SPOTLIGHTON:DUBAI
growth in the world, and one of the most dynamic markets, Dubai is consistently expanding its commercial and residential developments in line with rates of China. With no capital gains, inheritance, income or sales taxes in Dubai, many visitors become residents and open new businesses, or invest in franchising opportunities. The government also does not exercise any control over exchange of foreign currencies, allowing investors in foreign-owned businesses to repatriate 100 per cent of their profits. Having the local currency, the UAE dirham, pegged to the US dollar is an added bonus that makes it easy for foreign investors to predict and gauge their expenses. For these reasons, food and beverage brands from around the world are increasingly attracted to Dubai, and the overall market of the UAE. With a strong business model and correct understanding of the local markets, franchisors can earn potential record profits. This is mainly credited to the population density, a culture of dining out and high rates of tourism. Dubai has been previously described as a ‘cultural melting pot’. This is a clever way to outline the demographics of the population and residents from abroad. Not only does it attract tourism from around the world, but also around 80 per cent of residents in Dubai are now expatriates. This can be due to business relocation, seeking opportunity or through employment secondment.
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Setting up a new business in Dubai can be slightly more complex compared with the UK. There are various steps that need to be adhered to, to ensure that all has been done within compliance and the local government’s criteria have been met. Within Dubai itself, there are areas that require a local Emirati, acting as a sponsor, to initiate the process and also guide the investor through it. Not only does this service cost money, but they will also own 51 per cent of the business. Normally an agreement is negotiated between both parties to come to a mutually agreeable point. If the investor doesn’t wish to part with 51 per cent of their hard-earned business, they can opt to open in a ‘free zone’. These businesses do not require a local sponsor but tend to be located further out of the busy business areas, and the startup costs are much higher.
ubai is the most populous city in the United Arab Emirates (UAE), and the commercial capital of the Arabian Gulf. With the fastest rates of
The fast food sector represents around 40 per cent of the overall franchise market in Dubai. Most brands cater to the locals, with office workers and their families driving demand. With the assistance of the tax-free zones, you will see a large number of globally recognised brands, such as Microsoft, Dell and Siemens, having large offices there. With the increased percentile of expats making up the population, the ‘Dubai experience’ is altering to adjust to the international market. With many casual and high-end dining venues offering international menus, families are now finding it easier to relocate to Dubai, and familiar brands that you would see on any high street in the UK have all migrated to the UAE. Even though Dubai is culturally Muslim, there are now an increased number of licensed bars and restaurants located within hotel complexes in areas such as Jumeirah Lake Towers and nearby Dubai Marina.
On the flip side, Dubai is also a tough place to start a business on your own. A franchisor within the food and drink industry described the key to success as “location, marketing and consistency of quality”.
Good locations do not come cheap, either. Some of the most desired locations are within the world-famous shopping malls, such as the Mall of the Emirates and The Dubai Mall. These centres are home to over 1,200 shops and some even stay open 24 hours on key public holidays. The rents can vary massively, but for a prime location, you will be looking at around £300 per sq ft, excluding percentage of profits and service charges. With the high startup costs, it can be hard for many small franchisors to break into the Dubai market. However, if you have a motivated business growth plan and find a niche market, Dubai is a highly recommended place to take your next steps to expand your franchise business. n
Charlie Mander
Broccoli Pizza & Pasta
charlie.m@broccoli.ae
www.broccolipizzaandpasta.com
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