Overview

Franchising and distribution offer the opportunity to introduce U.S. products and brands into the Kyrgyz market and give local entrepreneurs an attractive entry point to purchase into a U.S. company. Recent years have witnessed a significant expansion of U.S. franchises operating in the Kyrgyz Republic, particularly in the food service, hospitality, and entertainment industries. There are more than 30 U.S. brands already officially operating in the Kyrgyz Republic, including Hyatt Regency, Sheraton, Coca-Cola Bottlers, KFC, Papa John’s, Baskin-Robbins, Nike, and Levi’s, New Balance, General Electric, Avon, and others.

In most instances, Kyrgyz franchisees of U.S. companies have purchased their licenses from regional master franchisers, often located in Moscow or Istanbul. Kyrgyz franchisees are held to the rigorous standards established by corporate headquarters and in several instances, have invested significant capital in receiving company certification. Entrants into this market have largely partnered with Kyrgyz firms with a demonstrated track record of experience in related sectors, such as retail sales and distribution.

Increasing travel and internet penetration have raised international brand awareness among Kyrgyz consumers, particularly in urban areas. The Kyrgyz market has gradually matured since independence 30 years ago, with preferences evolving toward quality, branded products sold by authorized outlets, including franchises, over informal retailers. Western brands, including U.S. product lines, are widely perceived by Kyrgyz consumers as being of higher quality and command a premium price.

These trends are most prominent in Bishkek, where opportunities and levels of disposable income are the highest in the country. U.S. franchises in the Kyrgyz Republic are predominantly located in Bishkek, with several franchisees considering expanding operations to Osh, the country’s second-largest city, located in the south and to the resort areas of Issy-Kul. Increasing disposable income and the growing middle class, particularly in Bishkek, offer real opportunities for American firms that pair with locally based operators who can navigate the complexities of the Kyrgyz business environment. Targeted opportunities exist in the Kyrgyz Republic, particularly for U.S.-based restaurant operators, though thorough market research is important to understand the distinct tastes and preferences of local consumers. On balance, Kyrgyz consumer demand remains very sensitive to price, and U.S. companies that have opened franchises in the Kyrgyz Republic benefit from economies of scale and are able to offer high-quality products at an attractive price point. Kyrgyz entrepreneurs, particularly those with international experience, are largely open to adopting U.S. business practices, though maintaining rigorous standards set by corporate headquarters involve higher costs for local franchise operators.

Any company wishing to establish a franchise in the Kyrgyz Republic or hire a distributor must be registered with Kyrgyzpatent, the state agency for intellectual property and innovation.[1]  Typically, international brands hire a local law firm to help them with the necessary registration and legal requirements.

Resources

State Service of Intellectual Property and innovation under the Government of the Kyrgyz Republic (http://patent.kg/en/)