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Franchising and the new Arab world

Franchising and the new Arab world

How franchising will help in the fulfillment of economic development and national transformation programs of the Arab countries.

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Over the years, business relationships between corporations went through various trial and error stages by means of agencies, distribution, licensing, and representation with each having its own limitations in terms of transfer of know-how and support as compared to franchising.

For example, agencies and distribution are limited to granting the right to sell products and/or services, while licensing is limited to granting the right to use a trade name or trademark. For this reason, franchising is differentiated in comparison with other business relationships as it represents a more comprehensive formula by granting the franchisee the right to use the know-how, management, and operating systems through the provision of manuals and management and technical training. That is in addition to the initial and continuous support programs which ensure compliance with performance measures and standard operating procedures of the franchisor.

In the coming years, and because of this qualitative advantage, franchising will become the most popular means of doing business in the Arab region, especially with the constant talk about the changes that occurred in the countries that were able to overcome the waves of the so-called “Arab Spring” and what is associated with that of the desire of the political leaders in those countries for achieving real economic and social progress that corresponds with the aspiration of their peoples for freedom and prosperity.

I see a clear example of the economic development plans represented in Saudi Arabia’s vision 2030, Egypt’s vision 2030, Bahrain’s vision 2030, Kuwait’s vision 2035, and Oman’s vision 2040, all of which have one common objective which is to diversify sources of income in preparation for the post-oil era.

“I see a clear example of the economic development plans represented in Saudi Arabia’s vision 2030, Egypt’s vision 2030, Bahrain’s vision 2030, Kuwait’s vision 2035, and Oman’s vision 2040”

The best example of these visions is what His Highness the Saudi Crown Prince Mohammed bin Salman said when he mentioned that the Middle East will become the “new Europe”.

Vision and transformation

All these visions and associated national transformation programs in each country focus on supporting emerging and priority economic sectors that contribute to building diverse economies, interact with the social changes in the new Arab world and compete in meeting the needs of citizens in the present and future.

The national transformation programs in Arab countries emphasize the support for small and medium enterprises as the most important factors in implementing these ambitious visions. And here comes the role of franchising in business growth and development in increasing the contribution of small and medium enterprises to GDPs, enabling entrepreneurs to utilize franchising as a proven and safe way to do business and creating new job opportunities for youth.

These nationwide visions also focus on activating the role of women in society and providing them with the opportunity to achieve their goals and objectives in the process of development, growth, and modernization. This is exactly what franchising can achieve by giving women various opportunities to enter the business market, whether through direct employment or via establishing their own business or even by means of home- based businesses in the Arab world.

At the franchisor owner’s level, franchising contributes to business expansion and multiplication of the number of operating units with a small management structure, and with low investment risks. Moreover, franchising helps in reducing the cost of raw materials through the large purchasing power of the franchisor. It also helps in improving cash flow, which can be used to expand market research activities and in the introduction of new products and services, reflecting in a superior business that can compete in the local and international markets.

In addition, franchising qualifies the franchisors to develop the essential training programs for the personnel in both owned and franchised units, which is reflected in increased efficiency at all levels, ensuring uniformity in operating procedures. Franchising also helps in synchronizing marketing plans and sales techniques, which strengthens the business image and increases the popularity of products and services. Of course, this will inevitably reflect in an added value for franchisees as they benefit from the management and operation system of the franchisor and the marketing power of the brand.

As for customers in the densely populated Arab world, they are now enjoying more than ever before the availability of high-quality goods, products, and services through advanced product supply chain systems, providing more choices in quality and prices.

“In the new Arab world, homegrown franchise brands will expand into different parts of the world, and they will introduce more trends, tastes, products, and services”

Also, the use of advanced technologies introduced by the franchisors will lead to more qualified human resources, providing maximum creativity to develop businesses that can satisfy the ever-changing requirements of customers.

The new Arab world

In the new Arab world, homegrown franchise brands will expand into different parts of the world, and they will introduce more trends, tastes, products, and services. These emerging brands will contribute to revealing the true Arab culture to the world.

As is the case with literature, sport, music, and cinema being bridges between cultures that help bring people from all parts of this wonderful world together on a common platform. A world that does not distinguish between race, color or belief, franchising with all its unique qualities represents the commercial version of this metaphorical bridge that unites people, consumers, businesses, governments, and nations in the same way.

Eventually, the Arab franchise industry will continue to be a major engine in the growth of its economies and will be a bridge extending between its rich culture and the cultures of the world.

THE AUTHOR

Sary Hamway is the founder and CEO of The Franchise Trainer, which is a capacity-building platform offering franchise, business, management and entrepreneurial training, and consultancy services.

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