The 35 new locations most likely will work out to about 25 Gap stores and about 10 Banana Republic openings by 2010. The first Gap stores are scheduled to open in late 2006 and the first Banana Republic stores in 2007.

Gap sees the Middle East as an appealing market because of its young and affluent population, according to Joshua Schulman, SVP of Gap Inc.'s International Strategic Alliances and Gap Japan Merchandising. He says that Dubai, in particular, is appealing because it has developed into "a world class shopping destination with some of the largest and most important shopping malls in the world."

The expansion into the Middle East marks Gap Inc.'s second franchise agreement to extend its reach to international markets. In January, the company announced that Gap and Banana Republic stores will open under franchise and distribution agreements in Singapore and Malaysia.