JEDDAH, 10 January — Saudi Arabia, where eight percent of its retail activity is from franchise business, has great potential for franchising its businesses worldwide, according to international experts.
"Franchise could be a key to help speed up the process of Saudization in the Kingdom as it encourages self-employment. The Kingdom currently maintains a 27 percent growth rate in this rapidly growing business concept," said the experts, here to participate in a three-day Franchise Investors Forum which began yesterday.
The forum, organized by the Jeddah-based Franchise Development Services (FDS) in cooperation with the Jeddah Chamber of Commerce & Industry, held its first day-long meetings with local investors at the Crowne Plaza Hotel. A second session will be held at the same venue tomorrow. The main event of the forum will be at the JCCI today with international participants giving their presentations.
"The franchise concept, promoted in the Kingdom barely five years ago, is the safest for running a business and has the lowest failure rate," the experts told Arab News. They included Roy Seaman, managing director of the UK-based FDS, Tony Urwin, the Middle East regional director of FDS. Top executives of international franchiser companies are looking for master franchisees or area developers for their brands of services here.
The executives were Steven J. Lilly, franchise development manager of the Riyadh-based United Auto Service & Maintenance Co. (Midas), Paul E. Barkman, director of the US-based Roto-Rooter, Steven Vanson of the Sweden-based franchise sales manager for the Middle East, Europe & North Africa of English First, and Walid K. Haroun, the Jeddah-based operation manager at Al Ghazzawi Development Co. (Joffrey's).
Seaman said: "We've been able to identify three types of master franchisers in the Kingdom." He added that previous slow uptake of franchises in the Kingdom was the result of investors' reluctance to co-operate and a language problem.
A new breed of entrepreneurs were now joining forces to operate franchises in the Kingdom as they offered self-employment without heavy investment, training of personnel and constant supervision by franchisers.
"After the Kingdom's food sector, which has marked a steady growth, its service sector is now being tapped by international franchisers," he said, adding: "A great number of franchise opportunities could have resulted in business partnerships if the potential investors had met our requirements."
Striking an optimistic note, Seaman hoped at least 50 Saudi companies would establish their franchises worldwide in the next few years.
The Kingdom's franchise business is estimated at $250 million, while the US, described as the home of franchises has the largest number of individual employers in the world, where investment exceeds $1 trillion, according to Seaman.
Roto-Rooter's Barkman said the past experience showed that 85 percent of the companies which split from their franchisers failed, mostly because the concept and brands promoted under the franchise were no longer available to consumers.
Lilly said the Kingdom had an untapped market for franchising and so there was unlimited scope to promote the concept for rapid business growth.
