Russia's largest retailer introduces "reversed" franchising

X5 Retail Group, Russia's largest retail holding, chooses the system of “reversed franchise” to make expansion of their retail network easier. This new simplified system of franchising has a lower threshold for franchisees (lower costs, no monthly licence fee, no own purchase investments), but lets the franchisee keep a commission of 13 to 18% of his business's turnover. This reversed franchise system had been announced in April last year and has been tested since November. 

Like a store manager

From a Western point of view, such a “reversed” franchisee is more like a store manager than like a real franchisee, but in the Russian market this could be a huge step to fully introducing the franchise system. It is very possible that entrepreneurs want more after experiencing this system's success and turn their business into a “hard franchise”. 

Merger in 2006

The rapidly growing X5 group was formed in 2006 by a merger of soft discounter Pyaterochka and supermarket chain Perekrestok and was expanded in 2008 with hypermarkets Karusel and again in 2010 with Kopeyka.  20% of the chain's 3400 stores are managed by (hard) franchisers, The group wants to use the new system mainly to expand in the region around Moscow and in the city of Nizhny Novgorod, 400km to the east of the capital. 

Paul Martins joins

These expansion ambitions also reflect in changes in X5's management team, as the group announced that Paul Martins, ex-Casino and now Tesco, will join the board of management next Saturday as commercial director. 

X5 Retail Group, Russia's largest retail holding, chooses the system of “reversed franchise” to make expansion of their retail network easier. This new simplified system of franchising has a lower threshold for franchisees (lower costs, no monthly licence fee, no own purchase investments), but lets the franchisee keep a commission of 13 to 18% of his business's turnover. This reversed franchise system had been announced in April last year and has been tested since November. 

Like a store manager

From a Western point of view, such a “reversed” franchisee is more like a store manager than like a real franchisee, but in the Russian market this could be a huge step to fully introducing the franchise system. It is very possible that entrepreneurs want more after experiencing this system's success and turn their business into a “hard franchise”. 

Merger in 2006

The rapidly growing X5 group was formed in 2006 by a merger of soft discounter Pyaterochka and supermarket chain Perekrestok and was expanded in 2008 with hypermarkets Karusel and again in 2010 with Kopeyka.  20% of the chain's 3400 stores are managed by (hard) franchisers, The group wants to use the new system mainly to expand in the region around Moscow and in the city of Nizhny Novgorod, 400km to the east of the capital. 

Paul Martins joins

These expansion ambitions also reflect in changes in X5's management team, as the group announced that Paul Martins, ex-Casino and now Tesco, will join the board of management next Saturday as commercial director. 

Questions or comments? Please feel free to contact the editors


Louboutin in trouble in red shoe sole court case

22/06/2017

The attorney general at the European Union’s Court of Justice has written an advice saying that the Louboutin brand’s red shoe sole cannot be a registered trademark according to him.

30 store owners banned from Amazon during Louis Vuitton counterfeit court case

22/06/2017

Thirty traders are no longer allowed to operate on Amazon until their court case with fashion brand Louis Vuitton is still ongoing. The brand filed a lawsuit because those thirty traders sold counterfeit items.

Yoox Net-a-Porter now also no longer sells angora

22/06/2017

Following its fur ban, online retailer Yoox Net-a-Porter has also decided to no longer sell items that contains angora wool, according to animal rights organization PETA.

Impending Amazon - Nike deal is bad news for retailers

22/06/2017

The possible AmazonNike collaboration, which would lead to Nike selling its product range on Amazon itself, has caused turmoil among other retailers.

C&A elects outsider as its new CEO

21/06/2017

Alain Caparros will become clothing chain C&A Europe’s new CEO, a move contrary to the company’s traditions. Normally, a company man is appointed, but Caparros has not worked for C&A before. He will face the arduous task of trying to improve the fashion company’s profitability.

Veronique Branquinho halts own label

20/06/2017

Belgian designer Veronique Branquinho announced she will (temporarily) suspend her own fashion label, not the first time she has done so.

Back to top