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Can UK franchise brands make it in the Middle East?

The Middle East is a fantastic place for franchising. The business communities there really understand the concept of franchising and have been embracing it for decades. Even if you look at the relatively small UAE on it’s own, you see that services count for more than half the economy and it has an 84% urban population – perfect for multi-unit franchise brands to thrive in. Despite the population being less than 15% of the UK’s, the UAE annual franchise exhibition boasts an incredible array of brands from an equally incredible number of business sectors, from cleaning and childcare, to fast food and retail.

One of the great advantages of such a franchise savvy population, is that provided you understand the mechanics of how each country likes to do business, you won’t need to work too hard convincing them of the merits of a well structured and proven franchise system. The two other jewels in the crown are Qatar and Saudi Arabia. Saudi Arabia has a substantial population (27m) and well-documented spending power, and Qatar (pop. 2m) has jumped into the spotlight as the host (correct at the time of printing) of the 2022 World Cup.

There is certainly a high demand for western brands, with UK high street favourites Top Shop and New Look chasing US giant Gap for market share, and it should come as no surprise that the likes of Ferrari and Lamborghini feel it is worthwhile exhibiting at Middle Eastern franchise exhibitions.


So what are the best ways to go about it?

Many companies will appoint an agent or distributor in the target country, however this will often produce mixed results as it is hard to maintain control over branding, quality, sales performance and standards. Others will establish a concession or licence partnership and this can certainly work well in some circumstances for relatively simple franchise concepts. Where we see the greatest success however, is with the appointment of a country or regional master franchisee; the greater the stake, the greater the effort and commitment.

 

  • Less investment is required than setting up company owned outlets.

  • Owners will have a greater commitment than managers.

  • You keep tight control of brand and quality standards.


In other words, pretty much the same reasons you franchised your brand in the first place. So, what will the right international partners bring you?
 

  • Local knowledge, business experience and network of contacts.

  • Overcomes many legislation, culture and language barriers.

Platinum Wave has a significant amount of experience in dealing with the complexities of these markets and there is no question there is much to learn. One thing is for certain though, don’t even consider trying to do this without the assistance of experienced international franchise lawyers, and if you want to avoid costly mistakes, then you will need specialist franchise consultancy by a firm who have hands on experience, a proven track record and contacts in these countries in order to guide you through the international franchising process – from assisting with market feasibility studies, the development of your operations for international expansion, international franchisee recruitment and the successful implementation and launch of your international offering onto new markets.

Hitting the market with an exiting proposition is one thing, but when you can combine that with a credible track record and a watertight knowledge of the local appetite for your product, you can find yourself very quickly dealing with your dream investment partners and an enviable development schedule. 

There are several questions that should be applied to any type of franchise considering taking such a big step:

 

  • Is there a demand for the product or service in the target country? Just because your brand and product/service offering is a success in your home market, does not guarantee it will be well received or in demand in other countries.

  • What is the profile of your ideal master franchisee or regional developer and how are they going to be recruited?

  • How are you going to establish the franchise brand in the market and how can you sustain brand awareness?

  • What training and support infrastructure needs to be put in place to enable franchisees to succeed in that market and to enable you to maintain brand standards as your international franchise networks grow?

 

Once you establish that you think it can work, you need to establish if it is financially viable to take the first steps. It is very easy to underestimate the costs involved, as making your business “international friendly” carries many inescapable expenses  such as market research, legal fees, broker fees, translations, travel, trademarking and so forth.  Whatever budget you have allocated, you might want to double it!

 

It may seem entirely obvious to say that it is essential that you choose the right partner to be your country or regional master franchisee, but the industry is abound with horror stories resulting from poor decision making from franchisors who made the mistake of believing that the ability to pay the franchise fee necessarily equated to having the ability to make a success of the business. This is where the services of a franchise consultant with international experience can be invaluable. You are making a huge commitment when taking on an overseas partner and it is vital to do your due diligence to ensure they fit with your business.  It is also vital to ensure that your intellectual property is properly protected, that is, your brand and domain names, and the franchise agreement documentation is properly constructed to minimise your exposure to risk, and again, do not for a second consider using a solicitor or firm that does not specialise in franchising or is able to demonstrate current international experience.

 

At Platinum Wave, we love working on International projects but we aren’t afraid to tell you if we don’t think your brand is either ready or suitable. Many franchisors have been blinded by the flattery of an unsolicited offer from a seemingly serious overseas investor, with the temptation to jump straight in with both feet only increased by a sunny and appealing destination like the UAE .

 

However, when the brand is right, the time is right, and the commitment is there from a high caliber overseas partner… it really is the most rewarding side of franchising.

 

Here are our top ten tips for getting it right.

 

  1. Know your market and competitors

  2. Seek advice from an experienced franchise consultant and lawyer

  3. Validate your market – market research is key

  4. Prove your brand first with a pilot in that market

  5. Choose your country or regional master franchisees carefully

  6. Don’t underestimate the investment required

  7. Ensure the branding, messaging and marketing communications are appropriate for the country

  8. Create a strong franchisee support infrastructure and ethos from the start

  9. Ensure strong brand auditing processes are in place to maintain brand standards as your international network grows

  10. Partnership approach is key