Franchising In The MENA Region: An Overview
Definitions of the Middle East and North Africa (MENA) region vary depending on the source, although it is generally broken into 3 blocks, which are as follows:
- Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia & United Arab Emirates
- North Africa: Algeria, Egypt, Libya, Morocco, Sudan & Tunisia
- The Levant: Iraq, Jordan, Lebanon & Syria
MENA is an area full of potential, with the franchise industry harnessing some the opportunities available, earning an estimated $30bn in sales there.
Read on if you would like to find out more about how both domestic and international franchises are succeeding within this complex but brilliant region.
Where To Do Business?
There is no shortage of wealthy individuals looking for excellent investment opportunities in the MENA region. Not only that, favorable regulations have also encouraged many big name franchises to expand into the area.
The Gulf Cooperation Council - Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman - represents massive potential for franchisees looking to expand their business here. It has an affluent customer base for franchisors and franchisees to benefit from and a combined GDP of well over a trillion dollars.
Amongst the African nations, Egypt is the top franchise destination, while Jordan has also proved to be a quality location for several franchise brands. Of course, there is potential in virtually all locations for motivated entrepreneurs who are running the right businesses.
According to The Middle East & North Africa Franchise Association (MENAFA), the MENA franchising sector is worth $30 billion and is growing rapidly.
The following are just some of the other reasons why MENA has proved to be a popular location for franchisors and franchisees in recent years:
- Favorable demographic & commercial factors
- Population of 297 million people with annual growth of 3-5 percent
- Sector sales of $30bn (source MENAFA)
- Investor friendly
- Pool of wealthy Individuals and upwardly mobile consumer market
- Common language and similar culture and habits across the region
It's estimated that 80 percent of all retail sales in the GCC are generated from international brands.
Therefore, it is no surprise to see quite a few international franchises in the most prestigious shopping malls of the region, with the likes of Bloomingdale’s at Dubai Mall and Harvey Nichols at the Mall of the Emirates in Dubai.
However, franchises have had success in many more areas than just retail and more and more domestic brands are expanding their business in this way too.
For instance, there has been a massive increase in franchises that are breaking into the education, fast food and tourism industries throughout the GCC and in other MENA regions.
Regulations and Cultural Sensitivities
The following should be noted if you are looking towards MENA as a potential area to expand your franchise:
- There can be strict regulations that differ from country-to-country
- Fees for registering trademarks through the GCC can be expensive
- Other areas in the MENA region, such as Turkey, Iraq, Jordan and Egypt have their own regulating bodies for franchises
- There are specific regulations and cultural sensitivities which must be noted for those considering the area.
According to law firm Bird & Bird: “While there is at present no franchise legislation (in the MENA region)... there is a significant body of case law surrounding agency law. Brands looking to expand via franchising, or indeed distribution and agency, will therefore need to structure their relationships carefully so as not to be disadvantaged by the laws relating to agency.”
For more information on franchises available in this region, take a look at ourA-Z of available opportunities.