EXECUTIVE BODY OF KYIV CITY COUNCIL (KYIV CITY STATE ADMINISTRATION) MUNICIPAL ENTERPRISE KYIV INVESTMENT AGENCY FRANCHISING IN UKRAINE

(1)

EXECUTIVE BODY OF KYIV CITY COUNCIL

(KYIV CITY STATE ADMINISTRATION)

MUNICIPAL ENTERPRISE

“KYIV INVESTMENT AGENCY”

(2)

SECTION 1. IN THE SHADOW OF RUSSIA

HOW IT IS NOW



Ukrainians

radically

altered

their

destiny and new elected President

signed Association Agreement with

European Union.



In the foreigners eyes – a proud

country with rich history and culture,

well-educated

population,

fully

economically developed.



The

sanctions

of

international

community have a negative impact on

the trade development in Russia and

entrance of new brands on Russian

market that makes Ukraine has never

been

more

attractive

to

start

development in CIS from here.

HOW IT WAS



Until recently Ukraine was under the

political and economic influence of

Russian federation.



In the foreigners eyes –

satellite-country of Russian Federation.



All the countries of the former USSR

were associated with the Russian

Federation;



Most of the master-franchise for

development in CIS-countries are

issued to Russian companies.

(3)

3

SECTION 2. UKRAINE: MYTHS AND REALITY

MYTH: UKRAINE WHERE IS IT?

REALITY - THE LARGEST COUNTRY

BETWEEN EUROPE AND ASIA

FACT: THE AREA OF UKRAINE IS

EQUAL TO AREA OF GERMANY AND

GREAT BRITAIGN ALL TOGETHER

REALITY - THE LARGEST COUNTRY

BY AREA IN EUROPE (EXCEPT

RUSSIA) AND WORLD (№47)

5 7 7 ,4 5 4 7 ,0 5 0 4 ,8 3 5 7 ,0 3 2 4 ,2 3 1 2 ,7 2 4 4 ,8 1 3 1 ,9 9 3 ,0 8 3 ,9 6 5 ,2 6 4 ,6 4 5 ,2 4 1 ,5 4 1 ,3 0 100 200 300 400 500 600 700 U kr a in e ( 4 7 ) F ra n ce ( 4 8 ) S p a in ( 5 1 ) G e rm a n y (6 2 ) N o rw a y (6 7 ) P o la n d ( 6 9 ) G re a t B ri ta in ( 7 8 ) G re e ce ( 9 6 ) H u n g a ry (1 0 9 ) A u st ri a ( 1 1 4 ) L it h u a n ia ( 1 2 2 ) L a tvi a ( 1 2 3 ) E st o n ia ( 1 3 1 ) N e th e rl a n d s (1 3 3 ) S w it ze rl a n d ( 1 3 4 ) T h o u s a n d s m 2

(4)

MYTH: UKRAINE IS A SMALL

COUNTRY DANGEROUS

FOR TURISTS

REALITY - ONE OF THE LARGEST

COUNTRIES BY POPULATION IN

EUROPE (№7) AND WORLD (№31)

8 0 ,8 6 4 ,2 6 1 ,5 4 7 ,4 4 2 ,7 3 8 ,4 1 9 ,9 1 1 ,2 1 1 ,0 1 0 ,5 9 ,8 9 ,8 8 ,6 8 ,2 7 ,2 5 ,7 5 ,5 4 ,2 2 ,9 2 ,0 1 ,3 0 10 20 30 40 50 60 70 80 90 G e rm a n y (1 8 ) F ra n ce ( 2 1 ) It a ly (2 3 ) S p a in ( 2 9 ) U kr a in e ( 3 1 ) P o la n d ( 3 3 ) R o m a n ia ( 5 9 ) B e lg iu m ( 7 7 ) G re e ce ( 7 9 ) ze ch R e p u b lic (8 4 ) H u n g a ry (8 9 ) S w e d e n ( 9 0 ) A u st ri a ( 9 5 ) S w it ze rl a n d ( 9 8 ) B u lg a ri a ( 1 0 1 ) D e n m a rk (1 1 3 ) F in la n d ( 1 1 4 ) C ro a ti a ( 1 2 7 ) L it h u a n ia ( 1 4 0 ) L a tvi a ( 1 4 8 ) E st o n ia ( 1 5 5 ) m ln

