Overview

Franchising is being deployed with increasing frequency and today, almost any product or service can be distributed through franchising. The Kuwaiti market is highly receptive to the franchise business model. High per capita income, significant spending power, tax-free income earnings, and an upwardly mobile population serve to underline business opportunities here. 

Kuwaitis are very familiar with U.S. brands and products as they frequently travel to the United States for tourism and education (approximately 10% of Kuwaiti high-school graduates study at U.S. colleges and universities). American franchises are warmly welcomed in this small, wealthy country. 

The pandemic period was tough on the franchising industry. Similar to the situation in the United States, demand for  new brands dropped and many small businesses closed. Thus, new concepts and brands struggled to enter Kuwait. However, this year we are seeing demand begin to grow again.  

Another new trend is the opening of new concepts by Kuwaiti entreprenuers, often financed by the Kuwaiti government. This is mostly in the food industry (cafes, restaurants, etc). These concepts are becoming popular locally and some companies are evening branching out to neighboring countries in the gulf and beyond.  

Best Prospects for U.S. Franchisors 

Although approximately 50 U.S. food franchises are currently active here, there is plenty of space for new brands with the opening of new shopping malls and entertainment areas in several areas of the country. In addition to the food sector, Kuwait is receptive towards retail franchises. American and European brands are leaders in this competitive market.  

In recent years, Kuwait has begun to introduce new entertainment and educational concepts such as Make Meaning, Trampo, National Geographic Ultimate Explorer, Sky Zone, Paintball, Color Me Mine and others in order to make shopping malls a prime destination for families where they can enjoy shopping, food, and entertainment in one centralized location. There is high market demand for quality education and training services. In order for a franchise to succeed in Kuwait, it must offer flexibility in the concept to match the Kuwaiti culture and taste.  

Market Entry Considerations  

Kuwait’s complex business environment requires flexibility, patience, and persistence. Many exporters and investors in Kuwait face challenges such as inconsistent, sometimes contradictory policies, lack of transparency in decision-making, and a judiciary that heavily favors the local population. 

Kuwait can be an expensive place in which to do business, largely due to the legal requirement to obtain a local partner. However, because low labor costs and low tax regime, many U.S franchises been successful.  

Kuwait’s laws stipulate that the Kuwaiti courts alone are responsible for adjudicating any disputes involving a foreign investor and other parties, although arbitration is permitted. 

In summary, selecting a local partner who will work for you is the single most important step a U.S. franchise can take in Kuwait. Obtaining competent local legal counsel to craft an agreement that protects your company from future liability is also critical. The best local partners are those who share both risk and profit with their American partners. 

Advertising Methods 

The use of social networks is high in Kuwait across all ages, including both Kuwaitis and expats. WhatsApp is commonly used across all nationalities, while Instagram, Twitter and Snapchat are popular among Kuwaitis. Facebook is popular among expats. 

For launching, promoting or advertising a product or a service and taking into consideration the target audience, Instagram and Snapchat are the best platforms to reach the Kuwaiti population. 

Residents of Kuwait use social networks for both social and promotional purposes. Among informational activities, the most popular actions include receiving news and information ranks highest, closely followed by exploring various links on social networks to direct users to external web pages. 

Resources 

For more information, please contact Commercial Specialist Rasha Al-Muhtaseb on rasha.al-muhtaseb@trade.gov.