Saudi Arabia's rewarding franchise future

Franchising leaders of MENA / The 'Saudi Vision 2030' has been a catalyst for large investment projects in Saudi Arabia.
Monday
2023-01-09
With a favourable market, a vibrant commercial environment and thriving investment activities, Saudi Arabia has become a burgeoning investment hub in the Middle East.
 

Over the years The Kingdom of Saudi Arabia has welcomed hundreds of global brands, granting franchises in many regions across Saudi Arabia and are constantly expanding with new branches.

In fact, Saudi Arabia represents almost 60% of the Middle Eastern franchise market. Showcasing its prowess as a region worth considering for international brands - especially after launching ‘Saudi Vision 2030,’ which has been a catalyst for large investment projects in Saudi Arabia - whose economy is among the world's largest economies.

The massive global industry of franchising enables major international companies to gain access to local markets and open up new opportunities for small investors and entrepreneurs to expand and grow their businesses.

In 2020, the executive regulations of franchise law came into effect, which was approved by the Council of Ministers in late 2019. Saudi’s franchise law encourages franchise activities in the Kingdom by setting a legal framework for the relationship between the franchisor and the franchise, based on a transparent promotional basis, and provides the necessary protection for the whole process.

Franchise consultant, Mr. Ahmed Al-Arfaj, stated that franchise law includes 16 Articles that regulate the relationship between the franchisor and the franchisee in all aspects of the activity, and preserve the rights of all parties. It also includes a disclosure appendix to help the potential franchisee concluding a franchise agreement. He also stressed the importance of abiding by the law’s provisions, to acknowledge your rights and steer clear of any violations.

Mr. Ahmed Al-Arfaj, who helped in launching and expanding numerous local brands by franchising them in many regions of the Kingdom, also mentioned the striving efforts taken by the Saudi government to encourage direct investment, including developing an intellectual property rights strategy, which provides full protection to trademarks. Furthermore, the strategy helps in facilitating registration and protection of trademarks, which had been made easy and accessible through online portals. He also referred to the government's plan to encourage Saudi brands by launching the “Made in Saudi Program” aimed at creating new Saudi brands and providing promising opportunities for companies, expanding its business and promoting its products locally and globally.

The program serves as a great opportunity to recognise technical innovations and creative talents, reflecting the Kingdom's Vision 2030 towards national economy, and contributes to strengthening cooperation between local investors and entrepreneurs with their counterparts abroad, thus advancing the national economy. The “Made in Saudi” logo on local brands will also contribute to improving Saudi Arabia's image around the world.

Small and Medium Enterprises General Authority (Monsha'at) confirmed that the financial guarantees provided by the "Kafalah" program reached 71.3 billion riyals by the end of the third quarter of 2022, while the total financing portfolios in the franchise sector amounted to more than 1.7 billion riyals.

Franchise Centre

The Franchise Center serves to support the franchise system in Saudi Arabia by providing many services and offering franchise opportunities for brands. It acts as a link between these brands and entrepreneurs and investors, in pursuance of increasing SME sector's contribution to GDP, in line with the Kingdom's Vision 2030.

The Centre recently launched the Tomoh program which aims to support fast-growing brands that are eligible for franchising, by promoting their growth, qualifying them to expand through the franchise system, and building an operational system for Saudi brands.

Main duties of the Franchise Centre

The General Authority for Small and Medium Enterprises established the franchise center as per the Council of Ministers Resolution (No. 122 dated 9/2/1441 AH), to be responsible for the below:

  1. Developing a code of conduct for mediation and conciliation activities in franchising.
  2. Developing required programs and holding events to raise awareness of franchise activities, relations and opportunities.
  3. Publishing awareness and educational brochures and documents related to franchising.
  4. Preparing franchise studies and researches and collecting related information and statistics.
  5. Raising the awareness of franchise practitioners about franchise law, regulations and decisions related to their practice.
  6. Settling any disputes that arise between franchisers and franchisees amicably in coordination with other competent centres.
  7. Identifying the obstacles facing franchise activities, to discuss them with the competent government agencies, to reach appropriate solutions.

The Centre seeks to achieve the following objectives:

  1. Improving and promoting Saudi Arabia's image globally, to attract international franchises.
  2. Encouraging local Saudi manufacturing brands and providing services in order to expand regionally and globally.
  3. Contributing to education, knowledge transfer and increase the efficiency of both local brand owners and franchisees to compete at multi-sectors level.
  4. Motivating both entrepreneurs and initiators to obtain a franchise, rather than establishing a new business.
  5. Facilitating access to financing for brand owners and franchisees.

165 brands & counting

The number of brands registered at the Franchise Centre reached 165 brands in various industries such as: Retail, restaurants, automotive, healthcare, tourism, hotels and more.

Franchise Program by Social Development Bank

The Social Development Bank offers a franchise program to support franchise projects, through financing products starting from 150,000 to 4 million riyals, with a financing period of up to 8 years.

The program contains more than 60 brands, granting franchise rights in various domains such as restaurants, cafes, patisseries, healthcare and more. They are available on the bank’s website.

Support & Consulting

Many specialised institutions and companies promote franchising in Saudi Arabia. This includes the Arab Franchise Marketing Corporation (AFMC), with branches in the Middle East and North Africa. They are responsible for offering and marketing franchise opportunities, as well as providing quality administrative and legal services to those wishing to obtain franchise rights.

The AFMC provides a media platform for marketing local distinctive brands as well as some foreign brands, and offers an easy and smooth service for brand owners "franchisers" and franchisees by registering on the platform and enjoying countless advantages and features. AFMC works with Profit System (headquartered in Warsaw, Poland) to generate and discover practical and provocative solutions to develop the franchise industry in the MENA region in general and in Saudi Arabia in particular.


Franchise consultant, Mr. Ahmed Al-Arfaj / Mr. Ahmed Al-Arfaj says that the Saudi government is encouraging direct investment, including developing an intellectual property rights strategy, which provides full protection to trademarks.

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