Dubai: Franchising could help promote the fortunes of family-run businesses in the region during the economic downturn, experts and industry officials have said.
Franchising has a long history in the region, with many GCC family businesses thriving on the business practice.
Over 60 franchise businesses from various sectors are trying to sell their brand names at the Franchising Middle East exhibition that started yesterday and ends tomorrow.
The exhibition is being held at the Dubai International Exhibition Centre.
One of the companies making its debut is David Reid Homes, a custom home construction company which has operations in New Zealand, Australia, the United Kingdom, Ireland and the United States.
"We feel there's certainly a lot of opportunity in the Middle East," said Martin Pick, the European Master Franchisee for David Reid Homes.
"In Dubai, we would be looking for one individual or one company who would want to operate under the David Reid Homes umbrella brand according to our standards," he said.
"It would be buying this licence to operate and say, ‘I am David Reid Homes in Dubai.'"
The homes are custom-built for clients seeking anything from an energy-efficient home to a house with special needs facilities.
While the company primarily caters to those wanting to build their dream home, it's also targeting those with a lot of cash to spend.
"In the United Kingdom, an average detached house would cost around £400,000 (Dh2.2 million). We tend to work beyond that.
"We wouldn't expect to be building a home for less than half a million pounds," Pick said.
In order to obtain a lic-ence to operate under the David Reid Homes brand in the UAE, it would cost a potential franchisee $150,000, Pick said.
"We'd expect the franchise holder to get that money back at least in their very first construction, after that they make [a] profit."
Ehab Ezzat is another businessman who's looking for investors that would be interested in adopting his food business and bringing it into the GCC market.
Ezzat created Pizza Conez five years ago — a food concept that serves cone-shaped pizzas to go. The pizza cones are frozen and then heated up for the customers.
Ezzat said there is potential business for Pizza Conez in the UAE.
"In the UAE, we expect to open in every mall and every corporate building, at the airport, at... Metro stations, so we're looking at at least 30 outlets," he said.
His franchise business is currently operating in Egypt but he hopes that it will soon set up base in Saudi Arabia and Pakistan.
Even a Hungarian designer decided to close her lingerie store operations in Hungary and come to the UAE looking for better business opportunities.
Sylvia Marton, co-founder of the European brand Sylvia She Glows is opening her first store in Dubai this May.
"We tried to set up shops in Hungary, but Hungary is not really open to luxurious stuff. Most people don't care about it," said Boglarka Bonnyay, franchise and marketing director for Sylvia She Glows.
Bonnyay said people in the Middle East are interested in the latest designs and accessories, thus presenting a better business platform for them.
Emmad Charafeddine, managing partner at Francorp, a franchise consultancy said that most international companies were looking at the region because of its status as a business hub.
"Let's face it, we have [the] money," he said.
What is franchising?
Franchising is the practice of using another firm's succesful business model. For the franchiser, the franchisee is an alternative solution to building chain stores to distribute goods while avoiding the investment and liability risks associated with setting up chain operations.
The franchiser's success usually lies in the success of his franchisees. At the same time, the franchisee has a greater incentive than a direct employee because he has a direct stake in the business.
With more than 50 per cent of total retail businesses in the United States, 45 per cent in Canada and 26 per cent in Australia, all choosing a franchise model for expansion, the impact of franchising on retail industries across the globe is considerable.
Many people think of fast food restaurants like McDonald's, Burger King and Wendy's when they think of franchising. However, there are several more types of franchise businesses.
One out of every $3 (Dh11) spent by Americans on goods and services is spent on goods sold by a franchised business.