REALITY – WORLD TOP-15

TOURIST DESTINATION

# Country 2008 2010 2013 1 France 79 218 000 77 648 000 84 726 000 2 United States 57 942 000 60 010 000 69 768 000 3 Spain 57 192 000 52 677 000 60 661 000 4 China 53 049 000 55 664 000 55 686 000 5 Italy 42 734 000 43 626 000 47 704 000 6 Turkey 29 637 000 31 364 000 37 795 000 7 Germany 24 484 000 26 875 000 31 545 000 8 United Kingdom 30 142 000 28 295 000 31 169 000 9 Russia 23 676 000 22 281 000 30 792 000 10 Thailand 14 584 000 15 936 000 26 547 000 11 Malaysia 22 052 000 24 577 000 25 715 000 12 Hong Kong 17 319 000 20 085 000 25 661 000 13 Austria 21 935 000 22 004 000 24 813 000 14 Ukraine 25 449 000 21 203 000 24 671 000

FACT: UKRAINE RANKED #8 IN THE

WORLD IN 2008 BY NUMBER OF

INTERNATIONAL TOURISTS

ARRIVALS

(5)

5

MYTH: UKRAINE IS A COUNTRY

WITH UNDEVELOPED ECONOMY

REALITY - №60 in THE WORLD by

GDP (in current prices) - LARGER

THAN MANY CURRENT EU-28 AND

ALL EU-CANDIDATES COUNTRIES

REALITY - №49 in THE WORLD by

GDP (by PURCHASING

POWER PARITY)

4 3 7 3 4 1 2 7 1 2 3 0 2 0 6 2 0 0 1 3 7 1 3 1 1 0 0 7 6 5 7 5 6 4 8 4 4 3 2 2 6 1 7 1 3 1 1 4 0 100 200 300 400 500 A u st ri a ( E U ) D e n m a rk (E U ) F in la n d ( E U ) P o rt u g a l (E U ) C ze ch R e p u b lic (E U ) R o m a n ia ( E U ) H u n g a ry (E U ) U kr a in e S lo va k R e p u b lic (E U ) B e la ru s C ro a ti a ( E U ) B u lg a ri a ( E U ) L it h u a n ia ( E U ) S e rb ia * L a tvi a ( E U ) E st o n ia ( E U ) G e o rg ia A lb a n ia * F Y R M a ce d o n ia * M o n te n e g ro * EU - EU-28 member * - EU candidate

Source: International monetary fund

3 8 7 2 4 9 2 2 2 2 7 6 ₃00 3 8 7 2 4 0 3 7 3 1 5 0 ₁71 8 7 1 2 3 7 9 ₉0 4 9 3 5 3 4 3 1 2 7 9 0 100 200 300 400 500 A u st ri a ( E U ) D e n m a rk (E U ) F in la n d ( E U ) P o rt u g a l (E U ) C ze ch R e p u b lic (E U ) R o m a n ia ( E U ) H u n g a ry (E U ) U kr a in e S lo va k R e p u b lic (E U ) B e la ru s C ro a ti a ( E U ) B u lg a ri a ( E U ) L it h u a n ia ( E U ) S e rb ia * L a tvi a ( E U ) E st o n ia ( E U ) G e o rg ia A lb a n ia * F Y R M a ce d o n ia * M o n te n e g ro * EU - EU-28 member * - EU candidate

Source : Central Intelligence Agency

FACT: GDP OF UKRAINE BY PPP

IS COMPARABLE WITH MOST

(6)

REALITY – WELL-EDUCATED AND

INTELLECTUALLY POPULATION

 Ukranians are in top-10 intellectually developed

nations in the world;

 4th place in the world by number of people with higher education;

 4th in the world(after the US, Russia and India) by the number of certified IT-specialists;

 9th in world by number of students from abroad;  9th in Europe by the number of Internet users

REALITY - ONE OF THE RICHEST

COUNTRIES IN THE WORLD IN

NATURAL RESOURCES DEPOSITS

 1st place in Europe by area of agro land;

 3rd place in the world by black topsoil (25% of the world) - 60,4 million hectares;

 1st place in the worlds deposits of iron ore;  1st place in the worlds deposits of magnesium;  2nd place in the worlds deposits of mercury ore;  3rd place in the worlds depositis of manganese

