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Exporting Lebanon: Franchise industry booming February 17, 2014 12:29 AM By Dana Halawi
The Daily Star


BEIRUT: As most of the country’s economic sectors struggle to survive the harsh economic conditions, Lebanon’s franchise industry is bucking the trend. Lebanese franchisers not only have achieved remarkable growth over the past two years but have succeeded in branching out to many countries around the world.

“The franchising industry is usually less affected than any other sectors in times of turbulence because a well-established brand gives quality assurance to the consumer on one side and it is a less risky business for investors on the other side,” Charles Arbid, head of the Lebanese Franchise Association, told The Daily Star.

Arbid said the risk exposure when buying a franchise license was much less than creating a new project.

“A franchise may be less profitable in difficult times, but it would still be able to secure investment,” he added.

Despite the deterioration of the many economic sectors that used to be considered the main generators of revenues in the Lebanese economy, such as tourism for instance, the franchise industry has maintained over 10 percent yearly growth for the past couple of years.

Moreover, franchising now contributes 5-10 percent to the country’s GDP, according to Arbid.

“This is a big number, and it is continuously growing,” Arbid said.

Arbid believes that one of the reasons behind the success of the franchising industry is that the nature of the Lebanese economy facilitates the exportation of franchises.

“The best way to export our goods and services today is through franchising,” he said, adding that the country was exporting the Lebanese way of life “which is the most precious asset we have in this nation.”

For Mohamed Choucair, president of the Chamber of Commerce and Industry of Beirut, the main factor behind the great success of the country’s franchising industry is the creativity of Lebanese people and their continuousinnovation.

“Lebanese are creative. They can create a concept and market it,” Choucair said. “They are very good at marketing.”

In fact, Lebanese brands are present in more than 40 countries through more than 1,500 points of sales, according to information provided by Arbid.

Moreover, Lebanese businessmen have a long history of success working abroad in many different sectors.

Building on that legacy are new projects such as The Little Engineer, a concept launched in July 2009 in Lebanon by a young instructor at the Faculty of Engineering and Architecture at the American University of Beirut.

The Little Engineer provides students as young as 4 years old with hands-on experience in selected scientific topics. It aims to enhance children’s awareness of new technologies and encourage their creative growth by exploring the various opportunities offered by the engineering field through summer and after-school activities.

Early success in its home market led the founders to explore exporting the concept abroad.

“We started offering our concept for franchising since 2012,” TLE co-founder Mohammad Shihan said.

TLE has already expanded to Libya and Qatar, Shihan said, while the company is currently negotiating with potential franchisees in Britain, the Gulf, Sri Lanka and the Philippines, as well as elsewhere in Asia.

Shihan attributes the success of TLE to its high social effect.

“The effect of this new concept is very high because it is about science and Lebanese people are usually keen on providing their children with new skills and knowledge,” he said.

However, franchisers interviewed by The Daily Star all agreed that the industry wasn’t immune from the current security situation that has affected the wider economy.

“Some investors have expressed their worries about accessing Lebanon to negotiate with us about duplicating the idea abroad due to the deteriorating security situation,” Shihan said.

Echoing Shihan, Roy Maroun, business development director at the restaurant chain Casper & Gambini’s, said the bad security situation was preventing investors from coming to Lebanon to negotiate franchise deals with his company.

“Investors are asking us to meet with them outside Lebanon to avoid dangerous situations,” he said.

Arbid, who also owns the Lebanese clothing brand Rectangle Jaune, said stability concerns went beyond scaring potential visitors.

“People are afraid to manufacture in times of security instability, and the problem is that in our business, orders must be produced six months ahead of the delivery date,” he said. “That’s why we tend to produce slowly but surely.”

Arbid said the security situation did not encourage franchisees to consider Lebanese brands.

“They are worried about not receiving the goods produced in Lebanon on time due to possible sudden security issues,” he said.

Albert Thoumy, a board member at the chain Crepaway, said the exodus of Lebanese youths emigrating made it difficult for firms to find skilled workers inside Lebanon.

“What Lebanon needs most is stability,” he said.

The recent downturn in the security situation compounds problems for franchisers, who told The Daily Star they already faced a perception issue when selling their concepts and products to foreign investors.

