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Russia’s King Of Franchising

By Bigg Success Staff
01-26-08

Success Stories

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Russia’s Merab Elashvili oversees four franchise chains with a rapidly-growing network of 160 restaurants. Through these restaurants, he employs over 3,500 employees and serves over two million customers a year. 

And he’s just getting started!

Tai Adelaja wrote a great article recently for The Moscow Times called, Sparking a Chain Reaction that tells Merab’s story.

Getting started
He started his first business before he reached his twenties. He imported assorted goods – like candles and chocolates – from Europe shortly after the collapse of the Soviet Union.

He found it difficult to gain people’s trust because he was young and inexperienced. He kept pushing to prove himself and win confidence.

Making the break
It paid off. In 1997, at the age of 23, he found a financial backer. He applied to Sbarro, an American franchisor of Italian restaurants, for the exclusive rights to the Russian market. Sbarro wasn’t sure how to respond to this young, dreamy-eyed lad!

Merab won them over through his perseverance and persistence – they granted him the rights he sought!

Over time, he has expanded his territory with Sbarro to include the other countries of the Commonwealth of Independent States, the Baltic States, and much of Europe.”

Overcoming adversity
But life hasn’t always been easy for Merab. His father died when he was three years old. He was forced to flee Georgia, the country where he was born, due to civil unrest. He wasn’t even eighteen yet.

In 1998, after less than a year with Sbarro, Merab faced perhaps the biggest challenge of his life. It was the early days of the post-cold war era in Russia. The economy was unstable.

Merab was forced to make difficult decisions in order to survive. He closed down some restaurants and laid people off. He also negotiated with Sbarro. They agreed to defer some of his royalty payments and to let him purchase some food locally.

He faced questions about the viability of his franchise model in a developing country. But he persevered. He survived and thrived!

Going and growing
He continued to develop his Sbarro chain. In 2002, he began franchising two of his own concepts: Vostochny Bazar and Bash-na-Bash. He launched a third, Viaggio Italiano, three years later.

He plans to continue developing his franchise organizations. He’s also giving back to the communities he serves with his restaurants. He believes that business people need to do that.

Gennaro Sbarro, Sbarro’s founder, said Merab is one of their top franchisees. Ernst & Young, the giant professional services firm, named him Russia’s Entrepreneur of the Year in 2006.

Many of the same people who questioned his franchise model early in his career now applaud his vision of bringing franchising to the country.

He saw opportunity. He acted upon it. He persevered. That’s why he’s now known as … the “king of franchising”.

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