Discusses opportunities for U.S. franchisers and legal requirements in the market.
Last Published: 2/12/2019

While the small number of inhabitants and low population density of Kazakhstan limit franchising opportunities, this sector is believed to have significant potential for development.  At the moment, there are more than 495 franchises operating in Kazakhstan, most of them located in Almaty, making Kazakhstan the franchising leader in Central Asia.  Kazakhstan is characterized by a large number of franchisees working on the basis of sub-franchising agreements with master franchisees based in Russia, Turkey, or elsewhere. Only a few foreign franchisors work directly with Kazakhstani partners but their numbers are growing.  U.S. franchisors have developed 300 franchise systems in Kazakhstan, which include around 2000 franchised outlets. U.S. share is the most significant in total franchising turnover.
The Kazakhstan Franchising Agency estimates that the total number of all franchises and brands operating under franchising or other similar terms stabilized and brands from Russia are increasingly present.  The number of foreign brands currently franchising in Kazakhstan is close to 500, estimated to equate to over 3,000 franchising outlets and employ over 30,000 people, with an estimated annual turnover of $ 2.5 billion. It is estimated that those 500 franchisers will rise to 550 by 2020. Domestic franchising is just starting to develop with more than 30 local franchises and more than 200 franchising outlets.

The franchising sector is developing quite intensively. Just a few years ago it was a fairly new business concept in Kazakhstan, but now it is drawing increasing interest from entrepreneurs. At the moment, the franchising sector has not yet reached its full potential, and the big international players in the sector are yet to arrive.  Kazakhstani companies have accumulated financial resources that, combined with a lack of available investment instruments, are stimulating interest in franchising.  While the number of potential franchisees grows steadily in Kazakhstan, franchisers have yet to express a notable interest in expanding into the market. It is expected that the next step of the franchising development in Kazakhstan will be the growth of national Kazakh brands. Regional centers of franchising in Kazakhstan are Almaty, Astana, Atyrau, Karaganda, and Shymkent.  Major international brands are concentrated in Almaty and Astana. 

Any franchising contract should be carefully drafted because judges in Kazakhstan are not familiar with this area of law. In fact, the Law of Franchising adopted in June 2002 does not even use the term but retains the archaic term "complex business license.".
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.