Buying a restaurant franchise in Saudi Arabia: what the franchisor will not run for you

By Denys Chernenko · Updated 20 October 2026

A franchise gives you a brand people already know, a menu that works somewhere, a manual and an opening team for a few weeks. It does not give you a restaurant that runs itself in Riyadh or Jeddah. The gap between the manual and the room is where Saudi franchisees make or lose their money, and most of it is decided before the agreement is signed.

What the franchisor provides

The brand, trademarks and trade dress. The menu, recipes and specifications. The operations manual and training programme. Design standards for the unit. An opening team on site for a defined period, usually a few weeks. Approved suppliers for proprietary items. Marketing materials and, often, a national marketing fund you pay into. Ongoing audits against the brand standard.

All of this is valuable. None of it is a local operating model.

What is left to you

The local cost model. The franchisor's food cost target was built on its home market's prices. In Saudi Arabia, imported proteins, dairy and proprietary items arrive with freight, customs and distributor margins. A 30 percent target can become 36 percent before the first guest is served. The labour target was built on a home-market wage structure; here it has to carry visas, medicals, Iqamas, housing, transport, flights, end-of-service benefits and the Saudization ratio. If the local prime cost is ten points above the brand's model, the royalty and the marketing fund come out of a margin that does not exist.

Hiring and training a team that stays. The opening team trains the people you have hired. Finding them, housing them, getting them through the visa process and keeping them after the opening team leaves is your problem. Staff turnover in the first year is the quiet killer of brand standards.

Site selection and the lease. The franchisor will approve a site; it will not pay the rent. Rent as a share of realistic sales has to work for your unit, and brand recognition does not fill a room on a bad corner.

The first quarter of trading. When the opening team flies home, the unit is three weeks old and the numbers are not yet stable. The next ninety days decide whether food cost, labour and standards settle at the brand's model or drift away from it.

The local cost model, in practice

This is an illustrative example with round numbers, not a client result.

A Saudi franchisee takes an American casual-dining brand. The manual assumes food cost 30 percent, labour 28 percent, so prime cost 58 percent, leaving room for a 6 percent royalty, a 2 percent marketing fund and rent. With imported proteins and the full Gulf labour cost, the real first-quarter numbers are food 36 percent and labour 33 percent: prime cost 69 percent. After royalty, fund and rent, the unit loses money on every month of good sales.

The fixes exist, but they need the franchisor's agreement and time: local sourcing approved for the non-proprietary 40 percent of the menu, portion specs enforced with the same discipline as the brand audit, a rota rebuilt for Saudi trading hours and the weekend pattern, and a staff-housing arrangement with a lower cost per head. Done well, prime cost comes back to the low sixties within two quarters. Done late, the franchisee funds the gap personally and the second unit never opens.

Questions to ask before you sign

What are the food and labour cost percentages of the brand's existing units in the Gulf, not at home? Which menu items must be bought from approved suppliers, and what do they land at in Saudi Arabia? What local substitutions has the franchisor approved for other Gulf franchisees? How many weeks is the opening team on site, and what support follows? What are the audit criteria, and how are they scored? What happens to the territory if you do not open the agreed number of units on time?

If the answers are vague, build the feasibility study yourself from local quotes before you commit, and read the agreement with someone who has run a franchised room.

For master franchisees

Taking a brand across several Gulf countries multiplies the problem: each market has its own import costs, labour rules and rents, so the cost model has to be built per country, and the opening sequence should start where the model works best. By unit ten you need an operations team of your own, with the brand's standards and your numbers, and the time to build it is before unit five.

Common questions

Does the franchisor help with food cost in Saudi Arabia?

It provides the specifications and approved suppliers. Managing the local cost of those specifications is the franchisee's job, and getting local substitutions approved takes time and data.

Can I negotiate the royalty if local costs are higher?

Sometimes, especially for a master franchise or a multi-unit commitment. You can only negotiate what you can show, which is why the local cost model should be built before the agreement is signed.

How is The DC Group different from the franchisor's support team?

The franchisor's team works for the brand. Franchise operations support from The DC Group works for you: the local cost model, the hiring plan and the first quarter of trading, from someone who has run a franchised restaurant and owned one.

Wondering what help like this costs? See how much restaurant consultants charge and which model fits your situation.

Related service: Franchise operations support → · Free P&L calculator →