Follow the Franchise

CAIRO - 7 January 2018: The 16th Middle East and North Africa International Franchising and Licensing Exhibition and Conference (MIFE 2018) took place on November 17-19,hosting around 38,000 brands from Egypt, Saudi Arabia, the US, the UK, Lebanon, Turkey, Malaysia, Singapore, and for the first time China. MIFE 2018 was organized by EFDA in conjunction with the Cairo International Franchise Conformance; Franchise Matchmaking Forum; World Franchise Council (WFC) meeting, ASIA Pacific Franchise Confederation (APFC) meeting; and IberoAmerican Franchising Federation (FIAF) meeting.

The Beauty of Franchising

Since small businesses cannot invest much in market studies, they can resort to franchising said Board Member and Treasurer at EFDA Ahmed Donia. All the franchisee has to do is just follow the manual for management and operation. “The franchisee assumes marketing while the franchisor assumes R&D,” Donia highlighted, going on to explain that the core of franchising is standardization, and that some brands have 45,000 outlets worldwide because of franchising. “In the US, for example, franchises constitute more than 60% of the retail sector. Prospective franchisors have the luxury to choose successful brands,” Donia added. The treasurer urged potential franchisors to confirm first that the brand they’re eyeing is successful, check the franchisor’s CVs, and talk with other franchisees to learn about their experience with the brand. He added that a good franchisor would not “just get money, and give manuals and the brand name.” A good franchisor will follow up on the franchisee’s performance, Donia explained, highlighting that there is room for franchises in the plumbing and babysitting sectors.

EBRD Help

The European Bank for Reconstruction and Development (EBRD) gives medium enterprises training for providing franchisees with “know- how” as franchising is easy for large corporate, explains EBRD Program Director Rime Al Saadi. “In order to be a franchisor, you have to get the whole franchising toolkit including positioning and branding skills, among others,” Al Saadi explained, adding that EBRD grants consultancy, and will introduce advising on contract models.

She went on to caution that before developing a franchising manual, a brand should test its readiness by examining if its business model is “standardized enough.” She highlighted some success stories fostered by EBRD included that of a cupcake brand which resorted to franchising to penetrate six governorates other than Cairo and Alexandria; as franchisees they achieved more revenues than the franchisor. Another is of a street food brand that is currently launching in New York City by franchising.

Franchises in Egypt

There are 800 franchises operating in Egypt, creating 800,000 direct jobs and 1.6 million indirect jobs. The size of their investments and sales are LE 80 billion and LE 14 billion respectively and the majority of these franchises are small businesses and concentrated in the service sector. Honorary Chairman of EFDA Moataz Al Alfy re- vealed that in 2018 alone franchises in Egypt were able to create 300,000 jobs.

Speaking at an earlier press conference, Al Alfy highlighted that there are growth opportunities for franchises in the sectors of maintenance and facility management services, noting that franchises have also started to appear in the education and economy-sharing sectors. He emphasized Egypt’s need for social franchises in different governorates like nurseries, facilities offering contraceptive methods, and ambulance services.

In the Pipeline

The EFDA has drafted a franchise law in partner- ship with the Ministry of Trade and Industry to be submitted to parliament next year. The law was drafted after holding 18 focus groups comprising legal experts and franchisees to regulate franchise registration, and franchise disclosure documents presented by the franchiser. The association will also hold a legal conference on franchise next month in collaboration with an international arbitration firm.

The EFDA is also attempting to finalize an agreement with the International Franchise Association (IFA) to grant Egyptian franchisees the Certified Franchise Executive (CFE) designation after fulfilling course requirements.