Franchising has been a key area for small business growth in the United States for over half a century, but recently real growth is happening in our neighbor to the south, Mexico. Mexico is not just a country with tourist beach locations but multiple large cities and a growing middle class. It is a market that franchisors should be considering or reconsidering.

Why Mexico?

Mexico has a growing population of 132M with a median age of 29, compared to the United States with a median age of just over 38 years of age. Many of the largest countries in the world are seeing their population trending to the middle to older populations on average and with either nominal or declining population growth. Mexico is youthful by comparison and with a growing population that is expected to trend upward to reach close to 150M by 2030.

The largest city in Mexico is Mexico City with a population of over 22M and growing. Over 80% of the population of Mexico resides within their cities and urban areas. In addition to Mexico City, other leading cities are Guadalajara (5M+ in the metro area), Monterrey (5.1M+ in the metro area), and Puebla (3M+ in the metro area). Today 70% of the franchising activity resides within the urban areas of the three largest cities.

Is Franchising Active in Mexico?

According to the US International Trade Administration, franchising is quite active and accepted as a business concept in Mexico. The Mexican Franchise Association states that there are 90K franchise locations in Mexico of which 85% are Mexican-based brands, and 10% are USA brands.

Historically, economic growth in Mexico has been low, but pre-Covid the Mexican economy was showing strong growth, and it is now again doing so with Covid issues easing. Mexico has a large footprint geographically for a franchisor to consider how to plan a master franchisee strategy for the country.

The food and beverage industry accounts for 35% of the franchises in the country. As of 2022, there were about 400 Mcdonald’s in Mexico. Dominos has over 800 units. KFC reports having about 440 units in Mexico. Wendy’s has 28 units but has recently announced an expansion plan for Mexico.

American brands are well known in Mexico,  with its growing population, growing middle class, global top 15 economy, and large cities to support multiple units in close proximity; all these factors can make expansion easier for a master franchisor.

While Dubai is a hot market with every franchise concept to compete with, it may be worthwhile to consider Mexico for the new expansion.

As a translation company, expanding your services to support franchise operations in Mexico can open up a range of new opportunities. Providing language translation and localization services for franchisors and franchisees entering the Mexican market is crucial for ensuring effective communication, cultural adaptation, and success. By bridging the language and cultural gaps, your translation company can play a vital role in facilitating the growth of franchising in Mexico.

With the right strategies and partnerships in place, franchisors can seize the potential that Mexico offers and establish a successful presence in this rapidly evolving market. The time is ripe to explore the possibilities and expand your franchise into Mexico

References:

• World Bank – Mexico Overview
• U.S. Department of Commerce – Mexico Franchising
• International Franchise Association – Mexico
• Worldometer – Mexico Population
• Mexican Franchise Association
• U.S. Commercial Service – Mexico Franchising
• Talk Radio News – FAQs about McDonald’s in Mexico
• Statista – Number of Domino’s Pizza Stores in Mexico
• QSR Magazine – Wendy’s Plots Major Expansion in Mexico

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Today, franchise businesses (franchisors and/or franchisees) from large companies with thousands of locations to small companies with less than 10 locations, are going global. To support their global growth, the need for translation services is increasing to include training materials, marketing, websites, applications, menus, contracts, etc. Franchise companies increasingly find that they will need translation for their employee and customer needs domestically as well.

Training

Training can be in document forms such as manuals or posters, or in many cases as videos or eLearning. Franchisors may create training videos for their franchisee to use in their employee training. Staff under the age of 30 often prefer and learn their job tasks better from viewing a video. Staff that does not speak English will benefit greatly from content provided in their native language. Having the videos translated with voiceover and/or subtitling will help the employees be more productive, improve safety, and customer experiences.

A US-based franchise opening a location in say France may want to translate their training content to French. A franchise in the USA may consider Spanish. A franchise in Dubai may consider Filipino. In Dublin, Ireland perhaps Eastern European languages may be a need. The need may not always be what the national language of the country the franchise is operating within, but the language of its workers.

