Buying a Franchise in Egypt: In Your Own Name or Through a Company?

You may have chosen the right brand and agreed the fees, yet still put off a fundamental question: who will legally buy the franchise — you or a company you set up? In franchising, being the person behind the business is not enough; the name on the contract determines who holds the rights and obligations. Settling this early helps you avoid a business whose contracts and assets are spread across different parties, making it harder to run or bring in a partner.

Understand the difference between the investor and the contracting party

You may fund and manage the business while a separate company holds the franchise, signs the lease and operates the bank account. In that case, the contractual rights to use the brand and run the outlet belong to the company, not to you personally simply because you own shares in it.

Equally, a contract you sign in your own name does not automatically become a company contract when you later incorporate. Transferring the contractual relationship may require the franchisor’s consent and additional documents, depending on the contract terms and applicable law. Do not rely on a verbal assurance such as, ‘Sign now and we’ll change the name later.’

Before choosing a legal structure, write down clear answers to three questions: who will provide the funding, who will own the business, and who will manage it? If the answers differ, you need to formalise the relationship between the investors, not merely choose a trading name. Discuss with a lawyer and an accountant whether a sole proprietorship, a single-member company or a limited liability company is suitable, taking account of the number of owners, liability and your operating plan. Do not assume that one structure suits every franchise.

Understand the legal framework before setting up the business entity

Egypt has no standalone, comprehensive franchise law, nor a general franchise-specific regime requiring franchise agreements to be registered with a dedicated regulator or a standardised disclosure document to be provided. This does not, however, exempt the operating company from the incorporation, registration, tax and licensing requirements for its activities.

The contractual relationship is subject to the relevant provisions of Civil Code No. 131 of 1948 and Commercial Law No. 17 of 1999. The intellectual property rules in Law No. 82 of 2002 apply to the licensing of trade marks and other rights. Setting up and organising the company also requires a review of Companies Law No. 159 of 1981, as amended, and Investment Law No. 72 of 2017 where applicable, alongside sector-specific rules.

The technology transfer provisions of the Commercial Law may also apply if the relationship meets the relevant conditions; calling it a ‘franchise’ does not settle the question. Ask for the substance of the agreement to be reviewed, not just its title.

The key point is that incorporating a company does not automatically give it the right to operate under the brand, and the franchisor’s approval does not replace incorporation or the necessary operating licences. These are separate processes that need to be coordinated before you commit substantial funds.

Put contracts and assets in the right party’s name

Create a simple table for each element of the business, identifying who will sign, who will pay, and who will own the asset or receive the service. Start with the franchise agreement, then cover the lease, equipment, employment contracts, bank account, payment services and delivery services.

The aim is not necessarily to put every relationship in the same name, but to ensure that any differences are deliberate, documented and legally workable. If you rent the premises in your own name while the company buys the franchise, check that the company has a legal basis for occupying the premises, that the necessary landlord consents are in place, and that the documents meet licensing requirements.

Before making any payment, settle the following:

• In whose name will the invoice or payment receipt be issued?
• Is the payment yours, or does it belong to the company that will enter into the contract?
• If you pay on the company’s behalf, how will this be documented for accounting and legal purposes?
• Who owns equipment you buy before incorporation is complete?
• Will the franchisor accept the proposed entity as the contracting party?

Ask your accountant to specify the documents needed to substantiate expenditure and funding, rather than trying to put the paperwork in order after trading begins. If payments will be made to a franchisor outside Egypt, check early with your bank and advisers that the contracting party’s name, invoices and transfer documents are consistent. Do not assume that your personal bank account is a suitable substitute for a company account.

Agree ownership and management arrangements before signing the franchise agreement

Bringing in partners requires more than agreeing profit shares. Record who is committed to contributing capital, how additional funding needs will be addressed, who has authority to sign, and which decisions require special approval. Then ensure that these arrangements are consistent with the franchise agreement and the company’s constitutional documents.

The franchisor may require a particular investor to remain an owner or manager, or require its consent to a change of control. Bringing in a new partner or changing shareholdings may therefore require a review of the contractual requirements, even if the same company remains the franchisee. Ask specifically about the distinction between transferring the agreement and changing the company’s ownership; do not assume that addressing one also addresses the other.

If the company has not yet been incorporated, ask for a written arrangement setting out the incorporation and signing process, and what will happen to any money paid during this period. Do not sign in the name of a future company without reviewing the signatory’s liability and how the obligations will subsequently be adopted by the company.

Practical takeaway: Before buying the franchise, prepare a one-page summary identifying the legal buyer, the owners, the authorised signatory and the parties to the main contracts. Review it with the franchisor, your lawyer and your accountant. Establishing the buyer’s identity clearly at the outset is easier than transferring an entire business once it is up and running.