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Friday, June 22, 2012

U.S. Business Expansion in the Middle East


One of the hottest places to expand a franchise internationally is the Middle East. This is due to several factors, most among them is the fact that the area is very wealthy and is eager to expand its U.S. brand presence. Since the 1990’s several U.S. based franchises have expanded into Kuwait with further expansion in the UAE and Saudi Arabia in the last 5-10 years.

Many small businesses are seeking the international expansion route in the Middle East as a source of expanding their revenue stream. This week, Bloomberg Business Week provided a look at how small businesses are taking advantage of the opportunities in the Middle East (see http://www.businessweek.com/articles/2012-06-21/small-u-dot-s-dot-franchises-head-to-the-middle-east).

While there is a great opportunity for expansion in the Middle East, there are some precautions that a business owner should keep in mind. First, if your business is in the food industry, you will likely have to comply with Halal Certification which regulates the preparation of food and meats. Most countries in the Middle East do not have franchise specific laws and regulations, which opens the business owner up to compliance commercial agency laws and in many instances, Shari’a Law as well.

If you are seeking to expand your business into the Middle East, it is recommended that you have both U.S. based and Middle East based (country specific) legal counsel. Together, your legal team can help you prepare for the complexities of international expansion and to comply with the various laws and regulations that can affect your brand from trademark registration to Shari’a Law compliance.