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Q&A: Top 5 reasons for franchising in the Middle East

Posted by Francorp Middle East on Jul 11, 2018 1:56:59 PM

 As the Middle East is a popular business and brand destination to expand into, which are the key markets?

The UAE is often looked at as being the first market to open in when businesses are looking to expand to the Middle East. The reason for this is that the UAE is seen as a hub for the region but also Qatar and Saudi Arabia are seen as key target markets.

Which sectors showed the most significant growth?

In UAE and GCC markets, the sectors which faced the greatest growth are hotels, food & beverage and fashion retail. Coffee Chains and clients of Francops such as Café to Go, IL Caffe Di Roma or Kaafe Chocolatier have been very successful, together with many UK high street brands such as New Look and Topshop. Statistics have shown that over 50 % of all international brands are already in the UAE and in the process of expanding to surrounding countries through either existing or new franchise partners.

What are the headline commercial attractions for businesses expanding into the Middle East?

The UAE has recently upgraded to an emerging market status which could result in an investment inflow of hundreds of millions of USD. Furthermore, the reasons why UAE is attractive for business opportunities is because of Expo 2020 and non-oil business growth which is predicted to reach 4.8%.

In the middle east 60% of the population is under the age of 25 years and on a high income, therefore the demand for western brands in the region is high. This is also evident from economic data which states the demand for franchised outlets is usually much higher in the Middle East markets than in the franchisor's home country. 

 What expansion stratergies are businesses using to enter the Middle East?

Businesses are using traditional franchise models which include individual unit franchising, where the brand owner grants a Middle East entity and the rights to use its brand and know how to develop the branded businesses throughout the region. On the other hand master franchising which is becoming extremely popular is where the owner gives permissions and responsibilities of their brand to a master franchisee within a given geographical area. So, for all intents and purposes, the master franchisee performs the role of a mini-franchisor in their particular territory.

What are the legal challenges facing businesses looking to expand via franchising into the Middle East?

The biggest challenge to expand via franchising in the Middle East is the lack of legislation dealing directly with franchising. There have been calls by some interested in developing a franchising law, but no drafts have been submitted. Opportunely, brands can work with franchising specialists such as Francorp Middle East that provide in-house legal documentation and commercially robust franchise agreements. 

If you're looking for an expansion plan for the Middle East through franchising then now is the right time! 

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