Franchising in Italy

Every year Italy provides millions of visitors with distinctive experiences, thanks to the natural, cultural, and social resources that characterize the country. An analysis of the role of the tourism industry — an important component of the Italian economy — is therefore appropriate and timely. Franchising can contribute greatly to a host market environment and to specific service industries in particular (Alon, 2004). Weaknesses in the Italian hospitality market could be compensated for and reduced by the development of the franchising concept, which is seldom used by Italian hotel chains as they seek to expand in the local market. The low level of franchising in the Italian hospitality sector stands in stark contrast to countries like the U.S., and to other countries where franchising represents as much as 65 percent of the total bed offer (Pine et al 2000). As Altinay (2004) points out, the implementation of franchising is a very difficult organizational activity, and this is particularly true in markets such as Italy, Spain, and Greece, where family-run companies resist the logic of franchising. Considering the data provided by Assofranchising (2005), in a positive overview which reveals a constant growth of franchising during recent years (during 2005 the increase in total turnover was 6.9 percent), the presence of franchising in the hotel sector is still insignificant: with a total turnover of €41.35 million, it represents only 0.2 percent of overall franchising activity in the country.