By Khaled Amin Youssef
Franchising is one of the important economic sectors that receive the attention of Vision 2030. This is due to its important role in supporting and developing the national economy and achieving the most important objectives of the vision. These objectives are represented in diversifying sources of income and the economy, developing and strengthening the small and medium enterprises sector, and raising its contribution to the GDP from 20% to 35% by 2030.
The Kingdom of Saudi Arabia has witnessed great progress in recent years in commercial franchise projects. It was done as a result of the wise leadership’s support for this sector, work to enhance the investment environment and the issuance of legislative and legal regulations regulating work in it.
The Royal Decree on the Commercial Franchise System was issued in 2019, followed by its executive regulations in the year 2020 AD.
Since the establishment of the General Authority for Small and Medium Enterprises “Monshaat” in 2016, it has worked to strengthen the franchise sector; As one of the main enablers that help it achieve its goals, which are aimed at promoting and developing the SME sector.
According to statistics, the success rate of franchise-based projects is the highest among small and medium-sized enterprises.
This is due to several reasons; The most important of which is that franchising projects depend in their professional management on the best international systems and transfer of administrative and technical expertise to franchisees.
They also adhere to the highest quality standards, while placing the desires of customers and consumers at the forefront of attention; Under the “brand” or a major successful brand; This provides a great deal of publicity for the project, and quickly builds bridges of trust between it and the clients.
To this end, “Manshaat” established the Center of Commercial Excellence; To spread the culture of commercial excellence, and to promote and support national brands; In order to expand locally and regionally, and to introduce young entrepreneurs to the investment opportunities represented in trusted brands, whether local, or through attracting international brands; To support national economic diversification, and generate additional jobs.
The establishment of the Saudi Franchise Association – the first specialized association in the Kingdom – is an important step in strengthening the franchise community.
Since its establishment, it has been working to spread the culture and thought of business excellence. It has also concluded several agreements with chambers of commerce and universities and held many seminars and workshops.
These seminars help entrepreneurs to understand the franchise system, and to communicate with the concerned parties; To find out the obstacles facing entrepreneurs and investors, and work to solve them with the responsible authorities.
Looking at the remarkable progress in the franchising sector in numbers, we find that the Kingdom has witnessed a boom in the franchising industry.
The total number of trademarks increased from 400 in 2016 to 700 at the end of 2020, while the number of Saudi trademarks jumped from 20 in 2016 to 100 at the end of 2020.
Furthermore, 20 Saudi brands are currently present at the regional and international levels.
In light of the continuous support for this sector, we expect more success for the national brands, and to attract more local and foreign investments to the Saudi market, which is the largest in the region. Owning more than 50% of the market volume in the Arab region and the Middle East; means providing more job opportunities and contributing to the development of the national economy, in order to achieve Vision 2030.