Saudi Arabia has witnessed a remarkable 866% increase in franchise registrations over the past three years. By the end of Q3 2024, the total franchise registrations reached 1,788, compared to just 185 in Q4 2021, according to a statement by the Ministry of Commerce.

Franchise Business in Saudi Arabia

The franchise business in Saudi Arabia is thriving, driven by a robust legal framework, government support, and the Kingdom’s strategic focus on economic diversification under Vision 2030. With increasing opportunities in key sectors, franchising has become a preferred model for both local and international investors.

Key franchise opportunities in saudi arabia Sectors

Tourism, Hotels, and Restaurants: Leading with 1,232 registrations.

Wholesale and Retail: Secured 689 registrations.

Transport and Storage: Reached 257 registrations.

The Riyadh region led with 647 franchise registrations, followed by the Makkah region (363) and the Eastern Province (225).

Factors Driving Growth in Franchise Registrations

The implementation of the Franchise Law and its executive regulations in 2019 and 2020 established a clear and transparent framework for saudi franchise agreements. This encouraged investment and enhanced confidence between franchisors and franchisees.

Supporting Entrepreneurship

The Franchise Center, part of Monsha’at (Small and Medium Enterprises General Authority), plays a pivotal role in promoting franchising. It fosters entrepreneurship, attracts local and foreign investments, and aligns with Saudi Vision 2030 by creating job opportunities and supporting economic diversification.

Franchising has been a key economic driver since global franchises entered Saudi Arabia in the 1970s. Today, over 380 Saudi companies operate franchise models across the Kingdom, with many expanding to GCC markets, reflecting the Kingdom’s growing influence in the regional franchise landscape.

Benefits of Franchising in Saudi Arabia

Access to Established Brands: Investors gain from proven business models and brand recognition.

Economic Diversification: Franchising supports the Kingdom’s shift towards a non-oil economy.

Job Creation: Franchises contribute to employment growth and skill development.

Expansion Opportunities: Saudi franchise businesses are now growing across GCC markets.

With a dynamic business environment, legal safeguards, and rising consumer demand, the franchise sector in Saudi Arabia is poised for sustained growth, making it an attractive option for entrepreneurs and investors.

What are the 4 types of franchising? 

The four main types of franchising are:

1. Product Distribution Franchising

Focuses on the franchisee selling products manufactured or supplied by the franchisor.

The franchisee operates under the franchisor’s brand and trademark but has more independence in operations.

Common in industries like automotive, beverages, and appliances (e.g., car dealerships, soft drink distributors).

2. Business Format Franchising

Involves a comprehensive system where the franchisee operates under the franchisor’s established business model.

Includes training, marketing, operational support, and access to the franchisor’s trademarks and brand.

Common in sectors like fast food, retail, and services (e.g., McDonald’s, Subway).

3. Manufacturing Franchising

The franchisee manufactures products using the franchisor’s specifications, trademarks, and branding.

Often seen in industries like food and beverage production or apparel.

Examples include bottling companies producing soft drinks for larger brands.

4. Job or Investment Franchising

Focused on individual or small-scale franchisees, often home-based or requiring minimal staff.

Examples include cleaning services, real estate franchises, or small consulting businesses.

In investment franchising, franchisees typically manage larger operations as investors, such as hotel chains or fitness centers.

Each type caters to different business needs and investor goals, offering flexibility and opportunities in various sectors

Saudi Arabia’s franchise sector is experiencing unprecedented growth, cementing its position as a hub for franchise business in the region. With robust legal frameworks, government support, and thriving franchise opportunities across key sectors such as tourism, retail, and logistics, the Kingdom continues to attract local and international investors. This momentum, coupled with the strategic goals of Vision 2030, ensures that franchising remains a pivotal contributor to economic diversification, job creation, and regional expansion, making Saudi Arabia a prime destination for franchise opportunities.