{"id":576589,"date":"2020-11-30T04:14:11","date_gmt":"2020-11-30T04:14:11","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/blackboards\/what-is-it-going-to-take-to-spur-education-franchising-in-egypt\/"},"modified":"2020-11-30T04:14:11","modified_gmt":"2020-11-30T04:14:11","slug":"what-is-it-going-to-take-to-spur-education-franchising-in-egypt","status":"publish","type":"blackboard","link":"https:\/\/enterpriseam.com\/egypt\/blackboards\/what-is-it-going-to-take-to-spur-education-franchising-in-egypt\/","title":{"rendered":"What is it going to take to spur education franchising in Egypt?"},"content":{"rendered":"

<\/a> What is it going to take to spur education franchising in Egypt? <\/strong>Last week<\/a>, we looked at how education franchising could be an effective way to import knowledge and expertise that would lend itself well to Egypt\u2019s drive to internationalize its education. Franchising isn\u2019t just a cost-effective way for international schools to enter new markets \u2014 in 2014 it was named<\/a>the fastest growing method of transnational education used by global players. But education franchising in Egypt is growing relatively slowly. Though our first international school franchise was established in 2004<\/a>, only a handful of K-12 schools and one university<\/a> have followed its lead, multiple sources confirm. Today, we look at which regulatory hurdles have impeded it and what policies would help push this model of education along.<\/p>\n

As things stand today, there is no regulatory framework governing franchises in Egypt.<\/strong> Currently, establishing a franchise in Egypt is relatively straightforward, essentially just drawing up a contract, says Mahmoud Bassiouny, Managing Partner at Matouk Bassiouny. But it\u2019s sector-driven. Franchising a fast-food chain is much more straightforward than a franchise model involving something more complex, like the transfer of technology and intellectual property. So franchisors, especially those with sophisticated models involving technology transfer or a powerful brand, need to see greater regulatory clarity to feel protected, he adds.<\/p>\n

This is particularly important to education <\/strong>franchisors<\/strong> coming to Egypt, who must ensure that their brand reputation will be protected, <\/strong>says Islam Saeed, Partner at Matouk Bassiouny. Education franchisors are generally urged to value brand reputation above every other consideration, and guard against local providers who use a school\u2019s name to do business but compromise quality and reputation, this ISC Research report (pdf)<\/a> shows.<\/p>\n

Enter the Franchise Act: <\/strong>The government and stakeholders have been working on drafting a Franchise Act, now under final review by the legislative department of the Trade and Industry Ministry, says Hatem Zaki, Executive Board Member of the Egyptian Franchise Development Association (EFDA)<\/a>. The act should cover how and where to register franchises, how to disclose information, what the commitments of franchisor and franchisee are, and what a court would consider binding and non-binding in a franchise agreement, says Zaki. It will hopefully reassure franchisors that their contractual arrangements will be upheld in Egyptian courts, says Bassiouny.<\/p>\n

But would such an act be enough to spur education franchising? On its own, probably not. <\/strong>For one thing, the Franchise Act doesn\u2019t appear to address education directly, sources close to the matter tell us.<\/p>\n

And neither does the Education Ministry\u2019s regulations: <\/strong>The establishment of any international school needs approval from the Education Ministry under the Education Act of 1981 (pdf)<\/a>, Deputy Education Minister Mohammad Megahed tells Enterprise. However, the Education Act doesn\u2019t include specific provisions on franchising schools, both Megahed and Saeed tell us. Franchisors might see theoretical protection of their names and trademarks (including logos) in local Egyptian law and international agreements that Egypt\u2019s party to, but there\u2019s no practical protection in terms of case law, verdicts issued by Egyptian courts or arbitral precedents. \u201cWe haven\u2019t seen precedents where the Education Ministry intervened in disputes or authorized the franchisee and franchisor structure,\u201d Saeed adds.<\/p>\n

Amending regulatory conditions related to licensing and trademarks could help: <\/strong>Currently the Education Ministry doesn\u2019t require local operators to prove they have the rights to use an international school\u2019s name and trademarks when applying for the license to use them, says Saeed. As long as the name isn\u2019t being used by another local school, the license could be granted. This needs to be changed so that local operators have to provide proof by international schools that they\u2019re authorized to use their names, trademarks and intellectual property, Saeed believes.<\/p>\n

As the regulatory body, the Education Ministry should take the lead in registering and monitoring franchises:<\/strong> It should register education brands, and have a record of both franchisees and franchisors so that in the event of any dispute, franchisors can apply to the ministry to get their licenses revoked, rather than going to the police or Egyptian courts, argues Saeed.<\/p>\n

In many ways, conditions are ripe for <\/strong>education<\/strong> franchising to grow in Egypt: <\/strong>Generally, franchising has the potential to grow significantly in Egypt, and a good franchise law could encourage more franchisors to set up here, says Bassiouny. Egypt remains an attractive destination for private schools seeking overseas expansion through franchising, as evidenced by Malvern College operating and Haileybury planning to open, says Nalini Cook, ISC\u2019s Head of EMEA Research.<\/p>\n

But for it to flourish, a clearer regulatory framework tailored to education is still needed: <\/strong>Education franchising should be encouraged, but with clear conditions, says Saeed, and international schools must remember that the sector is still under development in Egypt. \u201cIf I were an international school, I wouldn\u2019t adopt a typical franchise agreement in Egypt, the kind that issues a license and educational material in exchange for periodic supervision. I would want more control \u2014 not management control, but control when it comes to monitoring service quality \u2014 without taking on the liability of the operation,\u201d he adds.<\/p>\n

Your top education stories for the week:<\/strong><\/p>\n