“Some people outside Lebanon express their surprise that our franchise concept of an educational training center is coming from an Arab country,” Shihan said.

“There is a general perception that this should be coming from U.S. or Europe,” he added, while noting that “our concept is made in Lebanon, but it is based on international standards.”

The “Made in Lebanon” tag constituted a challenge for Arbid while building his business.

He said that while Lebanon was known in the fashion industry for its high-end products and haute couture, it was more difficult to sell the country as a clothing exporter.

“We are in competition with international brands,” he said, adding that his company had been able to overcome these challenges with regular follow-up and patience.

While Lebanese franchisers have had much success in expanding, several franchisers said that there was room for even more growth through better practices and more government support.

“I advise businesses that are planning on selling their franchises to strengthen their operations inside Lebanon before going abroad,” said Choucair, who is the owner of the famous chocolatier Patchi, which has branches in over 30 countries around the world.

Choucair said some Lebanese firms were failing to properly manage their franchises outside Lebanon because they had expanded too fast without properly studying the foreign markets.

“A proper study should be prepared in order to assess the needs of the targeted” market, he said.

For Shihan, the local franchising industry is in need of more support from the government.

“There should be cooperation between merchants, organizations and the Economy Ministry to help companies take part in exhibitions outside Lebanon by providing them with facilities,” he said.

“Any expansion is costing us huge amounts of money in terms of marketing; so we hope that the government facilitates our expansion at a lower cost in other countries.”

For Crepaway’s Thoumy, the formulation of a dedicated legal framework for the protection of the industry is much needed.

“A successful franchise requires a dedicated legal framework, which is currently unavailable,” he said.

Arbid explained that the franchise industry was subject to the Code of Commerce and the Code of Obligations and Contracts.

“We are working on a new law. It wouldn’t necessarily be separate, but rather a complementary law to govern this industry that has its specificities relating to the protection of intellectual property, trademarks, skill and development. This requires the relevant law to be clear in order to settle any dispute that may arise,” he said.

“There are two opinions concerning the special law. The U.S. opinion insists that there should be such a law, while Europeans see no need for a separate law and push for keeping the sector subject to the Code of Commerce.

“We try to take both opinions into consideration so as to promulgate a versatile law,” Arbid said, stressing that “contracts governing Lebanese franchises should include clauses on arbitration in Lebanon since we have an arbitration center at the Chamber of Commerce and Industry.”

Arbid noted that such a law was still under study and nothing had been submitted to Parliament yet.

“We need to further study it in order to come up with a proper scheme that is compatible with our needs and priorities,” he added.

But the private sector is ultimately responsible for the success or failure of exporting Lebanese products and ideas abroad, in Shihan’s opinion.

“The private sector should come up with ideas that are able to be promoted and succeed in other cultures,” he said.
 
French furniture boutique opens in Beirut
TEC Interior Design brings Mis En Demeure



TEC Group International, a local design, construction, and contracting company, is now the exclusive agent and franchisee of Mis En Demeure, a high-end French furniture and accessories brand. The inauguration of the store will take place on February 27.

The local boutique is located on Foch Street and features 650 square meters of home ware.

TEC Group was established in the Middle East in 2004 by Chahrazad Rizk, CEO. It expanded in 2009 with the launch of TEC Interiors: A specialist interior design and building service for commercial, retail, hospitality and residential clients. TEC Interiors has branches in Beirut, UAE (Dubai and Abu Dhabi), Switzerland (Geneva), and Qatar (Doha).

Rola Badran, Office Manager at TEC Group, said it is a good time to invest in a similar concept in the local market. “The brand caters to a specific clientele, and is renowned for its high-end quality at a very reasonable price.” The brand will have only one boutique locally.

According to Badran, TEC Interiors will be franchising the Mis En Demeure brand throughout the Middle East. “We will be opening soon in Saudi Arabia and in London.”


Reported by Rana Freifer
 
Golden Tulip opens in Aley
Four more hotels underway



The French hotel management chain Golden Tulip will be soft opening its new property, Golden Tulip Lili’s Resort in Aley, on March 15. The official opening is expected on May first, said Viviane Khoury, Regional Sales & Marketing Director at Golden Tulip MENA.

