The home decorations company Sedar is planning to fan out across the region this year before heading for North America and China, a company executive said.
Sedar, a Syrian-owned family business based in the UAE, is set to open franchises in Jordan, Egypt and Algeria with the aim to have 20 more shops over the next two years and open an average 20 to 25 showrooms every year after that.
“The reason we want to go to franchising is to help our brand grow bigger and much faster,” said Anwar Selo, the director of franchise operations.
“When you expand from your own revenues you cannot expand very quickly because the risk is very high, so going through the franchise route helps you to expand and helps other people to take part of the profit while you are using their money to expand. We have requests from all around the world.”
The company owns its outlets in the UAE, Saudi Arabia, Oman, Qatar and Bahrain. It plans to open a showroom in Kuwait this year. About 40 per cent of its business comes from Saudi, followed by the UAE with 30 per cent. The company plans to expand in the Arabian Gulf region and take advantage of demand for high-end products.
The interior contracting and fit-out business is flourishing in the Gulf market as construction projects increase. Based on the number of projects completed last year, the estimated size of the market is US$7.35 billion, according to a report by International Design Exhibition and data provider Ventures Middle East. Growth in this sector is set to increase by 8.5 per cent to $7.98bn this year, according to the report.
Sedar’s first UAE shop opened in 1979 after Mr Selo’s parents migrated to the country to capitalise on the economic boom.
After expanding across the Middle East and North Africa, the next destination for Sedar is the United States and Canada, as well as East Asia.
“We are going to open support offices in these regions and once the support offices have identified the key partners, we will start to franchise,” said Mr Selo.
The company plans to open its first service office in the US early next year and start franchising by the end of 2016. It is targeting Beverly Hills, New York, Dallas, Miami, Atlanta and Chicago. In the Far East, where the company expects to open a service office early next year, it is targeting Shanghai, Beijing, Tokyo and Seoul.
Having an established brand, a good business system and a top-notch product line will help Sedar implement its franchise plan, according to Sary Hamway, the chief operating officer of World Franchise Associates.
“I believe they have the infrastructure and business system to enable them to share their accumulated expertise with potential franchises,” said Mr Hamway.
Despite global ambitions, Sedar remains family owned and has no plans to change.
So far it has worked for the firm. Profit growth has averaged 10 to 12 per cent a year over the last three years and the company expects it to increase by 4 to 5 percentage points this year due to the franchise openings and more sales from its own shops. Each franchise from the ground up will cost between $1.5 million to $2.5m. Sedar also will be selling franchisees their own products, which is another revenue stream for the company.
The company said demand has not been affected by inflationary pressures thanks to its wide range of offerings at different price brackets. In March, the cost of furnishings grew 7.3 per cent year on year in Dubai, according to official data.
“The economic slowdown in the Gulf has not affected us. In fact, we are up slightly year on year until now,” said Mr Selo. “We are not afraid because the current projects that are ongoing automatically need window coverings.”
The company counts royalty, airlines and hotels among its customers. To cater to their demands, it is opening a design hub in the city of Como in northern Italy.
“We would like to diversify our portfolio. Hopefully the end result in 10 years is that we have a portfolio of different franchises which we can offer to the retailer and malls around the world,” said Mr Selo.
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