Dubbed the ‘energy-powered economies’, these countries have a combined population of 65.6 billion people with a staggering GDP of $3.6 trillion.

These are global markets that, until recently, have gone under the radar of Australian SMEs. In the retail space, franchising is a proven vehicle for rapid regional expansion and dominance in niche markets. In fact, franchising in MENA is worth $30 billion and growing at approximately 27% annually.

Once established, a franchise has a strong market presence and high recognition, rapidly filling in the market gaps with proven products and services.

EXPANDING A FRANCHISE TO THE MIDDLE EAST

Expansion of franchise systems can be either straightforward or may require rethinking and strategic tweaking prior to launch – particularly for new concepts in unfamiliar markets. 

Regardless, new entrants have to put in the hard yards, do their research and introduce the brand in a way that resonates with customers’ needs and expectations.

Tips to consider

  • Adjust the menu for cultural preferences, tastes, guidelines, including religious observance, and customer expectations if franchising in the food industry.  For example, Herfy, a large fast-food restaurant chain, knocked KFC from its position as the dominant fast food outlet in Saudi Arabia by adjusting its menu to suit local consumers.
  • Implement culturally appropriate ambience. For example, Herfy and other public eateries must provide designated areas for women and families. Female intimate apparel retailers must also comply with the Saudization requirement of employing only female shop assistants, and put up decorative partitions as well as employ shop security personnel to allow access to female shoppers only.
  • 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 and other laws are serious issues that impact entry and growth.
  • Choose the appropriate franchise agreement model and partners. For example, choose master franchisees and area developers in preference to single-unit owners. Consider infrastructure setup, logistics, and franchising systems (multi-unit franchisees may offer the best model for rapid international expansion).
  • Choose appropriate real estate locations. Considerations include the lack of new properties, high cost of occupancy and quality of the location.
  • Research, research and do more research to get close to your customer and capitalise on growing the brand. Above all, don’t just knock off cross border success because each case is unique and success factors are not always evident.
  • Build goodwill by adopting a fresh perspective to expand the brand. Take into account geographic issues, the political climate, linguistic and cultural nuances, legal complications, franchise structures and economic considerations.