The Life: Q&A: Local entrepreneurs may think they have a solid business idea that could be franchised outside of the UAE. But franchising trends for retail, restaurant and service-based concepts have been shifting as of late.
Trends shift as more try for slice of the pie
Entrepreneurs here may think they have a solid business idea that can go global. But franchising trends for retail, restaurant and service-based concepts are shifting. Gaurav Marya is the managing director at Franchise Middle East, which connects entrepreneurs with potential franchiser buyers. Here he talks about the market changes ahead of this year's Franchise Middle East exhibition in Dubai next month.
q How established does a business need to be before it can realistically expect to sign a deal at this show to franchise its operations outside the Emirates?
a The companies that have proven concepts. They don't have to have a certain number of stores, but some standardisation needs to be achieved. It's about how good the capacities they build are.
q Such as?
a Take a food brand, like Just Falafel. The have to have a lot of operating manuals, training manuals, their own operating systems in place. Their operational team has to know how to enter international markets. You need to know how to manage the supply chain.
q What has changed most in franchising within the UAE since the show was first held here three years ago?
a A lot of things. When we started it was dominated by the retail market. There was an oversupply of that. Today, people are focusing on food as a dominant area. But services - business-to-business and business-to-consumer services - [are opportunities, such as in] education, car-dealing and cleaning companies, and playschools. Shifting is good for the economy, because retail only contributes about 15 per cent of total business. Everyone cannot focus on that.
q Which franchising concepts are performing the best right now?
a Services are very interesting. They're usually low-cost, easy-to-start. It also gives you an opportunity to serve a large set of customers. Education and healthcare - [such as] laser clinics - is also very interesting. Beauty salons are doing very well.
q Which ones are struggling?
a I think fashion largely has not been too interesting. Luxury also has a little bit of an issue. I think there's a little oversupply of luxury. Anything that has value, affordability is doing pretty well. Speciality retail like home furnishings has a little bit of a problem. There's a tremendous supply in this market.
q What more needs to be done to help local entrepreneurs in franchising their concepts abroad?
a Singapore [provides] one of the greatest examples. They had a special body called IE [International Enterprise], which used to work with local companies and make them export-ready. Dubai SME is a good foundation, but I don't think they've been able to successfully do that. They have to be more aggressive on how they look at Dubai-based or UAE-based companies and how they can export intellectual opportunities.