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Sherif Samy: Franchise System Attracts various Non-banking Financial Tools

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• EFSA participates in discussing the first draft law on commercial concessions in Egypt
• Sherif Samy: It is time for issuing a law that regulates franchise in Egypt

Sherif Samy –EFSA’s Chairman stressed on the importance of regulating franchise system in Egypt to protect its parties and encourage small and medium enterprises to benefit from successful experiences in the field of products and services in many sectors in order to grant opportunities for emerging company to maintain a strong start.

In a discussion session organized by the Egyptian National Competitiveness Council (NCCI) in conjunction with Erada initiative on the first law in Egypt to regulate franchises in Egypt and in the presence of a large number of experts and representatives of the concerned ministries, EFSA’s Chairman indicated that the draft law will define the general framework of the system and the details of the contractual conditions between the parties will be left. He stressed on the importance of determining whether the law will –optionally- give the right for the parties to benefit from the advantages of the system or it will be bound by all contracts in the country which is considered it as commercial concession if the elements specified by the law are available.

Sherif Samy explained that there are many financing tools supervised by the Authority and suitable for companies benefiting from the system of commercial franchise, such as financial leasing, factoring , mortgage finance and even microfinance. Franchise projects attract all types of financing institutions  and it enhances trust in them due to the relative success of these projects in light of their reliance on a successful local or international brand and the commitment of the project to operate according to the company’s franchising specifications in terms of brand systems, marketing, management, technology transfer and quality control .

In his speech, he also asserted that there is a clear difference  between franchises granted by Egyptian companies and franchises granted by foreign companies.

EFSA’s Chairman stressed that the draft law should take into account the responsibilities and cases of conflict of interest for  both legal persons and nature persons. He pointed out that 39 countries around the world have laws governing the Franchise system and it is time for such legislation to be issued in Egypt.

On the sidelines of the event, Sherif Samy noted that the franchising company can achieve expansion, spread and market penetration without the need for significant additional investments or exposure to risks in other markets. He added that this grants material returns more than concession revenues, whether in one installment or continuous or periodic payments, which may be a percentage of sales, revenue or other.
 

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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