Nigeria Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in nigeria, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Franchise Sector
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Franchising has immense potential in Nigeria. With its great entrepreneurial spirit, and approximately 64,000 businesses being registered annually and a growing population estimated to reach 400 million by 2050, the country promises to be a great destination for U.S. franchisors seeking to enter the African continent. Nigeria’s franchise sector has evolved over the years with new local and foreign franchises rapidly springing up. While Nigeria’s large population is expected to accelerate growth of franchising, some economic factors may be an impediment. Growing inflation, 35 percent (as of December 2024) has caused sharp price increases of goods and services, and decimated consumer purchasing power. As a result, Nigerian consumers have become increasingly price sensitive.  

The cost of doing business has risen significantly since the Covid-19 pandemic and the floating of the naira against the dollar. Companies that depend heavily on imported inputs are more severely affected. Foreign exchange scarcity and high import duties continue to be pain points. U.S. franchises looking to come into the market must be mindful of these factors when crafting their business models. Quick Service Restaurants (QSRs) are the top foreign franchises in Nigeria based on volume and constitute about 45 percent of all franchises. South Africa, and the United States account for bulk of the foreign franchises operating in the country. U.S. franchises in Nigeria include:

  • Dominos (U.S.)
  • Cold Stone Creamery (U.S.)
  • Kentucky Fried Chicken (U.S.)
  • Krispy Kreme (U.S.)
  • Pizza Hut (U.S.)
  • The UPS Store (U.S.)
  • Burger King

Opportunities

There are some interesting segments within the franchising industry that are attractive to both local and international franchisors. Food and food related segments continue to command significant attention. Others include retail, health and beauty, consumer services, sports (gym), education, and agriculture (cultivation, processing, distribution and storage). The emergence of sports betting with its widespread appeal among the young football-loving population has surprised many. Network marketing/multi-level marketing (MLM) also has a considerable appeal among young professionals as a first step towards franchising.

Challenges

U.S. franchises continue to face market-based and policy challenges related to poor economic conditions in the country. Some of these challenges include:

  • Foreign exchange risks
  • Low level of infrastructure
  • Declining consumer spending power
  • High cost of import of inputs and raw materials

The Nigerian naira has continued to weaken against the dollar and the cost to businesses is high. Businesses may have trouble getting foreign currency for imports and profit repatriation. As a result, companies that have high naira exposure and purchase raw materials in foreign currency have seen a significant increase in costs while revenues have declined or remained flat. 

For more sector information, e-mail:  Ambrose Thomas, Commercial Specialist, U.S. Commercial Service, Nigeria, at Ambrose.Thomas@trade.gov

Resources

NOTAP Nigeria 
Nigerian International Franchise Association (NIFA) 
Navigating Cross Border Franchise

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