Marketing

Marketing flyers, coupons, advertisements, commercials, and websites that are localized for the target market can help a local franchisee earn business in that region. In regards to the website, Search Engine Optimization (SEO) for targeted languages should also be considered. In this case, it is not just a matter of translating keywords, but doing keyword research for the language in a specific market to understand which terms are being used for that region. It may not be a direct translation of your English keywords.

Menus

In some markets, a translated menu can be most helpful for customers. Tourist areas or global business centers may see customers from around the world. Having a translated menu may help expand one business for a small cost.

Apps

It has become common for franchise businesses to have apps for their customers and employees to use.
Apps for customers help orders to be placed, appointments booked, and deliveries made. Likewise, franchise companies often have separate apps for their employees for internal use. We recently localized an app for a customer for their delivery drivers.

Having an app today helps grow business. Lack of an app may see a customer to choose another company that has an app due to the added level of convenience. In some countries, I have seen companies use only an English app in markets that do not speak English or have an expectation for the customers to mainly speak English, only because this was provided by the franchisor in English, but the master franchisee for a country did not wish to translate the app as it would have been a cost item for them. This is not a win-win for either party.

Legal

Doing business globally may require a franchise company to have a contract translated. Perhaps a franchisee’s Franchise Disclosure Document (FDD) or other discovery needs. For example, the franchisor needs to consider the laws in the local market in order to understand what obligations they may be responsible for while operating in a given country.

In the past, translation was often overlooked as a need to be addressed by the franchisor or even the franchisee, as neither party wanted to be responsible for the cost. Today global franchising has created a very competitive market where a logo only goes so far, translation for marketing, training, and digital experiences can provide an edge with customers, benefits in employee efficiencies and safety, and repeat business.

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Franchising today is one of the fastest growing business segments for international expansion. While language is important for the franchisee and franchisor to communicate, submit an FDD and execute agreements this is often done in a common language which is often in English. The running of the business, the marketing to the local customers/ consumers and training of staff in global locales typically need to be supported by the local language and culture of the local market and/or customer base.

Where O’Where

Dubai is a top location for international franchising for companies to expand. For much of the restaurant and service business clientele in Dubai they can interact with their customers in English. But it is the employees that may need training in their native language, such as Filipino, Russian or Tagalog.

Interestingly in a location such as Dubai, UAE, with many people from other places that are not native to Dubai, UAE it can be hard to locate a restaurant serving Emirati cuisine. An article this year in the The Economist noted:  “One restaurateur estimates that of the 5,000 or so eateries in Dubai, fewer than 1% serve Emirati food.” This speaks to how many people, workers and of course the many visitors, in Dubai are from elsewhere, and not Citizens of the UAE.

In other markets such as France, Germany, Japan, China, or other favorite expansion target markets, language considerations will need to be addressed for training of staff, marketing, digital presence, and apps.

In China it is less than 1% of the population that can converse in English. Global hotel chains, high end hotels and banks will likely have customer facing staff that can speak English. But that is not likely the case in many other situations such as in using a taxi, most restaurants, or other areas a visitor may visit and will need assistance in English. A friend of mine became friends for a day with a few other tourists from a handful of countries to decipher public signage to visit the Great Wall using public transportation. The signage was only in Chinese and not a language of any one of them in the group.

What About Europe

In European countries such as Germany, France and Spain many expect English to be spoken by everyone as we often hear “in Europe everyone knows 5 or 6 languages”.  However, the numbers say 56% of the people in Germany speak English. In France and Spain, it is about 40%. Still significantly higher than in China.

In Europe, many franchise workers may be from another country than the one they are working in. Training in their native language should be considered. Workers may natively speak Polish, Ukrainian, or one of the other languages from within the European Union. Their English may be a range from fluent to a few words at the time of their hiring. Contracts, safety education, product, equipment and process training, other corporate required training may also be needed in their local language to truly understand what they are learning or agreeing to.

