World Franchise Review Summer 2014 - page 11

Howhas franchising transformed the
operationsandstrategiesof shopping
Theultimategoal of shoppingcenterowners
is toachieveconsistentlyhigh levelsof sales.
Thebasisof shoppingcentreoperations and
strategies remains the samewhether it consists
of franchisebrandsor if themajorityof tenants
are local enterprises.
Where franchisinghas causedchangeshas
been in thenegotiationsprior to signing leases.
Whendealingwitha franchise tenant, the
shoppingcenterhas tohavemore flexibility
during thenegotiationprocess.Havinga famous
brandcanbeanadvantage for thecentre, but the
technical requirementsof leasing to thesebrands
Franchising requires ahigher investment in fit-out
and finishingof the retail unit and inmost cases
requires a leaseperiod that is longer in
comparison toother tenants’ leaseperiod.Also
franchisebrands arewaryof takinga riskonon
location–you find that franchiseswill take the
majorityof theprimary locations.Of courseoften
it’s to thebenefit of themall aswell tohave the
bigwell knownbrandsmost visible.
Howhas the relationshipbetweenshopping
centreand leaseholder changedwith the
developmentof the franchisemodel?
The relationshipbetween shoppingcenter
management anda franchisecompanycanbe
morecomplexanddemandingas the franchise
regarding leaseagreement negotiationand
implementation incomparison to stand-alone
tenants.Shoppingcentermanagementwill be
required to interactwithboth theparent
franchisor and the lease-holding franchisee.
There is abalanceof powerbetween the three
parties andhow that balance falls isdetermined
bywhether it is the shoppingcenter that needs the
brand to raise itsprofileor if it’s the franchise that
needs theprime locationprovidedby the
What is the future forshoppingcenters in
partwill franchisingplay?
Growing interest togetherwithgrowing
populationcreatesdemand fornew retail space.
As aconsequence, therearenumerousnew
developmentsgoingahead in theMiddleEast.
NorthAfrica is still recovering from recent
political changesbut it is certainlyamarketwith
hugepotential. Inevery successful andwell-
positioned shoppingcenter franchisebrands
makea significant portionof total leasedarea.
I believe inabalanceof franchise, ethnicand
localmetropolitan/urbanconcepts, as it is this
balance thatwillmake sureall customers are
Dubai is currently ranked second in theworld
basedon the scaleof brandpenetration (London
is the first). 54%of allworldbrands arepresent in
Dubai and the interest of international brands is
constantlygrowing.More than inother
geographical areas, theMiddleEast sees a
commonpracticewherebrands aregrouping,
witha fewhugeholdings areacquiring franchise
rights for anumberof international brands.
Britishbrandswere first tomarket in the regions
andholdmanyof theprime locations in shopping
centers, but it is theAmericanbrands that are
coming innow innumbers and takingover
locations as theybecomeavailableaswell as the
prime sites innewdevelopments.AlsoEuropean
brands arehighly sought after, especially thehigh
end fashionbrands.
Inside themindset
of shoppingcentre
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