Dubai is one of the fastest-growing economies in the world and has established itself as a popular business hub worldwide. What was a desert city a few decades ago is now seeing a lot of investment from foreigners and global brands every year thanks to tax reforms, strategic location, skilled workforce and so on. Despite a disappointing 2020 due to the global pandemic, immigrants can benefit from setup up businesses in Dubai. Franchising is based on doing business using some or all aspects of another business and a successful business.
The franchisor is the holding company that allows the franchisee to work with the product or service, brand, technique, etc. the same based on pre-determined costs. The contract governs the business relationship between the franchisor and the franchisee. If you are looking to set up an offshore franchise company in Dubai, you will benefit from brand awareness, working support, and proven business experience. Read on to find out more!
Requirements for Opening a Franchise Business Set up in Dubai
First of all, you need to do some market research. You can refer to recommendations from previous or existing franchisees to learn more about franchisors. You can also get a Franchise Disclosure Document (FDD) if you work for a well-known international company. The former will help you learn franchise rules, fees, franchisee obligations, and other important financial information.
To ensure the smooth establishment of offshore companies in the franchise area, foreign investors must pay attention to the following:
- A local sponsor is required if the company is in Dubai mainland
- Foreign investors can register a business or sole proprietorship when opening a franchise business.
- Both parties sign a franchise agreement governing their business relationship. This agreement contains all rights and obligations for both parties.
Types of Franchise Businesses in Dubai
Dubai Department of Economic Development (DED) has divided franchise businesses into two categories:
The franchisee will offer and sell the franchisor’s products and services through a single company.
The franchisee will sell the franchisor’s products and services through several locations whose activities are managed by one company.
Do Franchises Require a Local Business Partner?
If you plan to continue to set up an offshorecompany in the free zone, regardless of the type of business, you can use 100% ownership. However, if you want to start your business in a zone that is not in a free zone, you will need to seek help from a local partner or service agent depending on the type of business. If you run a service business, you can have 100% ownership provided you have a local service agency (LSA).
The latter is a UAE citizen who helps foreigners with licensing requirements for a small fee. If you intend to sell or distribute products through your franchise business, you must work with a UAE citizen who owns 51%. If you are new to the industry in Dubai, it is best to enlist the help of an advisor. Foreign nationals can enter into a guarantee agreement stating that they are entitled to economic benefits from the shares of UAE nationals. This means that the financial interests of UAE residents are limited to the agreed annual fee.
Simple Steps to Run a Franchise Business in Dubai
Foreigners who wish to set up an offshore franchise company in Dubai should pay attention to the following details:
Choose a Profitable Company Name
Experts should pay attention to naming conventions guaranteed by the government. They are prohibited from using offensive or blasphemous words. In addition, they may not use established brand names and abbreviations when naming companies under their names.
Get a Trade License
Foreign nationals need a commercial license to operate an offshore business in the UAE. Applying for a trade permit depends on whether you plan to start in a free zone or a zone outside the free zone. You will need basic documents such as a completed application form, a two-color passport photo, a copy of the passport, etc.
Apply for a Visa
You need to apply for a visa to run your franchise in Dubai. UAE business license holders can also apply for a family member visa. The number of Visas you can sponsor is directly related to your franchise size, perks and income.
Open a Corporate Bank Account
You need to open a corporate bank account to successfully manage offshore company fees in Dubai. Therefore, you should research the various financial institutions in Dubai to find out which one best suit your business interests.
Dubai is an ideal place to do business thanks to business-friendly laws, tax incentives, etc. Wondering how to set up in Dubai? Would you like to learn more about the various opportunities for foreigners in Dubai? Contact a professional business consultant company today!