MYTH: UKRAINE IS A AGRARIAN

AND RAW-MATERIAL APPENDAGE

FACT : UKRAINE IS ONE OF THE MOST TECHNICALLY AND INTELLECTUALLY DEVELOPED COUNTRIES IN THE WORLD

(7)

7

MYTH: UKRAINE IS A AGRARIAN

AND RAW-MATERIAL APPENDAGE

REALITY – DEVELOPED

INDUSTRIAL COUNTRY

 Ukrainian space-rocket companies are in top-5

in the world;

 Ukraine on its own initiative refusedthe 3rd

largest arsenal of nuclear weapons in the world;  3rd place in Europe and 8th in the world by

installed capacity of nuclear power plants. World #4 by export of turbines for nuclear power plants;  3rd place in Europe and 11th in the world by the

length of the railway network (21 700 km);

 9th in the world by export of military equipment.

REALITY - DEVELOPED

AGRARIAN COUNTRY

 1st place in the world by sunflower and sunflower oil export;

 2nd place in the world by eggs production

(export to 45 countires);

 2nd place in the world by production and 4th largest exporter of barley;

 3rd place in the world by production and 4th largest exporter of corn;

 4th place in the world by growing potatoes.

FACT : UKRAINE IS ONE OF THE MOST TECHNICALLY AND INTELLECTUALLY DEVELOPED COUNTRIES IN THE WORLD

(8)

MYTH: IT IS HARD TO DO

BUSINESS IN UKRAINE

REALITY – ACCORDING TO THE

WORLD ECONOMIC FORUM

«

GLOBAL COMPETITIVENESS

INDEX 2014/2015

»

UKRAINE'S ECONOMY IS

GRADUALLY STRENGTHENING

REALITY – YEAR AFTER YEAR

POSITION OF UKRAINE IN «

DOING

BUSINESS

» IS INCREASING AND

MAKING DOING BUSINESS

PROCESS EASIER AND EASIER

FACT: THE MAIN FACTOR WAS THE

CHANGING IN UKRAINIAN

GOVERNMENT AND ITS ACTIVITY

FOR EUROPEAN INTEGRATION

152 137 112 96 15 25 16 2012 2013 2014 2015

Rank (lower is better) Change per year (+/-) 89

84

76

5 8

2011 2014 2015

(9)

9

MYTH: UKRAINE HAS

LIMITED CONSUMER MARKET

REALITY – 10th PLACE IN EUROPE

BY RETAIL TURNOVER VOLUME

REALITY - STEADY GROWTH OF

RETAIL TURNOVER IN DYNAMICS

Ukrainian retail turnover (RTO) commensurable with the Netherlands and Switzerland, bigger than

RTO of Sweden, Belgium, Norway, Austria,

Portugal. 2 times bigger than in Hungary and the

Czech Republic, almost 5 times bigger than in

Bulgaria, 4 times bigger the Baltic countries

(Lithuania, Latvia and Estonia) all together.

318,7 449,3 442,8 529,9 674,7 804,3 884,2 903,5 41,0% -1,4% 19,7% 27,3% 19,2% 9,9% 2,2% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 0,0 100,0 200,0 300,0 400,0 500,0 600,0 700,0 800,0 900,0 1 000,0 2007 2008 2009 2010 2011 2012 2013 2014 Ukraine, bln UAH YoY growth,%

4375 4636 6313 8214 10100 10419 14248 19657 20923 22818 24667 46307 46821 49894 51136 55604 60082 72497 76531 80142 89268 91907 105224 113942 163946 252682 479284 500559 503043 565157 691725 Estonia (EU) Macedonia * Albania * Georgia Latvia (EU) Lithuania (EU) Croatia (EU) Serbia * Bulgaria (EU) Slovakia (EU) Belarus Czech Republic (EU) Hungary (EU) Romania (EU) Finland (EU) Portugal (EU) Denmark (EU) Austria (EU) Norway (EU) Belgium (EU) Sweden (EU) Ukraine Switzerland Netherlands (EU) Poland (EU) Spain (EU) Italy (EU) Great Britain (EU) France (EU) Germany (EU) Russia Billions USD EU - EU-28 member * - EU candidate

FACT: UKRAINE’S CONSUMER

MARKET one of the biggest in EU

(10)

SECTION 3. Market condition of franchising in Ukraine



Today

in

Ukraine

operating

570

franchising

companies

include

425

companies (~75%) actively expanding

their networks and 145 companies

(~25%) just looking for a

franchisee-partner;



The number of franchising companies

growth with average year-to-year (YoY)

rates 21%;



Franchising companies operate almost

23 000 store units;



Nearly

¾

franchised

brands

are

Ukrainian or Russian and only 5% are

American;



Ukrainian

investors are particularly

interested

in

fast

food,

children’s

products

and

services,

educational

services,

fitness,

coffee

shops,

recreation, hotels, insurance, medical

services and travel services.

