Franchising

As a key commercial hub in the Middle East region, and benefitting from continued economic growth, population expansion, and as a tourist destination for visitors from around the world, franchising is a key feature of the UAE commercial landscape, for both local and international brands.

This is particular the case for F&B brands, and with some important take-aways.

F&B is the dominant franchising sector, primarily due to the level of tourism and also the diverse population. According to the Ministry of Foreign Affairs (more than 200 nationalities live and work in the UAE). This has led to significant appeal in the UAE market for F&B brands from all over the world, and where the UAE is often the 'stepping stone' to expansion in the rest of the GCC and MENA region.

A prominent and popular F&B brand originating from the Philippines is Jollibee, which currently has with more than 1700 stores across the world, including across the Middle East. Leveraging the existing reputation amongst expats from the Philippines and South East Asia, who were familiar with the Jollibee from 'back home', there are now more than 20 locations in the UAE. The announcement in November that Jollibee will be taking full ownership of set to gain full ownership of Tim Ho Wan, the Hong Kong dim sum restaurant chain, illustrates the diversification model followed by many F&B brands (Jollibee also acquired a 70% stake in Compose Coffee, the South Korean coffee brand, earlier in 2024).

A number of 'home grown' UAE F&B brands are applying the same model and either acquiring or development parallel and complimentary brands to their core QSR service offering, and then rolling these out through direct operator, or franchise models, or both.

So, what's the take-away for an F&B franchisor?

• Ensuring that sufficient registered trade marks are in place in the current and future markets of interest in the region ensures control and ownership of the brand's trade marks when entering franchising agreements.
• This strategy also minimises the risk of a third party, seeing the launch of the F&B brand in the UAE, being able to file for and register an identical or imitation mark in a nearby country and offering a competing but sub-standard brand offering, or holding the franchisor to ransom (either by way of a punative trade mark licence agreement or excessive sale price for the trade mark.
• A failure to deploy a suitable trade mark strategy can result in a franchisor suffering adverse effects of brand confusion (complicated by the borderless nature of social media); potential negative goodwill in the market and diminished appeal to potential franchisees (particularly if the service and/or quality levels of the authorised 3rd party are poor); and possibly being 'locked out' from the third party's country unless the franchisor succeeds in costly court proceedings.