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Franchise Opportunities in a Trillion Dollar Market

Franchise in the Middle East and North Africa (MENA) is worth more than $30 billion and growing at approximately 27% annually. At the heart of the MENA region is the economic and political block of Gulf Cooperative Council (GCC) that is made up of the six countries of Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman.  Dubbed as the energy powered economies, they geographically access a combined population of 1.4 billion people with a staggering GDP of $1.9 trillion.

These are global markets that have gone under the radar of available opportunities to Australian SMEs. Western brands and tastes are prominently from Europe, USA and certain parts of Asia. High brand recognition generally target and thrive amongst the bourgeoning young consumer population that is socially and internationally mobile with rapidly increasing disposable income.
 

Popularity of Franchises

 
In the retail space, franchising is a proven vehicle for rapid regional expansion and dominance in niche markets once established with a strong market presence and high recognition. They rapidly fill in the market gaps with proven product and services.
 
Expansion of franchise systems can be either straight forward or may require rethinking and strategic tweaking prior to launch particular for new concepts in unfamiliar markets. Regardless, new entrnts have to put in the hard yards, do their research and introduce the brand in a way that resonates with customers’ needs and expectations.


Seven Deadly Pitfalls

 

  1. In the Food industry - always adjust the menu for cultural preferences, tastes, guidelines (including religious observance) and customer expectations.  For example, Herfy knocked off KFC dominance in Saudi Arabia to be the No. 1 fast food chain with over 170 hugely popular outlets. They adopted a simple strategy of upsizing their chicken pieces with extra batter and add more fries at a value price. 
     
  2. Culturally appropriate ambiance. For example café’s in Saudi Arabia generally have a lounge feel with segregated retail space – families and single men.
     
  3. Comply with law of the land – to operate in a foreign country, trademarks, IP, property real estate law, transport, warehousing, logistics, health and safety, construction codes etc. …. These are serious issues that impact entry and growth.
     
  4. Choose the appropriate franchise agreement model and partners – e.g. master franchisees and area developers in preference to single-unit owners, infrastructure setup, logistics, franchising systems (multi-unit franchisees may offer the best model for rapid international expansion).
     
  5. The challenge of choosing appropriate real estate locations because of insufficient new properties, high cost of occupancy, quality of the location (physical and environment) etc. … Look for opportunities in older properties that require innovative remodelling and renovation since developers in this region lose interest in anything that is not new.
     
  6. Research, research and more research to get close to your customer and capitalising on growing the brand. Above all, do not just knock off cross border success since each case is unique and success factors are not always evident.
     
  7. Build goodwill by adopting Fresh Perspective to expand the brand by considering, geographic issues, political climate, linguistic and cultural nuances, legal complications, franchise structures and economic considerations.
 
Entering the Middle East markets is not difficult, but it does require specialist assistance from organisations with experience and understanding of how business is really done internationally. Engaging with Australian Business Consulting & Solutions gives you access to professional advice, mentoring, briefings, and business partner identification, screening, introductions, market visits, licencing and professional legal advice. If you want to know more about exporting to the Middle East contact Camil Gereis at - camil.gereis@australianbusiness.com.au

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Camil Gereis
Manager, Middle East
International Trade
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