Apps Are Not Just a Small Dish

Digital applications have taken hold within the franchise industry globally. The pandemic has helped with the need for development and customer adoption of apps used for customers ordering and driver deliveries. Having your app localized is vital, and in areas such as Dubai, or Europe providing app localization in in the multiple languages of their customer base.

Conclusion

The franchise industry is a global business, but language sometimes is left as a secondary concern. While who is responsible for translation may be agreed to in a contract for which either the franchisor or franchisee will consider the near-term cost and may not consider translation a strong need. However, the cost to the business long term should be considered mutually for both parties.

References:

Economist

How Widely Spoken

How Widely Spoken

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The International Franchise Association (IFA) recently invited me to write an article for their website to speak to what franchisees and franchisors should know about working with a vendor for translation services and how the perception that the cost for professional translation services is expensive may not be as much as they expect.

I invite you to read the full article “Translation Best Practices For International Franchises” here.

The article covers risks in using non-professional translators, how working with a translation vendor following industry best practices can protect your brand, how to improve your messaging for a specific local market, and ways costs can be made efficient and reduced for ongoing needs.

The IFA is a wonderful organization with strong participation by its members to support each other as a group with learned experiences for growing their businesses domestically and for many internationally.

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The success of Starbucks in the Middle East may seem surprising to some because of the prevalence of coffee shops in the MENA region. The history of coffee can be traced to the Arabic world, so how could a Seattle-based coffee chain manage to gain success in a region that holds its traditional coffee to heart so dearly? Starbucks currently has over 600 stores in 12 Middle Eastern and North African countries.

Starbucks in the Middle East

Localization Strategy

Starbucks focuses on localizing its products to satisfy the needs of the targeted consumers in each location. Translating their product content into Arabic is only part of a successful localization strategy. For the MENA region, this includes adding halal foods on the menu. Middle Eastern specialties, such as halloumi or zaatar, are included on menus.

Starbucks is an affordable, yet upscale brand, which is preferred by the typical Middle Eastern consumer. Regular consumers can satisfy their coffee craving without putting too big of a dent in their wallet. Starbucks successfully prices their products for the market.

When Starbucks rolled out their alcohol offering at their Starbucks Reserve stores, they wisely opted out of including it in their MENA locations. They did this to respect the region’s sensitivity towards alcohol.

Local Community Strategy

Starbucks interacts strategically with the local economy. They employ more than 10,000 people in the region and build partnerships with the cities and local businesses. Starbucks partnered with Alshaya Group that already has an established reputation in the region and in Europe as well.

Starbucks formed the largest coalition in the Middle East to help youth. In 2016, they launched the “Opportunity Cafe” initiative and hosted a CV writing workshop across 10 regions. Local youth received professional advice on creating resumes, preparing for future careers, and succeeding in interviews. Starbucks also partnered with AMIDEAST Entrepreneur Institute and Silatech to host startup training sessions for young people looking to start their own businesses.

Communication Strategy

Starbucks’s social media presence is proof of its localization strategy success. Starbucks knows that its targeted audience views advertisements on online platforms and this is where Starbucks directs most of its marketing in the Arabic language. Starbucks’s MENA Facebook, Instagram and YouTube channels have over one million followers. These are the platforms they use to interact directly with their local Arabic speaking audiences.

Summary

The expansion strategy for Starbucks in the Middle East was to build a brand following based on a solid localization strategy, which made the transformation and adaption to the MENA region so smooth and well received by Arabians. They employ these strategies for success and to gain brand loyalty among their Middle Eastern customers.

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Opening an international franchise is attractive to franchisors but going global is also risky. While there are many qualified consultants who would be excellent resources for assisting you in creating an international business plan and strategy, there are also a few online websites that are useful to review to get a baseline of what the international marketplace looks like for your franchise expansion plans.

I would like to highlight three websites that may be helpful in the early stages of your research when deciding where to open your international franchise.

GlobalVue

EGS’s GlobalVue provides quarterly ratings of the top 50 countries in over 10 business parameters to help you decide where to focus your international expansion plans. The parameters they use to rank the countries include projected GDP growth, legal concerns for international brands, ease of business entry, corruption index, political situation and projected coronavirus recovery.