The Aley hotel will be a small 4-star, 45-room property, with facilities for children, along with a spa and extensive recreational facilities. The resort has a bowling center, a health club, and a ballroom and features indoor and outdoor swimming pools.
The hotel will employ 55 during the off-season and far more during peak times, to attend to the hotel’s large banquet facilities.

The second property will be the Golden Tulip Achrafieh Hotel, expected in mid 2015. The hotel will be located near the Voice of Lebanon Radio station. It will be an eco-friendly, four plus star hotel, consisting of 76 rooms and suites, with business facilities.

The chain is considering operating three additional hotels, which will be revealed at a later stage. It currently operates four properties, locally: Golden Tulip Galleria in Jnah, Golden Tulip Serenada in Hamra, Golden Tulip Jiyeh Marina in Jiyeh, and Golden Tulip Hotel De Ville in Sodeco. The Golden Tulip group of hotels is part of the Louvre Hotels, which is currently the eighth largest group worldwide and second in Europe. The chain has a large presence in the Middle East & North Africa, with more than 50 hotels. Its regional head office is based in Dubai.






Reported by Rana Freifer
http://www.businessnews.com.lb/cms/Story/StoryDetails.aspx?ItemID=3852
 
Apple acquires a local software company




Daher’s Burstly is a leader in iOS testing
Burstly, a Daher Capital portfolio company, has been acquired by Apple Inc. Through its acquisition, Apple will work towards providing integrated mobile app testing and review services. Burstly was behind the popular iOS beta testing platform TestFlight.

Daher Capital is a Beirut-based family business, founded and led by Michel Daher, an entrepreneur with over 30 years of experience across several sectors including financial services, manufacturing, distribution and agriculture.

Daher Capital’s portfolio is spread across international equities, alternative assets, real estate and private equity across the world.

“Apple was interested in our company and they made the move towards us,” said Mark Michel Daher, Director of Daher Capital.

He said that negotiations took around six months to reach the final agreement, but he did not reveal any additional detail about the value of the deal.
Reported by Rana Freifer
Read more: http://www.businessnews.com.lb/cms/Story/StoryDetails.aspx?ItemID=3862
 
Municipality contracts Dar Group for security consultancy


The Municipality of Beirut has appointed Dar Group-Nazih Taleb for a $1 million contract to supervise the implementation of a plan to monitor the streets of the capital for security violations.

Mayor Bilal Hamad said: “We have chosen Nazih Taleb because his firm had already conducted the security master plan [for this project] and so it is only natural that we should task his company with supervising its implementation.”

Hamad said that the municipality does not have the qualified staff to oversee the plan’s execution. “This goes beyond our expertise so we hired the right people to make sure that everything will be conducted according to the tender and terms of reference,” he said.

The Municipality had signed a $30 million-$35 million supply and apply contract with Guardia Systems, which began implementation last August. The contract was for the operation and maintenance of cameras, data centers, and control rooms for the next five years.

The plan called for 1,800 fixed cameras, Pan-Tilt-Zoom (PTZ), and Automatic Number Plate Recognition (ANPR) cameras are being installed, in addition to two data centers and two control rooms. The cameras are distributed in 350 checkpoints in Beirut. ANPRs will be installed over Beirut’s entrances. The data centers have a storage capacity of 5,000 terra bytes that last for six months. Each control room will require 50 operators to monitor the cameras.

Around 30 percent of all works have been accomplished so far. According to the contract, Guardia Systems, which won a public tender, has one year to complete installations, training, and testing of equipment.

Hamad said: “This plan protects the capital and reduces the crime rate. Criminals will have to think ten times before committing a crime.” He also said that acts of terrorism will also drop because even if the perpetrator is not deterred, he will be caught eventually.
Reported by Yassmine Alieh
 
Highest resort in the Middle East
$500 million residential and hotel in Kornet Sawda



A mixed-use touristic project called Al Kumma is being planned in Kornet Sawda in the North, at a 2,400 meter altitude. The developer is Realis Development, a project management company owned by the Ghanem family. They also own G One Group, a real estate developer. Investment in the six-phased project is $500 million.

Patrick Ghanem, Executive Manager of Realis Development, said around 30 percent of the project will be financed through bank loans. Another 30 percent will be raised through an equity fund. The family also owns a finance company in Abu Dhabi.

