The State Bank of Pakistan has introduced revised guidelines aimed at easing the entry of international food chains into the local market. In a move designed to align with evolving business conditions, the central bank has updated its franchise payment framework, allowing greater flexibility for local investors seeking to collaborate with foreign brands.
Revised franchise limits for foreign food chains
Under the new structure by State Bank of Pakistan, local franchise holders will be permitted to remit up to $250,000 as an initial payment to their foreign partners—more than double the previous cap of $100,000. This adjustment is expected to streamline the onboarding process for international food chains and encourage more global brands to establish a presence in the country.
State Bank of Pakistan expands RFT payment scope
Additionally, recurring payments under Royalty, Franchise, and Technical Service (RFT) agreements have been revised. Local outlets may now remit up to 8 percent of their net local sales—after deducting applicable sales taxes and the cost of imported goods—for a period of ten years. The previous limit stood at 5 percent for the same duration.
Broader scope for other sectors
The updated framework is not limited to the food industry. According to the circular issued by the banking regulator, similar provisions have been extended to entities operating in agriculture, infrastructure, social development, and service sectors. These businesses may also remit up to 8 percent of net local sales under their respective RFT agreements, provided they meet the necessary documentation and compliance standards.
Boost to employment and business climate
The food service sector has seen notable expansion in recent years, with international chains opening new outlets across the country. This growth has contributed to job creation, with nearly one million individuals employed across restaurants, hotels, and related services. The revised regulations are expected to further enhance the ease of doing business and attract new foreign investment, reinforcing the country’s position as a viable destination for global franchises.
By modernizing its franchise fee structure, the State Bank of Pakistan is signaling its commitment to fostering a more open and investor-friendly environment. The move is likely to benefit both consumers and entrepreneurs, while supporting broader economic development goals.
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Input from Dawn