The link to the GlobalVue report is: https://edwardsglobal.com/index.php/globalvue/

The report is provided as a high-level view of what they are researching. ESG is also available for more in depth reporting or consultation needs.

TradingEconomics.com

This website strictly looks at the financial side. When you are planning an expansion into a new market, it is essential to understand the economic situation of the market. This report covers factors like GDP growth rate, inflation rate, unemployment rate, consumer confidence, corporate tax rate and personal income tax rate.

Trading Economics will provide the current financial picture for the market and projections for the near future. Their report can be found here: https://tradingeconomics.com/united-arab-emirates/forecast

International Franchise Attractiveness Index

The Rosenberg International Franchise Center, within the University of New Hampshire, offers another variation of ranking countries with their International Franchise Attractiveness Index.

The Rosenberg report is only published once each year, but it covers some areas that are unique from the other reports I mentioned. Such as a cultural and geographic distance rating. This report also covers 131 countries for a much broader coverage.

The link to the report is: https://www.unh.edu/rosenbergcenter/international-franchise-attractiveness-index%E2%84%A2

Summary

These country reports can be helpful in early international expansion research but utilizing actual franchise industry consultants with first-hand experience in the markets is highly recommended as you develop your strategy. They will be able to guide you around the potential pitfalls and suggest the best practices to succeed in the new market for business and cultural considerations.

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Japan currently has the third largest economy in the world, after the U.S. and China. It was valued at $5.2 trillion USD in 2019 and Investopedia estimates it will grow to $5.4 trillion USD in 2020. Japan presents an attractive franchise market for businesses looking to expand their global operations. However, savvy companies know that their business model, operations and marketing collateral must be adapted to the language and culture of the local market.

Below are some areas to be aware of before expanding your franchise into Japan.

Demographics

Japan has the 11th largest population in the world with 126 million people. The population has been decreasing since 2009, primarily due to the decreasing birth rate. The birth rate is the lowest it has ever been since they began recording the data in 1899.

The government type is a constitutional monarchy. The Emperor of Japan, Naruhito, is the head of the Imperial family and the ceremonial head of state. Under the 1947 constitution, the emperor is “the symbol of the State and of the unity of the people” and has no constitution powers. The Imperial House of Japan is the oldest continuing monarchical house in the world.

Japan’s government is divided into three branches: Legislative, Executive and Judicial. The Cabinet, comprised of the Ministers of State and the Prime Minister, directs and controls the government.

Economy

The largest sectors are retail/distributors (30%) and manufacturing (24%). Japan is the 3^rd largest automobile manufacturer and has one of the largest electronics industries. Manufacturers are concentrated in the Kanto region surrounding Tokyo, the Kansai region surrounding Osaka and the Tokai region surrounding Nagoya.

The GDP was worth just over $5 trillion USD in 2019.

Transparency International ranks Japan’s transparency index at 13 out of 180 markets with a score of 73 out of 100.

Language and Business Culture

Japanese is the official language of Japan. A few tips about the language include:

• The word order is normally subject-object-verb.
• The Japanese writing system is made up of three scripts:
  • Kanji (漢字), which uses Chinese characters.
  • Hiragana (ひらがな or 平仮名)
  • Katakana (カタカナ or 片仮名)
• The use of numbers is mostly shown as Arabic numbering in conjunction with Chinese numbers.

The traditional form of a greeting is a bow rather than a handshake. Typically, the more respect you want to show, the deeper you bow.  Non-verbal communication is crucial in Japan. They often trust non-verbal messages more than the spoken word.

Japanese are non-confrontational. If the request cannot be agreed to, they may say, “it’s inconvenient” or “we’ll consider” instead of answering “no”. So, you need to be vigilant at observing their non-verbal or indirect communication.

It may take several meetings for your Japanese counterparts to become comfortable enough to conduct business with you.  Japanese look for a long-term relationship, it is not advisable to refuse a request even if it may appear unprofitable or difficult to achieve.

