During a remote meeting organized by the Asharqia Chamber
Alsuqih: more than one billion dollars, the value of the franchise business market in the Kingdom
A specialist in commercial franchising and the feasibility study stressed the importance of investing in this methodology, as it involves a number of benefits at the technical, strategic and financial levels, which raised its shares at the global and local levels, and what led the Social Development Bank to support this option to serve the national economy.
Abdulmalik Alsuqih said during a direct (remotely) meeting organized yesterday, Sunday (7/19/2020) by the Asharqia Chamber represented by the Small and Medium Enterprises Development Center in cooperation with the Social Development Bank under the title "Commercial Franchise. Your Gateway to Investment" The initial definition of the term franchise is represented In the fact that a person or entity named to grant the right to a person called "the concessionaire" to do business on its own account linked to the trademark or the trade name of the concessionaire and that includes the provision of technical expertise and know-how ... explaining that this process is done according to the concession contract usually includes "location Practicing activity, operating manual, continuous training and support, contract duration and terms for renewal and cancellation, advertising and marketing, fees and payments, approved suppliers, grantor and franchisor rights, the non-competition charter ", and so on.
Accordingly, investing according to this methodology includes several benefits, including: “strategic benefits” that verify the adoption of this methodology is to focus on market and local variables, that competition is relatively less and the availability of market research tools, joining the franchisor’s network, and “operational benefits” It is represented in operating with a smaller organizational structure, providing quality control programs and their continuity, and their rise in products and services, and they represent a great opportunity for continuous improvement in performance, and "marketing benefits" that appear in dealing with a more widespread and reliable brand name, products and services that the public trusts, and plans Experienced and certified marketing. ”This is not the financial benefit that appears to be a more efficient investment, with carefully studied expenses, and a greater opportunity to increase profits and return on investment.
He mentioned that the Social Development Bank - based on all positive data - possesses a program of commercial excellence in order to support the national economy and serve the qualified people of the homeland by offering a number of investment opportunities that enjoy a high-profit rate and low-risk ratio and make them available by attracting projects that have proven successful and Agreements for granting the concession for those wishing to benefit from the bank's services, especially from the target groups of the bank's support. Stating that there are advantages to this program, including that the amount of financing amounts to four million riyals, a grace period of up to 24 months, and follow-up during the establishment and operation phases and the resolution of obstacles facing beneficiaries, while providing specialized training courses, including programs on the job with the franchising company, Organizing technical workshops in the administrative work of the beneficiaries in order to improve their work and make it more efficient and competitive, in addition to technical, financial and marketing consultations for them through specialized consultants.
He suggested that this mechanism is globally expanded, to the point that every 8 minutes a unit of commercial franchise opens in the world, and that 37% of activities related to food (catering, restaurants, cafes, etc.) around the world go according to the franchise, and there are about 785,326 units in The United States operates under the franchise system, and more than 9 million American employees are employed in franchising activities.
In this regard, he said that the value of the commercial franchise market in the Kingdom exceeds one billion dollars, with an annual growth rate of between 10-12%, to the point that more than 300 foreign companies have a commercial franchise in the local markets.
He pointed out that there are certain drawbacks that come within the methodology of investing in the concession, among which is the lack of scope for amendment and development, ongoing fees, the difficulty of leaving the contract and its consequences, and that any error in any branch can affect everyone, and that proliferation is difficult in the event of starting with one unit, as well On the monopoly of suppliers, and that the grantee does not own the project but rather is leased for the duration of the contract.
