In Focus: Franchising In Qatar

Franchising allows businesses to expand into the rapidly growing Qatar market without the risk and capital investment traditionally associated with establishing a joint venture. Franchising is not, however, a risk-free means of expansion. Below, we consider the opportunities and risks associated with franchising in Qatar and briefly examine the legal framework.

Opportunities

Qatar presents a tremendous opportunity for businesses looking to expand internationally. Qatar has a growing population, a rapidly growing economy, the highest GDP per capita in the world, is set to host the 2022 FIFA World Cup and plans to spend an estimated USD 200 billion on infrastructure projects in the coming few years.

Franchising continues to be the preferred model for businesses looking to expand quickly into Qatar's rapidly developing economy without the risk and significant capital investment associated with entering the market through a joint venture vehicle.

The franchise economy in the Middle East and North Africa (MENA) is worth USD 30 billion and is growing by 27% per year. The Gulf Cooperation Council (GCC) nations are at the forefront of growing the franchise economy in the MENA region. More than 50% of retail sales in the GCC are generated from international brands and the profitability of franchised outlets is often much higher in the Middle East than in the franchisor's home country.

Particular areas of opportunity exist in the food and beverage (F&B) sector. Fast food is estimated to account for 40% of the franchising market in the GCC. F&B franchises are expected to grow by 25% in the coming years. It is anticipated that the health food sector will be a key area of growth within the F&B sector. Franchising opportunities are not, however, limited to F&B outlets. There is a strong appetite for international brands in the retail sector. The education, transportation, tourism and healthcare sectors also present potentially lucrative opportunities to franchisors.

Legal framework

Qatar does not have a specific franchising law. A franchisee will often be considered as an agent under Qatar law and thus franchising agreements will generally fall under the scope of Law No.(8) of 2002 on Organisation of Business of Commercial agents (the Commercial Agency Law). The Commercial Agency Law provides significant statutory protection to franchisees and local agents such as the right to an exclusive appointment and the right to...

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