Japanese Franchises

The U.S.’s franchise business model has heavily influenced how franchises are conducted in Japan. Japanese franchisors then modify, or localize, business plans for the preferences of their local audiences. Everything from how to run the business and manage inventory to customer communication are customized for each region.

Popular franchise chains in Japan include convenience stores like 7-Eleven and general merchandising stores. There are more than 19,000 7-Eleven stores. These have been so successful in part because of their mission to contribute to each neighborhood the stores are in.

The franchising models available in Japan include:

• Wholly owned subsidiary as a master franchisee with a flagship store.
• Joint venture partner to help get established.
• Agreement with a master franchisee.

The laws surrounding franchise businesses in Japan are rather relaxed compared to the United States. Japan has a unique culture that businesses must adapt to, but once you learn and adapt it, there are many franchise business opportunities in Japan.

Sources:

https://www.investopedia.com/articles/investing/100515/these-will-be-worlds-top-economies-2020.asp

https://exporttojapan.co.uk/guide/routes-to-market/franchising/

https://www.globalnote.jp/post-3184.html

https://www.npr.org/2019/12/24/791132555/japans-births-decline-to-lowest-number-on-record

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International franchising is not just for large companies with great brand awareness, like the McDonald’s and Domino’s of the world. In some cases, companies new to franchising are going beyond their home country’s borders even before they expand across their home country.

At the recent IFE conference, it was discussed during one of the international sessions that some large franchisors have reduced their locations within the United States and expanded their locations internationally. The top 200 franchisors currently have 40% of their locations in markets outside of the U.S.

Growth in global markets is often viewed as low hanging fruit with less competition. This presents attractive opportunities for international franchises.

Expanding Globally

When evaluating countries that have a growing international franchise market, you must determine if it is the right locale for your business by understanding if the market is open to your concept.

In Australia, franchising is quite popular, but only for Australian brands. 96% of franchises are domestic franchisor companies. International franchisors have had a tough time entering this market from a consumer acceptance standpoint, in addition to the legal and IP concerns.

Website Localization

Franchisors aim to keep costs for going global down and use their in-country franchisees, area franchisors and master franchisees to be responsible for their international marketing, including translation or localization of their company’s website.

Some of the large franchisors will support the cost for localization of the website, as they want to control the content that is on the corporate website for brand consistency and perhaps to safeguard for legal reasons. Also, to simply support promoting the brand. If their franchisees do well, they do well.

In many cases, I have found that franchisors and franchisees do not have a symbiotic relationship when it comes to localizing their websites. The franchisor wants the franchisee to support the cost of growing their business in their own market and the franchisee may have thin margins and looks at localization of the website as a cost they cannot support. Often, this results in the site remaining in English only.

Reaching Global Audiences

Many consumers want to engage with a brand online. Perhaps via social media, a website, google for location and hours, etc. Local promotions are affected if they are not in a local language. Consider how your purchasing decision would be affected if here in the United States you wanted to find a cleaning service, but some of your choices had websites that were only available in Japanese. If you did not speak Japanese, you would likely immediately disregard the Japanese-only websites in favor of companies with websites available in English.

Some options for establishing a local presence without incurring much cost is to localize a landing page or microsite to include local promotions, keyword localization and search engine ad translation. Having a social media presence in international markets is a “must to succeed” as was mentioned during the IFE international session I attended.

Even a limited localized online presence will allow your local customers to access your business online while not incurring heavy costs for translation. Then as your international franchise business grows, more content can be localized as the franchisor and/or franchisee feels appropriate.

Summary

As many global franchisees and franchisors do not localize their website currently, this should present an opportunity for those that do. Franchise businesses that do not translate their content may be losing business to competitors that do have a localized online presence. If a franchise has made the investment to open new global markets it is unfortunate if they do not feel a localized website or overall online presence is a benefit for their business and customers.

