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Egypt's Franchise opportunities

Franchises are playing a more and more important role in the Egyptian economy

Safeya Mounir , Wednesday 21 Nov 2018
Egypt
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This week Cairo hosted the 16th Middle East and North Africa International Franchise and Licence Exhibition (MIFE), an annual event drawing attention to the growing role of franchises in the Egyptian economy.

“This year saw first-time exhibitors in the Egyptian market,” said Hatem Zaki, secretary-general of the World Franchise Council (WFC) and board member of the Egyptian Franchise Development Association that held the MIFE.

“The MIFE’s annual meetings aim to shed light on the success stories of trademark holders, businesspeople in the Egyptian market, and the holders of trade names wishing to sell their trademarks to others seeking job opportunities,” Zaki said.

Franchising is a way of distributing products and services based on a contract between two parties that are independent legally and economically in which the franchisor lends his trademark to the franchisee who pays a royalty for the right to do business under the franchisor’s name in an agreed-on region for a certain time.

According to a franchising contract, the franchisor is committed to extending technical help when needed in return for fees or economic interests. Egypt was first introduced to franchising in the 1970s with the advent of US fast-food chains in the country.

The MIFE draws attention to some of the franchise opportunities available and connects sources of finance with people seeking loans for projects. This year the sources of finance included the Social Fund for Development, the National Bank of Egypt and the Export Development Authority, Zaki added.

The MIFE was held this year under the title of “Social Franchising and Sustainable Development” and aimed to apply franchising to achieve social benefits, instead of simply individual gains, through allying a social target with a successful economic model and creating new job opportunities.

“The annual growth rate of franchises in Egypt has reached 20 per cent,” Zaki said. Direct franchise investments in Egypt are estimated at LE80 billion, while indirect franchise investments recorded LE90 billion. Together, they provide 90,000 direct job opportunities and 1.6 million indirect ones.

Annual franchise sales exceed LE12 billion annually in Egypt, and there are now around 60,000 franchised outlets across the country, including restaurants, stores, coffee shops, hotels, banks, law and international accounting firms, schools, universities, factories and real-estate companies.

According to Hussein Abul-Fath, secretary-general of the Egyptian Franchise Development Association, franchise projects can provide job opportunities for many Egyptian young people.

“These projects are often less risky and have a higher success rate,” he said, adding that the “MIFE presents an array of opportunities for local and international franchises and encourages national and foreign investors. It is the perfect environment for Egyptian and international exhibitors to strike deals with potential investors.”

A recent WFC study on the economic effect of franchising revealed that the gathering represented 40,000 international trademarks and 2.6 million stores or other units around the world.

WFC franchises produce 2.7 per cent of gross world economic product and employ 29 million workers.

“Franchising gives the franchisor an opportunity for his trademark to expand outside the borders of his country,” Abul-Fath said, adding that the Egyptian Franchise Development Association is working towards a draft bill focusing on registering contracts between the parties and terms of disclosure.

The association has held hearings with the Ministry of Trade and Industry, lawmakers, the Federation of Egyptian Industries, business associations and academics to draft a law guaranteeing the rights of both franchisor and franchisee, he said.

The three-day event was held in conjunction with the WFC’s annual meeting comprising 46 federations from 43 countries, together with the European Franchise Federation, the Asia-Pacific Franchise Confederation, and the Ibero-American Franchising Federation.

Exhibitors from China, Singapore and Malaysia attended the MIFE for the first time. 

*A version of this article appears in print in the 22 November, 2018 edition of Al-Ahram Weekly under the headline: Franchise opportunities

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