West Bank Franchising Sector
The franchising sector in the West Bank offers niche opportunities for U.S fast food and apparel companies.
Palestinians spend around 40% of their income on food and in the past seven years fast food franchises have sprung up in the market with entries by KFC, Pizza Hut, Domino’s, Hardee’s, Popeyes and Pizza Inn. There are great opportunities for major hamburger and doughnut chains. There are also opportunities for U.S. apparel franchises as no such similar companies have entered the market yet.
Palestinians recognize U.S. franchise brands either from traveling to Arab countries or by TV ads from neighboring Arab countries; those ads tend to influence the young people and develop brand recognition. Almost 39% of the Palestinian population is under 14 years old and this segment presents a sizeable client base for fast food companies.
Sales at fast-food chains during the height of the COVID 19 outbreak were reduced by more than 30% but the chains developed food delivery services to reach their consumers and eventually became an advantage after the health situation improved. As normal business operations resume, it is anticipated that sales figures will continue to grow.
A number of support industries have sprung up to support the local franchising sector. Due to strict import regulations into the West Bank, an important element is the procuring of local products such as chicken, beef, fresh produce and soft drinks. In many cases this is only possible after getting the approval of the franchisor’s quality control experts. Consideration of cultural and dietary customs of the general population such as using halal meats only and introducing new items on their menus that are in demand by the local population. Strong management and marketing and ongoing training for managers and restaurant workers is another key factor in building the capacity of the sector.
The small size of the market can be a deterrent for some U.S. companies. Another challenge for Palestinian investors in fast-food franchises is the fact that several U.S. franchises have given geographical rights in West Bank to companies that are based in the Gulf, Jordan, or Israel that have limited interest to expand into the West Bank market.
Franchise licensing agreements are drawn out between the local franchisee and the franchisor according to terms that serve and protect the rights of both parties. The supply chains are very important for the operations of franchises and there have been minimal interruptions reported.
For more information on the franchising sector in the Palestinian market please contact Issa.Noursi@trade.gov