Higher Initial Franchise Remittance Limit for Food Chains
The State Bank of Pakistan (SBP) has revised the franchise fee structure for local investors who want to set up and operate foreign food chain outlets, in a move aimed at promoting ease of doing business and aligning regulations with market dynamics.
Under the new framework, owners of local outlets are now allowed to remit up to $250,000 as an initial payment to the foreign franchisor. This is a significant increase from the previous limit of $100,000. The higher ceiling is expected to make it easier for international food brands to sign franchise agreements with Pakistani partners and enter the local market.
Increase in Allowed Royalty and Franchise Payments
The SBP has also raised the cap on recurring payments to foreign collaborators. Local outlets of international food chains will now be able to remit up to 8 percent of their net local sales as royalty, franchise and technical service (RFT) fees under their agreements, for a period of up to 10 years.
Previously, the limit for such recurring remittances was 5 percent of net local sales. Net local sales are calculated after deducting sales taxes and the cost of imported items. By allowing a higher percentage, the central bank has made it more attractive for global brands to offer full support, marketing and technical services to their Pakistani franchisees without being constrained by older, tighter remittance caps.
Boost for Pakistan’s Growing Food and Hospitality Sector
Over the past few years, Pakistan’s major cities have seen a steady rise in international and regional food chains, reflecting strong demand in a food-loving country with a large young population. New outlets have opened alongside local restaurants and hotel brands, contributing to a vibrant dining and quick-service restaurant scene.
Industry estimates suggest that the wider food and hospitality sector, including foreign chains, local eateries and hotels, collectively employs close to one million workers. By easing franchise remittance rules, the SBP is hoping to encourage more brands to invest, expand their networks and create additional jobs in operations, supply chain, marketing and support services.
Revised Rules Also Cover Other Key Sectors
According to the circular issued by the central bank, similar revisions have been made to the franchise payment structure for entities operating in other sectors such as agriculture, social services, infrastructure and broader service sector projects, including international food chains.
Entities in these sectors may now be allowed by authorised dealers to remit recurring payments of up to 8 percent of their net local sales under their respective RFT agreements. This brings non-food franchises in line with the revised structure for international food brands and reflects a broader policy shift toward attracting more foreign know-how and brand-led investment into the economy.
Making Pakistan More Competitive for Global Brands
The SBP’s updated regulations are expected to improve Pakistan’s competitiveness compared with other emerging markets where global food and service brands are expanding. For many international chains, the ability to receive adequate royalties and technical fees is a key factor when deciding whether to enter a new country or scale up existing operations.
By raising both the initial remittance limit and the recurring payment cap, Pakistan is signalling that it welcomes long-term partnerships with foreign brands. The changes are likely to encourage franchisors to invest more in training, quality control, marketing campaigns and new product launches, as they can recover their costs through a more flexible fee structure.
Potential Impact on Consumers and Local Investors
For consumers, the revised policy could mean greater variety and more competition in the food and service sectors, as additional international brands enter the market or strengthen their footprint. Increased competition can encourage better service standards, more menu innovation and promotional offers as brands compete for market share.
For local investors, the updated rules reduce one of the regulatory hurdles in negotiating franchise deals. With clearer and more generous remittance limits, potential franchisees may find it easier to convince global partners to sign long-term agreements and transfer their brand, systems and technology to Pakistan. Over time, this may also support local supply chains, as more ingredients, packaging and services are sourced domestically to meet the demands of expanding franchise networks.
Balancing Ease of Doing Business with Regulatory Oversight
While the new policy relaxes remittance caps, authorised dealers and franchise partners will still be required to comply with documentation, anti-money laundering and foreign exchange regulations. This is meant to ensure that payments remain transparent and traceable, even as the overall framework becomes more business-friendly.
The SBP’s move is part of a broader effort to improve the ease of doing business in Pakistan and to align financial regulations with market realities. If the reforms succeed in attracting more global food and service brands, they could contribute not only to job creation and consumer choice, but also to higher inflows of foreign investment and a stronger, more dynamic services sector.