A Canadian company is conducting the master plan of the project. Construction of the infrastructure of the entire project will start in summer.

The project will be built on a 420,000 square meter (m2) plot. The total built-up area is 250,000 m2. It will include a hotel, club house, wellness-center, and entertainment facilities, 650 chalets, 70 villas, and a ski trail. The residential units will be available for sale or rent.

The first phase of the project will be completed in four years and built on a 50,000 m2 plot. It will include a 40 room boutique hotel and a therapy spa.

The cost of the first phase is around $100 million.
Reported by Rania Ghanem

source: http://www.businessnews.com.lb/cms/Story/StoryDetails.aspx?ItemID=5859
 
Oil and gas decrees approved
First licensing round can now take place



Two decrees related to the demarcation of maritime blocks and the contracts for the exploration and production (E&P) of oil and gas have been ratified by the Council of Ministers. Prequalified companies have been awaiting the decrees for more than three years. The number of prequalified international companies in the bidding process is 46, including 12 operators.

The ratification opens the way to the first licensing round for the prequalified companies. The first licensing round was adjourned four times after the Ministry had moved its deadline from November to December 2013, then again to January 10 and April 10, 2014, before it was postponed to an unidentified date.

Rabih Yaghi, oil and gas expert, said: “The ratification is the key and the last hurdle before the cycle of exploration and production begins.”

He said that the Ministry of Energy and Water now has six months to announce and receive proposals as part of the round, if it wishes to follow international standards.

“But because we are in a race against time, the round can be shortened to three months only,” he said.

The Ministry would then require an additional three-month period to evaluate the proposals.

Yaghi said about 95 percent of the conditions agreed upon are according to the E&P contract. The remaining five percent are what will be actually assessed.

The Ministry, along with the Lebanese Petroleum Administration (LPA), will examine the financial and taxation articles of the contract.

“The Ministry should be flexible because we still don’t have an idea whether or not we actually have oil and gas. It can be more stringent in the second or third round when we discover the potential and know the quantities,” he said.
and gas
Reported by Yassmine Alieh

Source: http://www.businessnews.com.lb/cms/Story/StoryDetails.aspx?ItemID=5860
 
Third mall, more Carrefour planned by Majid Al Futtaim
To hire at least 1,000 additional employees



Out of the $2 billion earmarked for projects in Lebanon since 2009, Majid Al Futtaim has still to invest $1.1 billion. The new investments will include developing a new mall.

Alain Bejjani, CEO of the group, said: “The third mall will be in the immediate suburbs of Beirut.”

Majid Al Futtaim already operates City Centre Beirut, a mall in Hazmieh, with another planned for Waterfront City in Dbayeh.

Majid Al Futtaim is also the developer of Waterfront City, Carrefour, VOX cinemas, and Magic Planet.

The company will launch this year new phases at Waterfront City. It will also finalize the entitlement process for the Waterfront City mall and then set a date for its delivery.

The Emirati company is also expanding their Carrefour business.

“We have a number of locations that will open in the next two months. We will announce them once they are confirmed,” Bejjani said.

According to him, 2016 was a good year. He said: “The real estate sector has been almost idle. But our retail and entertainment business were outperforming the market.”

Waterfront City focused last year on delivering phase I and on launching the Business Park. The project will deliver units for 288 households this year. Another phase of the Business Park and a number of residential phases will also be launched.

“We currently have 465 team members and 285 outsourced across our operations. Once we execute the rest of our investments, I expect the workforce to increase to at least 2,000,” he said.

Bejjani said that the market’s challenges are topped by bureaucracy, market volatility, and the dramatization of reality driven by political debate.

“Infrastructure is also a big problem. The level of education has been weaker in the past few years as well. We hope it becomes more business friendly in terms of preparing the young generation,” he said.

Despite these challenges, the market has a good level of taxation and has growth in terms of demand, according to Bejjani.

He said: “Lebanon is not a country for short term investors. Majid Al Futtaim has committed to its long term presence.”
Reported by Yassmine Alieh

Source: http://www.businessnews.com.lb/cms/Story/StoryDetails.aspx?ItemID=5910
 
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