Doing Business in Saudi Arabia - International Franchise Association

Franchising – FRA
Overview Return to top
Saudi Arabia is the largest market in the Gulf region, and the franchising model continues to
expand in several business sectors. Half of the Saudi population is under the age of 15 and
many have traveled to the United States and Europe, where they acquired a taste for Western
culture, lifestyle and food. Over the past 10 years, the number of franchises has increased in
Saudi Arabia, the largest market in the Middle East. Most of the international franchise concepts
are available, some of them under “the exclusive agency” concept by which agents are used to
opening numerous stores and branches under their own ownership.
American franchises account for more than 70% of all franchised operations in Saudi Arabia.
Recent estimates point to investments in this sector of about $250 million, growing at an
average of 20% every year. There are more than 300 foreign companies that have established
a franchise in Saudi Arabia. Additionally, many local companies are now pursuing their own
franchising concepts, and have expanded domestically and regionally.
The Saudi government is keen to encourage growth in the private sector to increase
employment opportunities for Saudi graduates, and at the same time to lessen the dependence
on oil resources. Studies indicate that franchises have made significant contributions to the
country’s economy, stimulated growth and diversified business concepts, which, in turn,
prompted young Saudi entrepreneurs to explore and invest in the franchise sector. This has
also boosted the demand for franchise consulting and development services.
Best Prospects/Services Return to top
Franchising opportunities are expanding beyond restaurants. The franchise market is not
limited to this sector only, but it also covers automotive services, beauty, laundry services,
printing, hotels, logistics, medical, retail, furniture and food and beverages. There is a demand
for anything related to automobiles – customization, accessories, products and services.
Likewise, specialty retail stores, educational products and services, and home furnishing
franchises are in demand.
U.S. franchisers have led the market and recently, with names like Krispy Kreme, Gap & TGIF
entering this growing market.
Opportunities Return to top
Saudis are encouraged by the various Chambers of Commerce to look to franchising as a way
to create jobs, provide additional training to new job entrants, and encourage small business
development. The retail industry is booming in Saudi Arabia and this phenomenal expansion is
creating tremendous opportunities for new products and services, which in turn, has created
intense competition among brands, retailers, vendors and other service providers.
Success in the Saudi market is often attributed to finding the appropriate franchisee and
location. Usually, fast food franchises are situated near shopping centers or areas with high