The UAE: an attractive spot for international franchises
The franchise business in the United Arab Emirates (UAE) has been growing steadily within the past few years. Companies are entering the Emirates for the first time or growing their units in number as you read these lines. Their diverse multi-cultural population and their favorable business environment have turned the UAE into a cultural and tourist center favorable for franchising. The countless opportunities the Emirates provide allow businesses from any industry to thrive.
One of the reasons the UAE are a preferred business destination is their strategic location in proximity to many regional markets. They have turned into the hub of the Middle East, North Africa and Turkey (MENAT) region. The Emirates are a leading global commercial center; the world’s largest shopping mall based on total area is located in Dubai, UAE’s largest city.
The 2013 franchise UAE expo was visited by companies from 18 countries. It generated deals for over $100 million.
Even though the country does not have established franchise laws yet, there are some strict regulations international companies need to adhere. For starters, they need to notarize their franchise agreements. They also have to register with the country’s economy ministry under the commercial agencies law if they want legislative protection.
Speaking of legislation, keep in mind that there are some specifics when it comes to the UAE and franchising. Non-UAE nationals cannot conduct business in the Emirates unless they partner with a local entrepreneur. This means that international companies should enter into franchise agreements with local development partners if they want to do business in the area. In addition, they should provide exclusive territorial protection to their partners over all or part of the UAE.
Moreover, the country’s tax regulations are quite business-friendly compared to the rest of the world. The Emirates provide favorable conditions in order to win investors’ interest and to increase the business growth, especially when it comes to franchising. Some of the reasons investors like the region is the lack of sales tax in Dubai and the free trade zones where taxes are exempt.
Local entrepreneurs are also soundly supported by the UAE government; the Dubai Islamic Bank has a specialized program for helping young entrepreneurs who want to start a franchise business. The UAE also provides educational business programs for entrepreneurs. Urthermore, the government has established the UAE Franchise Association which brings together franchised companies and entrepreneurs.
The Emirates attract an increasing number of franchise businesses. During its 2013 edition, the franchise . Franchise businesses from diverse industries from 18 countries worldwide and some 300 prospective franchisees visited the event. The interest was so great, next year’s exposition is planned to be even more impressive than this year’s.
The UAE were placed 23 out of 189 countries on the 2013 Ease of Doing Business list by the World Bank Group. The Emirates also ranked first in regard to paying taxes. These factors, paired with the attractive location, the growing economy and business-friendly legislation, make the UAE the most desirable place for franchise businesses.
The franchise market in the Middle East is worth some $30 billion according to the latest estimates. Brands from the food and beverage sector and the clothing retail markets hold the majority of franchises in the region. Currently, there are some 300 retail brands in the UAE and another 80 are expected to enter the market by the end of 2015. In addition, the majority of the local brands have not been franchised yet.
As a business gateway to the MENAT region, the UAE are in the center of this dynamic franchise environment. Many international corporations have grown their businesses in the Emirates during the past couple of years. The Emirates are said to hold the second place after the UK in terms of number of international retail brands with Dubai as the most popular choice. From organic coffee shops, quick-service restaurants, to second hand and high-end clothing brands, the majority of the world-known brands are present on the UAE market.
