Limited Production Studios in Russia: Factors and Analysis
Manufacturing franchises remain inhot in Russia, with demand outweighing supply, creating a lucrative investment opportunity for male investors aged 35 and above. However, the limited availability of manufacturing franchises in the country presents a challenge for potential investors.
Anna Rzhedstvenskaya, head of the Franshiza.ru catalog, points out that the supply shortage stems from the limited number of manufacturing franchises available. Russian Franchising Association (RAF) data reveals that out of the 3800 franchises available on the Russian market, only around 5% are manufacturing.
Sergei Romanov, director of Biovat, a producer of eco-friendly sound and heat insulation materials, claims that Russia has no manufacturing franchises. According to Romanov, the unique technology or know-how included in manufacturing franchise packages is a critical factor that's often lacking in Russian franchises. Many manufacturing franchises in Russia, in Romanov's view, offer standard technologies, with the emphasis on marketing services such as advertising campaigns and lead generation.
Dmitry Vdovkin, founder of the "Dilekt" network of franchised carpentry workshops, believes that up to 90% of manufacturing franchises in Russia do not actually transfer any technologies, merely using the name, with the franchisor producing the product and the franchisee building a dealer network.
The DIY approach presents potential risks for producers, with most manufacturers not relying on franchising for growth. Yuri Bogomolov, founder of the Businessmens.ru franchise catalog, notes that these franchises are often too complex for beginner entrepreneurs. The lack of scalability, sharing of unique technologies, and concern about forming competitors are additional factors hindering the development of manufacturing franchises in Russia.
Government support and technological advancements present opportunities for growth in the manufacturing franchise sector. The establishment of industrial centers of competence by the government suggests a push towards developing domestic industries. Russia's resilience in the face of economic challenges and technological advancements could further support growth in manufacturing and interest in franchising. Escalating trade tensions and sanctions, however, pose challenges that could negatively impact Russia's economy and the development of manufacturing franchises.
Despite the hurdles, some small new brands are beginning to grow in Russia, particularly in production segments like food, construction, and household chemicals. Examples include "Bukhanka," "REMIT. Tasty sausages," "Utilizator" waste collection points, the business of creating modular eco-homes Freedom Nature, the production of rubber coatings "Masterfabr," and "Smart Sreda" eco-factories for producing street furniture. Experts predict that franchises producing coverings and equipment for children's playgrounds, street workouts, and automotive chemicals, as well as businesses in the field of low-rise construction, will exhibit high growth potential in the near future.
Entrepreneurs like Lenar Biktimirov, founder of the franchising company "Karkas taimag" for building log houses and baths, have found success in the manufacturing franchise sector. Despite starting the construction business with his brother in 2020, "Karkas taimag" has already acquired 134 partners in 60 cities. Woodnext Network from Krasnodar, which specializes in modular home and sauna construction, sold 20 franchises in 2024 and is planning for further expansion, while "Dict" aims to open 20 to 30 production facilities in Russia and international markets within the year.
Bizpro, a household chemicals production franchise, signs a supply equipment contract with partner franchises, offering them a technologist and a manager for promotion on marketplaces and in offline trade. Bizpro expects to have 100 partners by the end of the year, promising profits of 200,000 to 1 million rubles per month with investments of 750,000 rubles. The demand for low-investment production franchises with consistent quality is expected to remain stable in the future.
The lack of manufacturing franchises in Russia, as highlighted by Anna Rzhedstvenskaya and the Russian Franchising Association (RAF), is a critical issue, considering only around 5% of franchises available are manufacturing-focused. Moreover, the concern about the transfer of unique technologies and the fear of forming competitors among producers might be hindering the growth of the manufacturing finance sector in Russia, as Dmitry Vdovkin and Yuri Bogomolov suggest.