2 2 6 26 8 30 3 3 8 2 2 4 7 3 5 9 4 1 1 5 3 0 5 4 0 57 0 61,4% 18,6% 13,1% 26,1% -35,3% 45,3% 14,5% 29,0% 1,9% 5,6% -60% -40% -20% 0% 20% 40% 60% 80% 0 100 200 300 400 500 600 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4

Franchised companies YoY growth, %

425 75% 145 25% Actively expanding networks Looking for a franchisee-partner

(11)

11 FURLA DOLCE&GABBANA MAXMARA WEEKEND TRUSSARDI JEANS CAMPER NAPAPIJRI PEPE JEANS DIESEL STRELLSON MICHAEL KORS ARMANI JEANS BEBE YAMAMAY VERSACE COLLECTION NAUTICA CAMICISSIMA

PEDRO DEL HIERRO VITTORIO SPERNANZONI COFFEE SHOP COMPANY VAPIANO CALZEBONIA FIKA

(12)

SECTION 3. Brands planned to be opened in 2015-2016

CARPISA

FLORMAR

CORTEFIEL

KIABI

WENDYS

SUBWAY

HARD ROCK CAFÉ

FASHION TV CAFÉ

HESBURGER

PINKO

ADL

(13)

13

SECTION 4. SUCCESS STORIES IN UKRAINE

KFC UKRAINE

 Opened in Kiev from 20/12/2012;

 Presented in 2 cities of Ukraine and 3 large cities (Kharkiv, Zaporizhia and Lviv) in a nearest plans;

 10 restaurants;

 KFC drive line in restaurant "Kiev railway station" is the largest in the world among all KFCs and can cater up to 200 vehicles and 280 pedestrians per hour.

MCDONALDS UKRAINE

 Opened in Kiev from 24/05/1997;

 Presented in 21 cities of Ukraine;

 71 restaurant;

 7 000 employees;

 400 000 visitors every day;

 More than $225 millions invested in the development of network;

 More than 1.1 billion hryvnia (~$200 millions) of taxes payed into state budget;

 McDonalds "Kiev railway station" took 2nd place in the world (among the 33,000 McDonald's) by the number of visitors: in 2011 it was filled 2.5 million of orders.

(14)

SECTION 4. SUCCESS STORIES IN UKRAINE

TUI UKRAINE

 TUI occupies a leading position among Ukrainian tour operators;

 More than 200 travel agencies;

 Cooperates with more than 4000 ukrainian travel agencies;

 250 000 tourists per year;

 In 2015 TUI added an unique assortment of author tours to Ukraine.

PEGAS TOURISTIK UKRAINE

 In Ukraine from 2004 year;

 192 travel agencies;

 Year after year «Pegas touristik» expanding the list of proposed countries and destinations. In 2014 added in assortment tours by regions of Ukraine;

 «Pegas touristik» is one of the leader on touristics market in Ukraine and #1 in Turkish area.

(15)

15

SECTION 4. SUCCESS STORIES IN UKRAINE

COLUMBIA UKRAINE

 Network developing in Ukraine started in 1996;

 2 own shops and 45 franchised shops;

 Brand «Columbia» is of the most famous trademarks in Ukraine;

 500 employees.

COCA-COLA HELLENIC UKRAINE

 In Ukraine from 1992;

 The first factory was opened in 1994 in Lviv.

 Opened in 1998 Kyiv plant was the largest, most powerful and most modern plants of non-alcoholic beverages in Europe.

 21 distribution center;

 12 bottling lines on the factory;

 2 000 qualified professionals;

 90 000 clients in the customer base;

 More than $175 millions invested in the development of network;

(16)

SECTION 5. ABOUT “KYIV INVESTMENT AGENCY” (KIA)

MUNICIPAL ENTERPRISE “KYIV INVESTMENT AGENCY” IS EXECUTIVE

BODY OF KYIV CITY COUNCIL AND INVITES INVESTMENT IN KIEV

 «KIA» invites ukrainian and foreign investors in a wide range of projects in different sectors of economy and promotes franchising in Ukraine's capital.

