UAE's petrol station stores eye franchise deals

Home-grown convenience stores in the UAE are eyeing overseas franchise deals in a bid to finance their ambitious expansion plans, franchise consultants have said.

Eateries owned by the region’s biggest petroleum companies are hoping to sell tens of stores to investors in the GCC, before growing their brands globally, the manager of Francorp’s Middle East division said.

“All the major oil and gas companies here have their own convenience stores, and they have been extremely successful,” Imad Charaffedine told Arabian Business.

“They are all looking at expanding their businesses into franchise businesses. Most of them have started working on their programme to become a franchisor in this region. Then they will consider international.”

The firms include Emirates National Oil Company (Enoc)-owned ‘Zoom’, Emarat’s ‘Freshplus’ and Abu Dhabi National Oil Company (Adnoc)-owned ‘Oasis’, he said.

Enoc, which boosted the number of Zoom stores at Dubai Metro stations from six to 16 earlier this year, is eyeing the sale of 30 stores in the GCC between 2012 and 2013, and 100 stores across the region in five years. The average investment required per store is around AED1m.

The firm first announced plans to franchise Zoom and its fresh food and coffee concept ‘Pronto’ in March, in the hopes of opening standalone stores as well as more service station outlets in the near future.

Charaffedine said Emarat’s Freshplus had similar numbers in mind for expansion, after it began franchising in 2010 along with its sister concept ‘Bakeria’.

Also in discussions to franchise is the Abu Dhabi equivalent of Zoom, known as Oasis. Charaffedine declined to give numbers but said the firm was again looking at regional growth through the franchise model.

“[Most of the firms] build their concepts in the UAE, but when they want to expand, it’s better to have a good partner who has the capital and resources to operate their business and expand on their behalf,” he said.

“Some are even franchising in the UAE, so [expansion] depends on the strategies of each business.”

A report by Business Monitor International (BMI) in 2010 said UAE convenience store sales would outperform the wider mass grocery retail sector over the next four years.

According to the report, sales would increase by more than 50 percent by 2014, to reach a total AED430m ($117m).

In July this year, French retail giant chain Carrefour said it would open four ‘Express’ convenience stories in the UAE by the year-end, while Abu Dhabi-based Lulu Hypermarket Group announced plans to roll out 50 local stores across the Gulf in three years. 

Retail Arabia also said in September it would launch 10 Géant supermarkets in Kuwait within 12 months and eight branches in Bahrain by 2014.