Egypt - Franchising Egypt - Franchising
Franchising has developed quite extensively in Egypt over the past three decades, especially in the fast-food sector. At present, there are around 600 franchises in Egypt, including food and non-food franchisees with hundreds of individual outlets. According to the Egyptian Franchise Development Association (EFDA), 42 percent of these are local brands and 58 percent are international brands. The U.S. market share is around 20 percent of the international brands and estimated to account for 30 percent of total franchise revenues in Egypt. The EFDA represents and serves the franchise industry in Egypt. It promotes the concept of investment through franchising, encourages training and quality control, and works to solve common problems in the industry. Moreover, the EFDA sponsors a local franchise show in the spring or early summer every year. Please contact the U.S. Commercial Service in Egypt for more details about the franchise show: https://2016.export.gov/Egypt/
Franchising is expanding in Egypt, as well as in the Middle East and North Africa (MENA) region. And it has proven to be one of the most successful mechanisms for entrepreneurship. According to industry sources, direct investment is valued at around EGP 60 billion, with annual sales of EGP 12 billion. The industry provides an estimated 800,000 direct jobs and 1.5 million indirect jobs. Franchising has developed quite extensively in Egypt, the ownership structure of the franchising industry in Egypt is:
- 60 percent Master Franchisees do not sub-franchise
- 17 percent Master Franchisees sub-franchise
- 40 percent are Local Franchisors
The Egyptian fast-food market, dominated by American chains, has experienced notable expansion since it began in 1970, and market sources expect the growth to continue at an annual rate of 15 percent over the coming years. The current food franchise market size is estimated at more than $800 million. Some of the popular chains are: Auntie Annie’s, Burger King, Carvel Ice Cream, Burger King, Domino’s Pizza, Hardees, KFC, McDonalds, Pizza Hut, Dunkin Doughnuts, Papa John’s, Starbucks, and Subway.
The non-food franchise sectors began to emerge during the 1990s. These franchises have considerable market potential, and many American franchisors continue to enter the Egyptian market. For example, several companies in hotel management, car rental, foreign language teaching, health and fitness, and electronics are currently franchised in Egypt. Some of the non-food franchises that currently exist include: Coldwell Banker, Gold’s Gym, Harley-Davidson, Hertz Rent a Car, and Marriott/Starwood Hotels.
Sub-Sector Best Prospect
Although dominated by the food sector, the non-food franchising sector has grown, primarily in the retail sector, in response to the increasing demand for clothing and lifestyle brands among the urban population.
Retail franchises account for 50 percent of the non-food franchising sector, making overall retail the highest ranked sub-sector. It is anticipated that demand will continue to increase for hypermarkets and home products. The best prospects for U.S. non-food franchises are in the areas of department stores, fitness, education and specialty stores and home products.
Egypt has an estimated five million “A class” consumers, who have an average monthly income of about $1,500. These consumers are well educated and familiar with foreign goods and services. They seek high-quality and well-priced goods, though price is not always the deciding factor in purchasing decisions. Because of their education and travel experience abroad, these consumers have become very receptive to western products and services, particularly U.S. goods and services. Some of these consumers in Egypt include tourists from other Arab countries, which represents a strong seasonal demand factor.
Moreover, thanks to the recent and growing trend of improved living standards, as well as increased exposure to western culture and media, Egyptian consumers have become brand conscious. The population of Egypt is around 99 million, and of this figure it is estimated that five million consumers are drawn to the increasingly popular name brands and convenience services. The median Egyptian age of 18-25 years also supports the growth potential of the fast-food and retail sectors.
Egyptians have initiated their own retail franchising businesses domestically, especially in the apparel industry. This trend indicates that the franchise concept is culturally acceptable. Most of the franchises operating in Egypt are the result of Egyptian entrepreneurs approaching foreigners, rather than as the result of the marketing efforts of foreign firms. While this may show an entrepreneurial spirit among Egyptian businesspersons, it also highlights missed opportunities on the part of foreign business.
Contact for the Commercial Specialist in charge of the Franchising Sector: Cherine Maher, email@example.com
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.