Franchising News
Why Are Franchises Flocking To The Middle East?
Written by Tim Morral
Published: 3/14/2013
Franchise Herald explains why the Middle East has become a hotbed for growth and expansion in the franchising sector.
Few entrepreneurs would point to the Middle East as a high growth target for franchising. But according to Franchise Herald, that's exactly what the Middle East has become--a top destination for some of the world's most recognized franchisors.
The franchise push in the Middle East is being partially driven by consumer demand. In many Middle Eastern nations, demand for western food and merchandise is at an all-time high. Although some of the increased demand for western brands is attributable to higher volumes of foreign workers temporarily living in the region, Middle Easterners are also driving up demand for western franchises like Sprinkle, Shake Shack and Smashburger.
The other force behind the franchising in the Middle East is capital. Backed by cash earned in the oil industry, regional business owners are leveraging franchises to diversify their portfolios and cash in on consumer trends. Franchising offers these entrepreneurs a ready-made business model and in some cases, the brand recognition they need to hit the ground running.
Even so, there are several variables that need to be considered when evaluating franchise opportunities--whether they are located in the Middle East or in more traditional franchising locales. Franchise fees, territorial restrictions, financing, franchisor training/resource and other factors all come into play and have the potential to make or break a franchise investment.
In the Middle East, there are some additional variables that need to be factored into the equation. Right out of the gate, prospective franchisees need to determine whether the franchise's food items or products will effectively translate to Middle Eastern markets and consumer preferences. If so, franchisors and prospective franchises need to identify strategies to maintain quality control and establish reliable supply chains to Middle Eastern locations.
Additionally, franchisees need to objectively decide whether the franchise's brand has enough visibility and appeal to justify fees and royalties. While larger franchise brands may be instantly recognizable to Middle Eastern consumers, less known franchises may not offer enough brand recognition to deliver a return on a franchise investment.
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