Discovering Global Markets—such as Germany
If you can make it in Germany, you can make it anywhere in Europe. Which doesn’t mean Germany is an easy market for franchises: It’s not. In fact it’s tough, which is why Volker Wirsdorf, the senior Commercial Service specialist in Frankfurt, used Germany as the touchstone for European expansion. In other words—Germany shouldn’t necessarily be the first country in Europe a franchisor tackles.
The two-day seminar held in June, “Discover Global Markets: Europe,” wasn’t designed just for franchises. Manufacturers and distributors of tangible goods and services were the main targets, but the wealth of information applied to any U.S. company looking to partner overseas.
Country profiles were grouped together, so the session on Germany also included information on Austria and Slovakia. “Does anyone have any questions about Slovakia?” Wirsdorf asked the audience. When no hands went up, he quipped, “I’m lucky because I know nothing about it.”
Slovakia and Austria took a backseat to Germany, the fourth largest economy in the world (by nominal GDP, which is evaluated at current market prices) and Europe’s largest.
“Germany is not a test market,” Wirsdorf warned. While it has a lot to recommend it—highly developed infrastructure, skilled labor, sophisticated market—consumers there have high expectations for goods and services. “Products have to be perfect, last forever and be environmentally friendly,” he pointed out.
Germans like communication to be direct and to the point. No everyone-wins-a-trophy here: “If you don’t hear from your boss, you’re doing great,” Wirsdorf said. While most U.S. companies have only one president, Germans lean more toward a peer structure where multiple people run the company, and employees often represent 50 percent of the board of directors, he said. Employment law also includes numerous protections for the workers, such as termination protocol, mandatory vacation and collective bargaining.
Business agreements can be as concise as one sentence: “I buy this business for $...” The legal system is efficient, he said, and the loser pays for the lawsuit. “There are no jury trials,” he added.
The tax system, however, is complex and franchisors will need advisors early in the process.
But remember: If you can make it in Germany, you can make it anywhere in Europe. You just have to make it in Germany.