The United Arab Emirates (UAE) is currently one of the most promising and investor friendly regions for franchise opportunities. With the many different festivals, business conferences, trade shows, etc. the UAE has been very successful in drawing foreign investors into their country. Expo 2020 Dubai is right around the corner and is expected to be the biggest business exhibition the world. The UAE will attract massive amounts of business and leisure travelers from around the world.
In this blog, I will cover information on franchising and how Arabic translations can help you successfully enter this prosperous market.
UAE Country Statistics
Population: 9.68 million (2019)
Largest Cities: There are eight cities in the UAE: Abu Dhabi, Ajman, Al Ain, Dubai, Fujairah,
Ras Al Khaimah (RAK), Sharjah and Umm Al Quwain (UAQ). With over three million people, Dubai ranks the largest among them all.
Religion: The official religion practiced by approximately 80% of the population is Islam. Christians make up the largest minority religion at 9%, followed by Hindus and Buddhists.
Government Type: The UAE has a presidential, federal and despotic monarchy. The UAE is a federation of seven constituent monarchies, which include the Emirates of Dubai, Ras al-Khaimah, Abu Dhabi, Umm al-Quwain, Ajman and Fujairah. The President and the UAE’s head of state is also the ruler of Abu Dhabi and the Prime Minister is the ruler of Dubai and the head of government of the UAE.
GDP: $432 billion USD (2018)
Currency: United Arab Emirates Dirham
UAE Franchise Information
Franchise opportunities allow companies to expand without the risk of debt or the cost of equity. Like any other business plan, franchising always needs solid research and a market analysis to identify the competition, demand vs. supply in the market, customer behavior, laws, banking rules and so on.
To open a franchise in the UAE, you will need a UAE national sponsor to partner with for beginning the business. However, the UAE’s initiative to attract foreign investors and companies has introduced multiple free zones across the emirates, which allows you 100% foreign ownership with no taxes except the 5% VAT, which was introduced in 2019. A larger capital base is needed to open in a free zone.
A few of the factors that make the UAE an attractive market for opening international franchises include:
- World-class infrastructure.
- Improved intellectual property legislation.
- Government efforts to diversify the economy.
- A growing expatriate population, which is changing customer behavior.
- A growing number of high net-worth individuals who prefer leisure and consumer spending.
The opportunities for UAE franchises span multiple sectors including food and beverage, fashion retail and convenience stores. An article published earlier this year by TopFranchise.com states that the UAE, Dubai in particular, is one of the best destinations in the world for shopping tourism. They also compiled a list of the top 10 franchise opportunities, which include: Jones the Grocer (a gourmet food emporium), Danube Home (home furnishings), Splendore Jewellery, Baskin Robbins (the world’s largest ice cream chain) and Gloria Jean’s Coffees.
UAE’s New Unrestricted Foreign Investment
Previously, foreign investors in the UAE were required to partner with a local Emirati or GCC partner who would hold 51% interest. The foreign investor would control 49% equity interest. 100% foreign ownership was only allowed in designated free zone areas. Free zones were created to encourage foreign investment in designated industries.
These foreign investment regulations changed on July 2, 2019 with the Federal UAE Cabinet announcement to permit up to 100% foreign ownership for 122 economic activities across 13 industry sectors in the UAE. The affected sectors are:
- Transportation and Storage
- Renewable Energy
- Hospitality & Food Service
- Information & Communication
- Professional, Scientific & Technical Activities
- Administrative & Support Services
- Educational Activities
- Art & Entertainment
There are some industries explicitly left out of this new policy, called the Negative List. These include: petroleum exploration and production, fisheries, investigation, security and military sectors, banking and financing activities, payments and funds management systems, land and air transport services, insurance services, commercial agencies services and other.
To learn more, please see Squire Patton Bogg’s PDF: Read PDF.
The Arabic Language
Arabic is the official language of the UAE and the most widely spoken language. It has three distinct forms: classical, formal and Modern Standard Arabic. While classical and formal are used across cultural books, government and legal content, most of the other industry sectors like hotel and hospitality, conferences and trade shows and advertising and marketing use Modern Standard Arabic, which is the most widely spoken dialect across the UAE.
In the UAE, customer behavior is sensitive to culture and language and translations play a key role in determining the success of your new franchising plans. To connect with your audience, compelling Arabic marketing content will make a huge difference. Compromising on the quality and investment for translations will always be a risk to the launch of any franchise. Poor Arabic translations have caused damage to many company’s reputation in the UAE.
The UAE has always welcomed companies and investors from every part of the world and it prides itself on being one of the fastest growing countries in the world. Opening a franchise in one of the fastest growing countries is a wise decision however, a well-researched plan that includes language, culture and consumer buying habits is a must to succeed in this highly competitive market.