FME gears up for action as Subway seeks 500 new franchisors across the Middle East

Organized by International Expo Consults(IEC), Franchising Middle East will show case products and services across a broad cross section of industries, as a large number of international and regional franchisors and master franchisee converge at Dubai World Trade Centre from 5-7 March 2007. International participation in the 2007 event has increased by 20 percent as Middle East is amongst the most sought after franchising destination. The Middle East food industry being the high demand sector amongst the international franchisors.

Subway-the fresh food giant that boasts of 27000 retail outlets in 86 countries, with a brand new outlet coming up every 3 hours 20 minutes in some corner of the world, is greatly focusing on Middle East. Incidentally, the region happens to be an integral part of the Subway success story as the Middle Eastern island nation of Bahrain became the first location outside North America to have a subway outlet, way back in 1984.

Commenting on the expansion plans and Subway's participation in FME, John S. Chedid, Director of Subway in the UAE said, "Subway plans to increase its presence substantially across the UAE and the Middle East. In fact, from our current presence of 160 outlets across the Middle East we intend to cross the 500 mark by the year 2010. That would represent an increase of almost 32 percent. In UAE alone, we intend to raise our standing from 33 to 125 outlets during the same span of time.

'We are looking forward to expand through greater franchising. We consider FME as an effective gateway to the MENA region, CIS countries and Levant because the exhibition attracts serious trade visitors from across these regions. We firmly believe that our 2007 participation will greatly help us achieve our strategic expansion plans.

'Although, it is very difficult to sign deals during an exhibition but we have actually signed many in our last two participations. With Dubai becoming a global city, increasing international participation of franchisors from across the globe at the show opened up partnerships for us in other parts of world as well."

Terming the expansion plans as humble, John cites the economic boom across the Middle East and the growing number of people making healthy lifestyle decisions as the motivations for expansion. "In UAE, alone Subway registered a 24 percent increase in sales in 2005 and the 2006 figure is sure to be better. In comparison to demand our expansion is quite modest. If I were to add the 2007 target of 17 outlets across UAE to our cumulative franchised tally of 17 stores in 2006, which includes 12 outlets in various stages of progress, then by all means we will be accomplishing 50 percent of our target by end of this year itself."

Vindicating John's opinion is a BIS Sharpnel study in consumer values that pegs the UAE food market at a massive AED 16 billion. At a growth rate of 11 percent per annum, it represents a growth not seen in any other part of the world.

Affirming the tremendous growth in the food sector, Mr. Abdul Rehman Falaknaz, President of International Expo Consults (IEC) says, " The huge demand for food can be gauged from the fact that fast food alone accounts for a whooping 40 percent of the total franchising market. More quick service international food brands are looking towards Middle East due to the immense opportunities it offers.

'Franchising Middle East show has seen a steady increase in the number of exhibitors and visitors interested in the food sector. The fact that international brands like Subway consider FME important in terms of achieving their business objectives clearly shows the fact that the exhibition has been successful in opening up franchising opportunities in the region."

Almost 40 percent of the people in the UAE visit the quick service restaurants often called informal-eating- out- places (I.E.O.P). The UAE business' annual volume of this sector stands at around Dh600 to Dh800 million. Although huge, the sector is characterized by stiff competition as 15 to 20 major international players including Subway, McDonald's , Burger King , Kentucky Fried Chicken and Hardee's compete for the market share.

John is quick to dismiss competition. "Subway is not in competition with these brands as we focus on providing fresh and healthy food. In the USA, Subway surpassed McDonalds in store numbers, way back in 2004. As part of a very successful global strategy, our outlets are located either opposite or adjacent to McDonalds.

'We cater to population mainly in the age group of 13-48. Evidently, we are not big on the kids meal concept that is central to marketing campaigns by McDonalds and KFC. Our proximity to these eating joints is aimed at providing a healthy alternative to parents and health conscious people."

In addition to UAE, Saudi Arabia with a population of 24 million and retail sales equivalent to 18.2 percent of its GDP is a major franchising destination for Subway. Interestingly, Saudi Arabia is the only country in the world being exclusively serviced by Subway master franchise and therefore a very alluring prospect for franchisors.

Delineating the selection process of Subway, John says, "Subway always looks forward to franchising partnerships with young, energetic, ambitious, focused and self motivated people, as the success of Subway is so very much dependent on the collective success of these individual enterprises. Contrary to the general perception, we do not seek rich people with multiple business interests and focus areas."

With an annual growth of 27 percent, the franchising industry in the Middle East is attracting a lot of attention globally, while franchisors in the region are favorably disposed to famous international brands.