Saudi Arabia’s Franchise Market Drives Economic Growth Amid Vision 2030 Reforms

Saudi Arabia’s franchise market is emerging as a major driver of economic growth, contributing to employment, government revenue, and cultural transformation in the Kingdom. Experts attribute this expansion to regulatory reforms and the broader economic strategy of Vision 2030, which aims to diversify the economy beyond oil dependency.

Since the implementation of Saudi Arabia’s franchise law in 2019, followed by expanded regulations in 2020, the business landscape has become more accessible to international brands. The Kingdom now accounts for nearly half of the $30 billion franchise market in the Middle East and Africa, according to Yaseen Ghulam, an associate professor of economics at Al-Yamamah University in Riyadh. He noted that the sector is expected to grow by more than 20% annually over the next five years, presenting significant opportunities for global brands.

“This presents an exceptional opportunity for international brands to enter the Kingdom through franchising, given the fact that European and North American consumer markets are struggling due to economic uncertainty, unemployment, and higher cost of living,” Ghulam told Arab News.

Franchise registrations in Saudi Arabia have risen sharply, reaching 1,788 by the third quarter of 2024, up from just 185 three years earlier. The accommodation and food services sector leads the registrations, followed by wholesale and retail, and the transport and storage industries. Riyadh, Makkah, and the Eastern Province have emerged as key hubs for franchise businesses.

Government initiatives have played a crucial role in fostering this growth. Abdullah Al-Maghlouth, a member of the Saudi Economic Association, highlighted how streamlined processes and a supportive legal environment have attracted investment. The 2019 franchise law and its subsequent regulatory framework have enhanced transparency between franchisors and franchisees, making Saudi Arabia an appealing market for both local and international investors.

To further support entrepreneurship, the Kingdom’s Small and Medium Enterprises General Authority (Monsha’at) has introduced programs like Tomoh and established the Franchise Center. Intellectual property protections, simplified trademark registration, and financial support programs such as Kafalah and the Social Development Bank have also contributed to franchise expansion.

The Saudi Franchise Association, the first specialized entity of its kind in the country, has been instrumental in promoting business excellence, organizing workshops, and partnering with academic institutions and chambers of commerce. Additionally, the Arab Franchise Marketing Corporation provides consulting services and business development support for domestic and international franchises.

Experts believe that Vision 2030 has been pivotal in shaping the franchise landscape by fostering private-sector growth, diversifying the economy, and encouraging foreign investment. The initiative has not only enhanced regulatory and financial structures but also stimulated demand for franchises in sectors such as education, healthcare, fitness, and retail.

“Vision 2030 has transformed the mindset of Saudi youth, encouraging entrepreneurship and self-employment through franchising, offering substantial returns on investment,” Ghulam noted.

As Saudi Arabia continues to invest in mega projects and expand its tourism, retail, and hospitality sectors, the franchise industry is expected to play an increasingly vital role in the Kingdom’s economic future. Industry experts anticipate further expansion into emerging fields like technology, education, and healthcare, solidifying Saudi Arabia’s status as a leading investment destination in the region.