Poland. With backing from the U.S. retail company, he and his partners opened six stores, starting in 1991. They have now been granted the ComputerLand franchise for Poland and plan to go public later this year.
As new economic habits take hold across this nation in transition, Poles are embracing a form of small-scale enterprise famous for its customer-friendly hustle: the franchise. Besides ComputerLand, Eastman Kodak and Rank Xerox operate high-speed copying centers, Levi Strauss hawks jeans, and McDonald's is doing scrumptious business with 27 restaurants, one-third of them operated by franchisees.
"HUGE ADVANTAGE." What franchising offers to Poland goes far beyond the dream of running one's own business. The franchise system is playing an important role in the very creation of capitalism. Besides a shortcut to ownership, it provides access to products that have track records around the world. Even more important, it can provide crucial infrastructure such as physical equipment, standardized supplies, and store design--as well as intangible factors such as management skills.
Western training courses teach the franchisor's methods of accounting, advertising, inventories, and marketing. Franchisees also get assistance in financing supplies, negotiating with bankers, and training staff. A franchise confers "a huge advantage," says Jolanta Kramarz, who chairs the two-year-old, 12-member Polish Franchising Assn. and holds the franchise rights for Alpha Graphics, a U.S.-based copying and design business that just opened its second store in Poland.
While U.S. franchisors were first on the ground here, those from Germany, Spain, Italy, and Britain are arriving in force, says Kramarz. German fast-food chain Kocgossel, for example, has franchisees in Katowice and Wroclaw so far. There are opportunities in "hotel chains, car rentals, car servicing and repairs, and almost anything in the retail system, from food to pharmaceuticals," Kramarz adds.
Of course, life is not all ham and sausage for Polish franchisees. They face nightmarish problems in getting clear title to land, and it's tough to find reasonably priced rental space in high-traffic sites. Bankers rarely give investment loans, so megafranchisors sometimes finance startup costs. McDonald's Corp. covers some of the $450,000 minimum startup cost by granting loans to be repaid from profits.
Andrzej Blikle became a science professor because he didn't want to join the family bakery in Warsaw. But to keep his father happy, he also became a master pastry chef. Then, when warm weather forced him to cancel a 1991 ski vacation, Andrzej decided to spend the time examining what direction the Blikle business should take next.
He's still doing that, planning business development for a cousin who now runs the bakery. At first, he put in 16-hour days, seven days a week, capturing $300,000 in venture capital from foreign investors and opening four new pastry shops as well as a glitzy cafe. Finally, he decided to franchise. A couple from Lodz "asked my permission to buy retail for resale. They were adding 50% to the cost and selling out their deliveries within two or three hours." So Blikle devoured a book on franchising brought from London by a banker friend and took the plunge, licensing six shops in such cities as Lodz, Opole, and Wroclaw. Since 1991, employment has jumped from 40 to 130, and sales have increased "by a factor of five or six."
Blikle, 56, says that so far his major mistakes have come when he ignored his book learning. One key lesson: Make sure your franchisees think big enough. Some, he says, were so frugal that their supply of Blikle paczkis (small doughnuts) ran out at noon. Not exactly the way to win customers' hearts in the new Poland.