Free Zone vs Mainland: Which Business Setup Is Right for You in 2025?

When it comes to setting up a business in Dubai, many people rush to ask, “Where’s the cheapest option?” or “Which is the fastest setup?”

But here’s the truth: choosing the right jurisdiction — free zone or mainland — is one of the most important decisions you’ll make.

It’s not just about paperwork or pricing. This choice shapes how your business operates, who you can serve, and how you can grow. Picking the wrong setup can limit your market access, restrict your activities, or leave you needing to restructure later, which costs time and money.

This blog will help you understand why this decision matters, explain what free zones and mainland setups are, and guide you through the key differences so you can choose wisely for 2025 and beyond.

Why Is Choosing the Right Jurisdiction So Important?

Your jurisdiction determines:

• Where you can legally sell your products or services
• Who you can hire and how many visas you can get
• Whether you can bid on government contracts or serve the local UAE market
• What kind of regulatory requirements and costs you will face

In short, your business setup isn’t just a license — it’s the framework that will shape how you operate day to day.

For example, imagine starting an online services business targeting European clients. A free zone setup may offer a cost-effective, streamlined launch. But if you’re opening a restaurant in Dubai or planning to bid on UAE government projects, only a mainland setup will give you the legal access you need.

Making the right choice from the start avoids surprises later and puts your business on a smoother path to growth.

What Is a Free Zone?

A free zone is a designated economic area within the UAE designed to attract foreign investment.

In a free zone, you can:

• Own 100% of your company as a foreigner (no Emirati partner needed)
• Set up businesses focused on international trade, online services, manufacturing, or other export-driven activities
• Benefit from simplified regulations and flexible office options, such as virtual offices or shared desks

However, free zone companies typically cannot trade directly within the UAE mainland without working through a local distributor or service agent.

Dubai alone has over 20 free zones, while the UAE as a whole offers more than 40 free zones across its various emirates. Each free zone tends to specialise in particular industries, such as media, technology, finance, logistics, or healthcare, providing tailored services and infrastructure for those sectors.

What Is a Mainland Company?

A mainland company is registered under the Dubai Department of Economy and Tourism (DET), allowing it to operate anywhere in Dubai or across the UAE.

With a mainland license, you can:

• Sell products and services directly to the local UAE market
• Open retail shops, restaurants, service centres, or physical offices
• Bid on government contracts and large commercial projects
• Expand operations by opening branches across the UAE

Previously, mainland companies required a local Emirati partner holding at least 51% ownership. However, thanks to recent regulatory changes, many business activities now allow 100% foreign ownership, making the mainland more accessible to international entrepreneurs.

What Are the Key Differences?

When comparing free zones and mainland setups, here’s what matters most:

• Market Access
  Free zones let you trade internationally or within the free zone, but not directly inside the UAE. Mainland companies can serve both local and international markets.
• Ownership
  Both options now allow 100% foreign ownership for most activities, though the free zone has always guaranteed this.
• Business Activities
  Free zones tend to specialise in specific industries, offering licenses only for approved activities. Mainland licenses cover a wider variety of commercial, professional, and industrial activities.
• Office Requirements
  Free zones often allow virtual offices or flexi-desk setups. Mainland businesses require a physical office with a registered lease (Ejari).
• Government Contracts
  Only mainland companies can apply for government tenders and projects.
• Cost and Process
  Free zones often offer starter packages at lower cost, while mainland setups typically come with higher costs due to office lease requirements and local approvals.

How Do Costs Generally Compare?

While it’s difficult to give an exact figure without knowing your business specifics, here’s a general idea:

• Free zones often offer packages ranging from AED 10,000 to AED 25,000, covering license fees and minimal office space.
  
• Mainland setups usually start from around AED 20,000 and go higher depending on the type of license, the number of visas, and the office lease cost.

Keep in mind: costs can vary widely based on activity type, visa needs, and other factors. It’s smart to get a detailed quote before making a final decision.

When Should You Choose a Free Zone?

A free zone is often the better fit if:

• Your clients are international or based within the free zone.
• You want to run an online or export-focused business.
• You want industry-specific support, like for media, tech, or logistics.
• You’re starting lean and want cost-effective packages.

For many startups and first-time founders, free zones offer an easier entry point, with less regulatory complexity and simplified processes.

When Should You Choose Mainland?

A mainland license makes sense if:

• You want to trade directly with the local UAE market.
• You’re planning to open a shop, restaurant, or service centre.
• You want to bid for government work or larger commercial contracts.
• You’re thinking long-term about scaling branches or operations across the UAE.

Mainland companies offer wider commercial reach, though they come with slightly more formalities and higher upfront costs.

What Should You Ask Yourself Before Deciding?

Before choosing between the free zone and the mainland, reflect on:

• Who are my target customers — local or international?
• What business activity do I want to register, and where is it allowed?
• What’s my short-term and long-term vision for growth?
• How many visas and what kind of workspace will I need?

Taking time to clarify these points will help you avoid costly mistakes or having to restructure your business later.

The Bigger Picture

What’s important to remember is that both free zone and mainland setups have evolved over time. With regulatory changes, new ownership rules, and government initiatives to support entrepreneurship, Dubai has created an ecosystem that gives founders real choices, not just in structure, but in how they grow.

This idea is explored in resources like the book Founders Roadmap, which helps entrepreneurs understand not only where to set up, but also how to align their decisions with a smart, sustainable business strategy.

Final Thoughts

Choosing between a free zone or a mainland company isn’t just about ticking boxes. It’s about making sure your business model, target market, and future goals are aligned with the setup you choose.

Take time to explore the regulations, licensing details, and market opportunities tied to each option. Dubai’s business landscape in 2025 offers entrepreneurs an impressive level of choice and flexibility — but only if you take the time to choose wisely.