The new operating environment for restaurant franchising in Europe

Franchising remains a core business model for expansion in the European foodservice industry. However, recent developments in costs, demand, and operational challenges are requiring brand owners to review and adjust their strategies. Reduced margins and moderate demand growth are putting prolonged pressure on financial returns. Higher financing costs are a hurdle for expansion and acquisitions, and brand owners need to increase involvement with franchisees to protect their brands. This more complex situation means that brand owners need to be more selective when choosing potential strategic partners. Franchisees also face higher demands in terms of investment and operational capability.