Critical Circumstances Influencing Franchisees’ Business Performance: A Review of the Saudi Arabian Franchise System

Kehinde Ogunsola-Saliu () and Abdulaziz Alotaibi
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Kehinde Ogunsola-Saliu: Centre for Petroleum, Energy Economics and Law, University of Ibadan, Ibadan 200284, Nigeria
Abdulaziz Alotaibi: Department Marketing, College of Business, Al-Baha University, Al-Baha 65779, Saudi Arabia

Businesses, 2025, vol. 5, issue 3, 1-27

Abstract: Franchising operates as a proven business model that drives substantial growth for small and medium-sized enterprises (SMEs) worldwide. The franchise ecosystem in Saudi Arabia lacks sufficient research, despite established frameworks for success in markets such as the United States, the United Kingdom, and Australia. This research investigates the elements that lead to franchise success in Saudi Arabia through a combination of qualitative and quantitative data. This research evaluates franchise performance through metrics such as Average Revenue Per Unit (ARPU), Return on Investment (ROI), Franchise Success Rate, Time to Break Even, and Market Growth Rate, comparing Saudi Arabia with the U.S., the U.K., and India to identify essential success determinants. The research reveals that franchise success depends on regulatory frameworks, cultural alignment, economic diversification, and supply chain efficiency. The U.S. and U.K. enjoy established legal protections, whereas Saudi Arabia faces regulatory complexities and resource limitations. The research proposes three strategic recommendations: government incentives, locally adapted business models, and carefully selected locations to boost franchise success. The analysis provides essential information to policymakers, franchisors, and entrepreneurs seeking to expand their businesses in Saudi Arabia. The implementation of Vision 2030 growth barrier solutions and market opportunities will enable Saudi Arabia to build up its franchising sector and enhance market performance. This research adds new knowledge to the franchising literature in emerging markets and its impact on sustainable business growth.

Keywords: franchise; business performance; small and medium enterprise; international business; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: A1 D0 D4 D6 D7 D8 D9 E0 E2 E3 E4 E5 E6 E7 F0 F2 F3 F4 F5 F6 G0 G1 G2 H0 J0 K2 L0 L1 L2 M0 M1 M2 M3 M4 M5 N0 N1 N2 O0 O1 P0 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jbusin:v:5:y:2025:i:3:p:33-:d:1720385

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