Direct Franchising Popular for Expansion into Middle East

asked about 7 years ago

Direct franchising into the Middle East, particularly Saudi Arabia & Kuwait, is becoming increasingly popular. According to franchise experts, the region is a growing fast.

The GCC Powerhouse

The Gulf Cooperation Council (GCC) is made up of the six Persian Gulf states of Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain, Oman and Qatar. It is an intergovernmental political and economic union, somewhat like the European Union, and consists of a combined population of 34 million people.

While the GCC is a relatively small and new council, it is considered a powerful economy, one that matches many of the leading first-world economies. With a combined Gross Domestic Product (GDP) of $600 billion, the GCC ranks easily within the top 20 of the world’s largest economies.

Some of the main objectives of the GCC has been to formulate similar regulations in various areas, including tourism, trade, finance, administration and legislation, to foster the development of the private sector, establish joint ventures and foster scientific and technical developments in a wide range of sectors.

The Changing Face of the Middle East

Since the oil boom of the 1970s and the establishment of the GCC in 1981, the Middle East region has undergone massive change, development and advancement, changing not only its physical landscape but also the region’s economic, cultural and social landscape.

“When comparing the GCC to the world’s stage, it is a relatively new and emerging region,” says Derek Cafferata, CEO of All State Franchise Finders, experts in international franchising. “But it is emerging at a staggering pace, and emerging as a leading marketplace very successfully.”

From a business viewpoint, foreign investment into the area has come in leaps and bounds, especially within the last 20 years. International brands in various sectors, including the retail, restaurant, education and tourism industries, are becoming more and more sought-after.

“Two of the major emerging markets for international franchising are Kuwait and Saudi Arabia,” says Derek. “Traditionally these have been the more conservative nations, but the social makeup is changing and the population is seeking out foreign brands.”

The UAE has successfully placed themselves as the retail mega-centre of the Middle East, if not the world, and this has been a huge economic, social and political success for them. Now the other nations are looking to follow, in particular, Kuwait and Saudi Arabia.

Direct Franchising

According to Derek, direct franchising is the more popular option for emerging into the Middle East, especially in the two popular destinations of Saudi Arabia and Kuwait. Saudi Arabia has the largest population of any of the GCC members, with 20 million people and retail sales of approximately 20 percent of the GCC’s GDP.

Kuwait has recently introduced the Commercial Agencies Law 2016, covering franchise agreement registrations, distribution agreements and agency agreements, among other things.

It is estimated that franchise-driven revenues are around $30 billion, and the franchise sector is experiencing a 27 percent annual growth rate. More than half of all retail sales are generated from international brands, with consumers demanding high quality.

Direct franchising, where the franchisor takes direct responsibility for recruiting, training and supporting the franchise network, is a popular franchising structure for those who have expanded into the GCC, in particular, Saudi Arabia and Kuwait.

Many businesses choose either to maintain control, development and expansion of the franchise from headquarters based outside the Middle East region or they choose to have a subsidiary office with a specified agent within the local market. In Derek’s opinion, either of these direct franchising structures works well for those expanding into Kuwait or Saudi Arabia.

All State Franchise Finders

Derek Cafferata and his team at All State Franchise Finders have over 30 years’ experience in the franchising industry with the United States and across the globe. All State Franchise Finders have helped a large number of businesses expand into the international market with great success.

Their experience and knowledge in the franchising industry have led All State Franchise Finders to become the leading franchising experts for both national and international franchising.

If you are considering expanding through franchising either into America or further afield, including the Middle East, then contact All State Franchise Finders on 1-800-544-2161 or visit today. All State Franchise Finders – Your Franchising Experts.