BGF Retail Co., operator of South Korea’s largest convenience store chain CU, on Friday signed a master franchise deal with Iranian home appliance manufacturing and retail firm Entekhab Investment Development Group, becoming the first Korean convenience store brand making a foray into a foreign market.

According to BGF Retail, it will receive stable royalty income for providing the brand and overall system knowhow to local operator and franchisee Entekhab Investment Development Group that will be in charge of investment and operations under a master franchise contract. The master franchise deal is preferable to a company opening franchise business in a new market as it can minimize investment risk. The Korean convenience store operator will also earn 3 million euro ($3.4 million) as one-off master franchise fee under the term.

Entekhab Investment Development Group is the largest home appliance manufacturer and retailer in Iran that has worked with a number of Korean companies in various industry sectors over the past 20 years. The Middle Eastern company is known to have deep understanding about Korean culture and business.

BGF Retail hopes the latest franchise deal with the Iranian company can pave the way to other emerging markets in the Middle East and Southeast Asia. The company’s advance into Iran comes after the Korean convenience store market has been saturated amid fierce competition.

Last year, BGF Retail raised 4.9 trillion won ($4.3 billion) in sales, up from 3.3 trillion won in 2014. It also operates 10,857 stores as of end of 2016, up from 8,408 stores in 2014.

By Sohn Il-seon and Park Eun-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]