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Many companies going global initially look at their sales opportunities for a given market. It is advisable to also consider the political and corruption status of the target market as an early step in the process. Some leading markets have changed enough politically to raise caution in setting up a new business operation and it may be wise to consider safer, alternative markets.

Transparency International

Transparency International is one of the best organizations to help you begin your research. They obtain input from local market experts and communicate with the local business communities on a regular basis for 180 countries and release a corruption perception index (CPI). The organization began in 1995 and has become the leading global indicator of public sector corruption.

It is my experience that sometimes these types of indexes or organizations will avoid conflict and make almost all candidates appear favorable. Some organizations are run by the companies they are supposed to be reporting on or are paid for their positive ranking. In the U.S., I have seen a business rating organization avoid critical reports or issuing low ratings on businesses to avoid being sued, sell their ratings and other illegitimate practices that make the ratings worthless. But this is not the case with Transparency International.

The average score of countries in 2018 was 43 out of 100, with 100 being a perfect score indicating no corruption. Over two-thirds of the countries fall below 50 on the corruption scale.

According to Delia Ferreira Rubio, Chair of Transparency International, “corruption is much more likely to flourish where democratic foundations are weak and, as we have seen in many countries, where undemocratic and populist politicians can use it to their advantage.”

Factors that affect democracy scores include free and fair elections, strong and independent institutions, political rights (ex: the right to protest) and civil rights (ex: access to fair trials).

Here is a brief overview video from the organization’s website: https://youtu.be/OXApeTYRYNQ.

For a very high level and quick look at a country the site has an easy to use map to scroll to the country you have interest in to see their current score: https://www.transparency.org/cpi2018.

Corruption Perception Index 2018

The countries in the top 10 and their scores are:

• Denmark – 88
• New Zealand – 87
• Finland – 85
• Singapore – 85
• Sweden – 85
• Switzerland – 85
• Norway – 84
• Netherlands – 82
• Canada – 81
• Luxembourg – 81

The U.S. is ranked 22nd with a score of 71, which is a drop from their 2017 score of 74. The United Arab Emirates is just behind the U.S. at 23rd with a score of 70.

The five countries with the lowest scores, indicating the most corruption are:

• North Korea – 14
• Yemen – 14
• South Sudan – 13
• Syria – 13
• Somalia – 10

The highest scoring region, with an average score of 66, is Western Europe and European Union. The lowest scoring region, with an average score of 32, is Sub-Saharan Africa.

Transparency International also highlights categories like “improvers” (Estonia, Côte D’Ivoire, Senegal and Guyana), “decliners” (Australia, Chile, Malta, Turkey and Mexico) and “countries to watch” (U.S., Czech Republic and Brazil).

If you have a production center, sales office or franchise to open in a new country for your business consider Transparency International’s corruption perception index and see if any red flags are raised. If so, inquire on the ground in the market under consideration. It is not the end all, but it is a helpful tool among many to consider.

Sources:

https://www.transparency.org/country

https://www.usnews.com/news/best-countries/best-transparency

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The United Arab Emirates (UAE) is currently one of the most promising and investor friendly regions for franchise opportunities. With the many different festivals, business conferences, trade shows, etc. the UAE has been very successful in drawing foreign investors into their country. Expo 2020 Dubai is right around the corner and is expected to be the biggest business exhibition the world. The UAE will attract massive amounts of business and leisure travelers from around the world.

In this blog, I will cover information on franchising and how Arabic translations can help you successfully enter this prosperous market.

UAE Country Statistics

Population: 9.68 million (2019)

Largest Cities: There are eight cities in the UAE: Abu Dhabi, Ajman, Al Ain, Dubai, Fujairah,
Ras Al Khaimah (RAK), Sharjah and Umm Al Quwain (UAQ). With over three million people, Dubai ranks the largest among them all.

Religion: The official religion practiced by approximately 80% of the population is Islam. Christians make up the largest minority religion at 9%, followed by Hindus and Buddhists.