 More than 130 projects is developing;

 Construction area of projects – more than 1.4 mln m2;

(17)

SECTION 6. HOW «KIA» CAN HELP AMERICAN

FRANCHISE COMPANIES TO ENTER THE MARKET?



KIA’S INVESTMENT WINDOW

– US franchise companies can file an

application with their investment proposals to find ukrainian parthner;



US companies can be added to the KIA’s database and

RECEIVE

INFORMATION ABOUT ALL NEW

tenders /

PROPOSALS;



ADMINISTRATIVE UMBRELLA

– KIA can provide complex support and

help to US companies in obtaining approvals / realization of projects;



KIA

meets regularly with investors and

CAN FORWARD AMERICAN

FRANCHISES

companies;



If the city interested in realization of the franchise of American company

KIA

(18)

SECTION 7. KEY PROJECTS OF KIA

«KIA» IS ACTIVELY DEVELOPING AND ATTRACTING INVESTMENT IN

THE FOLLOWING PROJECTS:

 Projects in education (private kindergartens and schools);

 Multi-storey housing and office building development with related infrastructure (shops, gym, pool, cleaning, travel agency, bank, beauty salon etc.);

 Shopping centers;

 Health sector projects (private clinics, hospitals, dentist’s office etc.);

 Projects of tourism development (hotels, health resort, spa, camps);

 Bicycle and transport projects («bike-sharing» system, bicycle parkings,

transportation hubs);

 Sport infrastructure projects (stadiums, athletic field, playgrounds);

 Recreational infrastructure projects (development of 23 Kiev city-parks);

 IT – parks;

(19)

19

SECTION 7. POTENTIAL FRANCHISING PROJECTS KIA

HEALTH SECTOR

(private clinics, hospitals, dentist’s office)

 5 projects;

 Construction area: >17 502 m2;

 Budget of projects: $18.15 mln

MULTI-STOREY HOUSING

(shops, gym, pool, cleaning, travel and real-estate agencies, bank, beauty salon)

 23 projects;  Construction area: 432 883 m2;  Budget of projects: $256.45 mln Residential complex on Sarativska str. Дитячий навчальний заклад на вул. Кудряшова Medical center on Zoologicheskaya str.

(20)

SECTION 7. KYIV INVESTMENT AGENCY (KIA)

PROJECTS IN EDUCATION

(private kindergartens

and schools)

 9 projects;  Construction area: >14 600 m2;  Budget of projects: $9.35 mln

SHOPPING CENTERS / OFFICES

(shops, stores, related

infrastructure, gym, pool, cleaning,

travel and real-estate agencies,

bank, beauty salon)

 12 projects;  Construction area: 80 500 m2;  Budget of projects: $78.57 mln Business center on Levanevskogo str. Private kindergarten on Staronavodnitskaya str.

(21)

BICYCLE INFRASTRUCTURE

(«bike-sharing» system, bicycle

parkings, cycle paths)

 3 projects;

 Budget of projects: $5 mln

SECTION 7. KYIV INVESTMENT AGENCY (KIA)

TOURISM DEVELOPMENT

(hotels, health resort, spa, camps)

 4 projects;

Bike rent / service

(22)

RECREATIONAL INFRASTRUCTURE

 More than 30 projects in 23 city parks;

 Area: more than 600 hectares;

SECTION 7. KYIV INVESTMENT AGENCY (KIA)

SPORT INFRASTRUCTURE

(stadiums, athletic field,

playgrounds)

 5 projects;

Park named after Alexander Pushkin on Pobedy prospect

Reconstruction of stadium and building of sports complex

Beach football sport base on Dolobetsky island

(23)

23

SECTION 7. KYIV INVESTMENT AGENCY (KIA)

BUSINESS ENVIRONMENT /

INCUBATOR

(opportunities for all segments and small businesses)

 Project: «Kyiv Business Harbor»;

 Construction area: 545 000 m2;

 Budget of projects: $2 billion

MULTI-STOREY CAR PARKINGS

(road infrastructure - car wash, tire

service, service stations)

 2 projects;

 Construction area: 55 000 m2;

 Budget of projects: $41.9 mln

Business center on Levanevskogo str. Kyiv Business Harbor

Reconstruction of exit subway station “Pecherskaya" with shopping center and parking