Local Luxe Franchises Flourishing in Turkey

Luxury is booming here, and it's making franchising a big business.

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ISTANBUL — Luxury is booming here, and it's making franchising a big business.

Sephora, Dolce & Gabbana, Chloé, Jimmy Choo, Coach and Prada are just a few of the names that, during the last 12 months, have opened their first monobrand stores with Turkish partners in the country's biggest and richest city as the luxury market spreads to an increasingly affluent middle class.

Shopping malls are lining up by the dozens to welcome international brands, which have rained on Turkey, especially Istanbul, in the past few years. One of the best examples of the growing market was the opening of luxury mall Istinye Park last fall. The mall, which contains brands such as Chanel, Dolce & Gabbana, Prada, Dior, Celine and Fendi, was fully rented a full year before it opened at a reported cost of $250 million.

And the flood shows no sign of abating. In addition to monobrand stores by major labels, those said to be looking into Turkey are Saks Fifth Avenue, Selfridges, Italy's La Rinascente and Spanish department store El Corte Ingles, all hoping to capitalize on the lack of a department store tradition here.

All the demand creates a lucrative business for the small but growing number of franchise partners that dominate the market. And as the brands move in, so the agreements evolve.

Take the arrival of Sephora, which entered the market as part of a pioneering partnership between its parent company, LVMH Moët Hennessy Louis Vuitton, and Unitim, the company that brought Harvey Nichols to Istanbul in 2006.

The partnership for Sephora Unitim A.S. — owned 60 percent by LVMH, 40 percent by Unitim — is a new formula in a country where franchise and licensing have been the norm, and demonstrates the increasing confidence international companies have in the potential of Turkey's retail sector.

"Turkey is in the process of joining the European Union, there is political stability here at last, the economic indicators are improving all the time and foreign investors are seeing that it has become a very attractive emerging market," said Aret Cilingir, head of strategic planning and business development at Unitim, who said he believed the Sephora agreement to be the first retail partnership of its kind in Turkey.
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