Setting up a new company, buying an existing business, and merging with another corporation are the three most common ways of starting a business in Dubai. However, in the last few years, another way of breaking into Dubai’s market has been gaining traction: franchising a business.
Franchising is now one of the best methods to successfully set up a business in Dubai. This is because the UAE is now considered one of the most promising and opportunistic international franchise markets. It also helps that the UAE has one of the fastest-growing markets in the world and that the country is an investor-friendly region.
Benefits of Franchising
If you are looking to enter Dubai’s exciting and lucrative market, franchising is one option you should consider.
Buying a franchise in Dubai offers several benefits which include:
- Business expansion with virtually no possible liability. This is because it is the franchisor, not the franchisee, who signs the lease and commits to various service contracts. This implies a reduced risk of failure on the part of the franchisee as well.
- Access to much-needed resources. One of the best advantages of franchising is that it combines the entrepreneurial passion of a small or first-time entrepreneur with the industry know-how and resources of a larger corporation. This business structure is highly efficient and provides entrepreneurs more benefits.
- Take advantage of an established brand reputation. Since the company that is open to franchising is already an established brand, there will be fewer difficulties with entering the market. This is because the company already has well-known and trusted products or service outcomes. Business trademark and recognition are easier to achieve as well.
Setting Up a Franchise in Dubai
To ensure your success in buying a franchise business in Dubai, take note of the steps and tips below:
1. Research your franchise brand options
Before making the decision to move overseas to start a franchise business in Dubai, carefully study the different franchise brands.
Go online to look for or request marketing prospectus from franchisors. Take the time to read testimonials from previous and existing franchisees, too.
If you are interested in dealing with a well-established international brand, ask the company to send you a Franchise Disclosure Document (FDD). This document contains the franchising rules, fees, franchise responsibilities, and other important financial information.
Additionally, ask the company representative or staff if you can request a draft copy of the Franchise Agreement. This is a legal contract that contains all the franchisor’s rules and regulations.
2. Understand the types of franchise businesses
There are two main types of franchises recognized by the Dubai Department of Economic Development (DED). These are:
- Single-unit franchise – Under this type, the franchisee will sell or distribute the products or services of the franchisors through a single company.
- Multi-unit or developed franchise – This type of franchise requires the franchisee to open several spaces or sites which will be controlled by a single company.
Each type comes with its own set of advantages and disadvantages. You can get more information about them from the franchise brand or from a business set up consultant based in Dubai.
3. Decide where to set up shop
There are two main areas in Dubai where you can open your franchise business: in mainland Dubai or in one of the free zones.
If you want to open a shop or office in mainland Dubai, you need a UAE local as a sponsor and business partner. However, if you open a company in one of Dubai’s free zones, you don’t need a sponsor. You will retain 100% ownership of the franchise.
Setting up your business in mainland Dubai or in a free zone is one of the most important decisions you have to make. As such, make sure you carefully weigh the pros and cons of each location and that you choose the right area where your business will get the most benefits.
4. Proceed with the franchise acquisition
Once you have chosen a franchise, the type of franchise, and the most ideal business location, ask for the final agreement from the franchisor. Read the document thoroughly.
Don’t hesitate to consult a lawyer before signing and submitting the agreement to ensure that the contract protects you and your interest.
After signing the contract, you will have to register your franchise agreement before a UAE court and apply to obtain the trade license for your business.
Make sure you have all the necessary documents to do these, such as the business plan and summary, financial plan, and marketing policies.
Opening a business in Dubai through franchising can still be tricky, especially if you do not know the ins and outs of starting a company here. If you want to have a less stressful time going through the process of starting a franchise here, consider getting help from seasoned business setup consultants.
Raj Herry is the Founder and Chairman of Flying Colour Business Setup Services. His extensive experience comes from more than 15 years in the field of company incorporation for Dubai Mainland, all Free Zones across the UAE and offshore companies worldwide. He also owns several business centres offering furnished and ready-to-move offices in Dubai.