How to Start a Franchise Business in Dubai?

How to Start a Franchise Business in Dubai?

One of the fastest-growing economies globally, Dubai has firmly established itself as a popular business hub across the globe. What used to be a desert city decades back now witnesses tons of investments from foreign nationals and world-class brands every year, thanks to tax reforms, strategic location, skilled workforce, etc. Despite a disappointing 2020 due to a global pandemic, expats can benefit from offshore company formation in Dubai. 

Franchising is based on conducting a business by employing some or all aspects of another firm and successful business. A franchisor is a parent business that permits franchisees to operate using the same products or services, trademarks, techniques, etc., based on a predetermined fee. An agreement governs the business relationship between the franchisor and the franchisee.

If you want to open an offshore company in Dubai in the franchising sector, benefits include brand recognition, functioning support, and a proven business track record. Read on to learn more!

What Are the Requirements for Opening a Franchise Company in Dubai? 

First and foremost, you will need to conduct market research. You can refer to testimonials from past or existing franchisees to learn more about the franchisors. You can also get a Franchise Disclosure Document (FDD) when dealing with a well-known international business. The former will help you learn franchising rules, fees, franchise responsibilities, and other crucial financial information.

A foreign investor must take care of the following details to ensure effortless offshore company setup in the franchising sector:

  • A local sponsor is mandatory if the business is situated in
  • the Dubai mainland
  • The foreign investor can register a company or a sole trader when opening a franchise business.
  • Both parties shall sign a franchise agreement, which will govern their business relationship. This agreement will contain all the rights and obligations for both parties.

What Are the Different Types of Franchise Businesses in Dubai? 

The Dubai Department of Economic Development (DED) has divided Franchise businesses into two categories:

  • Single-Unit Franchise

 The franchisee will market and sell the products and services from the franchisor via a single company.

●Multi-Unit Franchise 

The franchisee will sell the products and services from the franchisor via several sites, whose business actions will be administered by a single company.

Do Franchisees Need a Local Partner? 

If you plan to go ahead with the offshore company setup in a free zone, you can exercise 100% ownership regardless of the type of business. However, if you want to set up your business in an area that does not fall under the free zone, you will need to employ the assistance of a local partner or service agent based on the nature of the business.

If you are operating a service business, you can exercise 100% ownership, given that you have a Local Service Agent (LSA). The latter is a UAE national who helps out foreign nationals with licensing requirements for a small fee.

If you plan on selling or distributing products via your franchising business, you will have to partner with a UAE national wherein the latter will have 51% shares. If you are new to the business sector in Dubai, it would be best if you recruited the help of a consultant.

Foreign nationals can create a side agreement that shall state that the economic benefits arising from the shares held by the UAE national belong to them. This implies that the financial interest of the UAE resident is limited to an agreed-upon annual fee.

What Are the Steps to Running a Franchise Business in Dubai? 

Foreign nationals hoping to start an offshore company in Dubai in the franchising sector must take care of the following details:

●Pick the Right Company Name 

Expats must pay heed to the naming conventions warranted by the government. They are prohibited from using any offensive or blasphemous language. They should also avoid using the name of well-established brands and abbreviations when naming the company after themselves.

●Apply for a Trade License 

Foreign nationals will need a trade license to run offshore companies in UAE. The application for a trade license will depend on whether you plan on opening a company in the free zone or an area outside of the free site.

You will have to provide essential documents such as a completed application form, two colour passport size photos, copies of passport, etc.

●Apply for a VISA 

You will need to apply for a VISA to run your franchising business in Dubai. A UAE business license holder can also apply for their family members’ VISA. The number of VISAs you can sponsor will directly depend on the size of your Franchise Company, setup, and earnings.

●Open a Corporate Bank Account 

You will have to open a corporate bank account to manage Dubai offshore company cost successfullyTherefore, it would be in your best interests to research the different financial institutions in Dubai to find out which one best suits your business interests.

Dubai serves as the perfect spot for conducting business, thanks to its business-friendly laws, tax incentives, and so forth. Are you wondering about how to open an offshore bank account in Dubai? Do you want to learn about the different business opportunities for foreigners in Dubai? Contact us today!

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