Government Type: The UAE has a presidential, federal and despotic monarchy. The UAE is a federation of seven constituent monarchies, which include the Emirates of Dubai, Ras al-Khaimah, Abu Dhabi, Umm al-Quwain, Ajman and Fujairah. The President and the UAE’s head of state is also the ruler of Abu Dhabi and the Prime Minister is the ruler of Dubai and the head of government of the UAE.

GDP: $432 billion USD (2018)

Currency: United Arab Emirates Dirham

UAE Franchise Information

Franchise opportunities allow companies to expand without the risk of debt or the cost of equity. Like any other business plan, franchising always needs solid research and a market analysis to identify the competition, demand vs. supply in the market, customer behavior, laws, banking rules and so on.

To open a franchise in the UAE, you will need a UAE national sponsor to partner with for beginning the business. However, the UAE’s initiative to attract foreign investors and companies has introduced multiple free zones across the emirates, which allows you 100% foreign ownership with no taxes except the 5% VAT, which was introduced in 2019. A larger capital base is needed to open in a free zone.

A few of the factors that make the UAE an attractive market for opening international franchises include:

• World-class infrastructure.
• Improved intellectual property legislation.
• Government efforts to diversify the economy.
• A growing expatriate population, which is changing customer behavior.
• A growing number of high net-worth individuals who prefer leisure and consumer spending.

The opportunities for UAE franchises span multiple sectors including food and beverage, fashion retail and convenience stores. An article published earlier this year by TopFranchise.com states that the UAE, Dubai in particular, is one of the best destinations in the world for shopping tourism. They also compiled a list of the top 10 franchise opportunities, which include: Jones the Grocer (a gourmet food emporium), Danube Home (home furnishings), Splendore Jewellery, Baskin Robbins (the world’s largest ice cream chain) and Gloria Jean’s Coffees.

UAE’s New Unrestricted Foreign Investment

Previously, foreign investors in the UAE were required to partner with a local Emirati or GCC partner who would hold 51% interest. The foreign investor would control 49% equity interest. 100% foreign ownership was only allowed in designated free zone areas. Free zones were created to encourage foreign investment in designated industries.

These foreign investment regulations changed on July 2, 2019 with the Federal UAE Cabinet announcement to permit up to 100% foreign ownership for 122 economic activities across 13 industry sectors in the UAE. The affected sectors are:

• Transportation and Storage
• Agriculture
• Space
• Manufacturing
• Renewable Energy
• Hospitality & Food Service
• Information & Communication
• Professional, Scientific & Technical Activities
• Administrative & Support Services
• Educational Activities
• Healthcare
• Art & Entertainment
• Construction

There are some industries explicitly left out of this new policy, called the Negative List. These include: petroleum exploration and production, fisheries, investigation, security and military sectors, banking and financing activities, payments and funds management systems, land and air transport services, insurance services, commercial agencies services and other.

To learn more, please see Squire Patton Bogg’s PDF: Read PDF.

The Arabic Language

Arabic is the official language of the UAE and the most widely spoken language. It has three distinct forms: classical, formal and Modern Standard Arabic. While classical and formal are used across cultural books, government and legal content, most of the other industry sectors like hotel and hospitality, conferences and trade shows and advertising and marketing use Modern Standard Arabic, which is the most widely spoken dialect across the UAE.

In the UAE, customer behavior is sensitive to culture and language and translations play a key role in determining the success of your new franchising plans. To connect with your audience, compelling Arabic marketing content will make a huge difference. Compromising on the quality and investment for translations will always be a risk to the launch of any franchise. Poor Arabic translations have caused damage to many company’s reputation in the UAE.

Summary

The UAE has always welcomed companies and investors from every part of the world and it prides itself on being one of the fastest growing countries in the world. Opening a franchise in one of the fastest growing countries is a wise decision however, a well-researched plan that includes language, culture and consumer buying habits is a must to succeed in this highly competitive market.

References:
https://abudhabiblog.com/how-to-open-a-franchise-in-uae/

https://gulfnews.com/uae/arabic-is-the-official-language-in-the-uae-1.639876

https://www.export.gov/article?id=United-Arab-Emirates-Franchising

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