By Scott Lehr, CFE, Senior Vice President, U.S. & International Development, International Franchise Association
We had arrived at our final destination of the U.S. Franchise Trade Mission to the Middle East – Doha, Qatar. Ten days of planes, hotels, meetings, mall tours and hauling luggage but most importantly many, new relationships with prospective master franchisees, stronger connections with our Commercial Service friends and lasting memories with members and peers from the franchise delegation.
The group of Greenberry’s, Pollo Tropical, Tutor Doctor and Wing Zone pushed forward into Qatar. Hertz Rental joined for the morning sessions our first day in Doha but were heading out that afternoon.
The U.S. Commercial Service staff, Robert Dunn, Senior Commercial Officer, Mahmound Skhiri, Senior Commercial Specialist and Anissa Lahreche, Commercial Specialist met us at the airport and got us to the hotel to rest up for a packed day at the hotel filled with briefings and one-one meetings. In the morning we were joined by Natalia Hernandez, Commercial Assistant and Golda Agnazata.
Michael Palmer from Patton Boggs led off the morning sessions with a legal update and “Doing Business in Qatar” briefing. Palmer confirmed that there is no specific franchise law in Qatar, only the need to register the Franchise trademark. He stressed that franchisors need to be in control of the trademarks, licenses and ownership of materials in the country. As in some other countries in the Middle East, he cautioned that the Franchise Agreement is sometimes registered as an exclusive agency which is not recommended and described the preferred practice which is a franchise licensing arrangement.
While discussing some of the challenges of the market, it was agreed that franchisors will have to deal with supply chain and approved supplier issues since many items especially for food franchisors will need to be imported.
The group then had the opportunity to hear from local franchisees that have been operating in the market for a number of years. Mr. Vijay Arora, Operations Manager with Chili’s – Qatar, part of International Food Concepts Company has been operating in Qatar for 12 years and sees strong potential for growth as long as the population growth keeps up with the building in the area. Mohamed Ekram, Brand Operations Manager of Popeyes which is also part of the International Food Concept Company is currently operating five Popeye’s in the area and has plans to develop up to 16 in the next few years. He cautioned the franchisors to look for strong food experienced partners or face lots of problems in getting their concepts opened and operating. He said that “kid friendly” and play area locations will drive sales and build loyal followings.
Finally Camille Aoun of the Al Jassim Group which operates Burger King Restaurants, Quiznos Sub Shops and other brands including hotels advised the franchise delegation to be cautious to find the right partner that is interested in operating profitable food businesses instead of locating a partner that invests in franchised businesses to have them in their portfolio as a badge of honor and prestige that may never open a significant number of locations. He cautioned the group that they need to look for partners that can be in the market for the long term due to the growth of the retail real estate market that is outpacing the population growth creating more space than demand for product.
The final speaker before lunch was Garrett Grennan with Ernst & Young who talked with the group about tax implications for franchisors with operations in Qatar. He reported that franchise royalty is subject to withholding tax of 5 percent and that corporate income tax is 10 percent. He also mentioned that although basic food products are not subject to customs tariff, processed foods are subject to a 5 percent tariff so franchisors need to work these figures into their calculations for the market.
The Commercial Service team had arranged for a press event that included more than a dozen media in Doha including The Peninsula, Qatar Tribune, Qatar News Agency, Doha News, Arabian Business and Qatar Today. Members of the press fired questions at the delegation and everyone shared their stories on looking for partners for their brands in Qatar.
Lunch was hosted that afternoon by the American Chamber of Commerce of Qatar and represented by Robert Hager, Founding Chairman and Theresa Backus Dunn, Executive Director.
Once again, the group rolled into a full afternoon and evening of one-one meetings that had been previously set and prequalified by the Commercial Service staff in Doha making for a full and productive day.
Day two in Doha began with a retail tour of a number of malls in Doha and massive new community projects. The delegation enjoyed a great breakfast at the new Tim Horton’s Coffee Shop in Ezdan Mall followed by a tour of the mall which included a number of American brands open or in the process of being built including KFC, Papa Johns, Fuddruckers, Pinkberry, Robecks, Subway and Johnny Rockets.
The group also toured two mixed use communities, Katara and The Pearl, a community 20 kilometers north of downtown Doha. The Pearl Qatar is a mixed-use development which includes beachfront villas, town homes, luxury apartments, penthouses, five-star hotels, marinas, and upscale retail and restaurants all situated on a man-made island encompassing 985 acres. This project complete with all the top high end brands including Ferrari, Maserati and Rolls Royce dealers and retail brands to match will certainly be on the list of places to visit while in Qatar.
The last official function of the U.S. Franchise Trade Mission to the Middle East ended with a lunch at the St. Regis looking out at the Pearl-Qatar. The lunch was hosted by the U.S. Ambassador of Qatar, Susan Ziadeh and the Qatari Businessmen Association and represented by Hussain Ebrhim Alfardan, Deputy Chairman of the Board who is also Chairman of the Alfardan Group, which has businesses in jewelry, real estate and the automotive areas. Also in attendance was Hamad Bin Faisal Bin Thani Al Thani, Chairman of Al Khaliji one of Qatar’s leading banks.
As the trade mission participants said their goodbye’s after 11 days together, everyone was optimistic that they would be back soon hopefully to sign deals in a number of the countries they had visited over the past week and a half.