Dubai Fact-File Part 1:
Business Formation for Individuals

1.10 Dubai Individual Business Franchises

Franchising: Another type of ownership structure to be considered is the franchise. An independent that chooses the franchise path will benefit from a support system. This usually includes a business model, the right to use an established name, assistance in training staff, finding a location, and on an ongoing basis, for the management of the franchise.

However, with the safety net come a number of restrictions and expenses: the franchisor is likely to be very inflexible over location, the types of goods and services that can be sold, the standards that the franchisee must be held to, etc.

In addition, an initial franchise fee (which will vary according to the business type), ongoing royalties (even, sometimes, where the franchise has not made any income during the period in question), and sometimes payments into a central advertising fund may be required.

A franchisee can be either a corporate entity or an individual; the tax consequences of becoming a franchisee will therefore vary accordingly. Business forms may be in any of the legal forms available for a new business in Dubai and the legal requirements for these are the same whether a business is a franchise or not.

Franchise opportunities are available throughout the Gulf states, including Dubai. Franchisee UAE (www.franchiseek.com/UAE/) is a good starting point to find out what is available and where.

As a start-up model, a franchise has pros and cons as described here, but having a globally recognised brand behind a new business start-up can be a significant advantage.