Buying a Franchise in Egypt: Who Decides on Hiring and Pay?

Franchise fees and fit-out costs may seem clear, while the cost of staffing remains hidden in the operations manual. The brand may require a manager with specific qualifications, a minimum number of staff and prior approval for certain appointments. When entering Egypt’s franchise market, knowing how many employees you need is not enough: you must establish who makes the decisions, who signs the employment contracts and who bears the cost when requirements change.

1. Separate brand standards from employer authority

It is reasonable for a franchisor to protect service quality by setting standards for staff skills, appearance and working procedures. But requiring a qualified manager is different from choosing a particular person, setting their pay and issuing direct instructions about their promotion or dismissal.

Before signing, ask for all staffing requirements contained in the agreement, operations manual and appendices. Then identify the party responsible for each decision: sourcing candidates, conducting interviews, approving professional suitability, hiring, pay, leave, disciplinary action and termination of employment. Do not leave this allocation of responsibilities to a broad phrase such as ‘staff are subject to the franchisor’s supervision’.

Also check which entity is named as the employer in contracts and other documents. If your company employs the staff, do not assume that the franchisor’s day-to-day involvement transfers your legal obligations to them. Equally, the description of the relationship in the franchise agreement alone does not settle all its legal implications: the facts and actual management arrangements warrant legal review.

Negotiating objective: Clearly defined quality standards, with employment decisions remaining with the party responsible for them, and a clear process for any required approval of professional suitability.

2. Understand the Egyptian rules governing the relationship

Egypt has no standalone franchise law or general franchise-specific regime requiring franchise agreements to be registered or a standard disclosure document to be provided before signing. Do not therefore assume that a mandatory document will automatically disclose staffing obligations and their costs.

The contractual relationship is subject to general rules, including Civil Code No. 131 of 1948 and Commercial Law No. 17 of 1999, depending on the nature of the agreement. Technology transfer provisions may also apply if the agreement meets the relevant conditions, potentially creating specific obligations. The absence of a standalone law does not mean the sector is unregulated.

The relationship between employer and staff is governed by the Egyptian Labour Law in force, social insurance rules and other rules applicable to the business. Brand instructions do not exempt you from respecting employees’ statutory rights, and a franchise agreement is no substitute for legally sound employment contracts.

Ask an Egyptian lawyer to review whether the employment model complies with these rules, particularly where you use the franchisor’s employees or assign people to work across more than one outlet. The agreement should define each party’s responsibilities without assuming that allocating them between the parties removes employees’ rights against the legally responsible employer.

3. Turn staffing requirements into a budget you can test

Do not base your payroll budget on the number of employees you see when visiting a successful outlet. Behind the scenes, there may be relief staff, a shared manager or support funded by the company that owns the outlet, which may not be available to you on the same terms.

Ask for a written schedule setting out mandatory roles, minimum staffing coverage and required qualifications. Then work with an accountant to calculate the cost of each role, including pay, employer social insurance obligations, overtime where payable, relief cover, recruitment, uniforms and any checks or examinations required for the business.

Test at least these scenarios:

• Lower-than-expected sales: Can you reduce staffing without breaching brand standards or employees’ rights?
• Absence of the approved manager: Must you appoint an expensive replacement, or is a temporary appointment permitted?
• Rising demand: Will you need additional employees before revenue can cover their pay?
• Changes to the staffing structure: Who bears the cost of a new role required by the franchisor?

If the franchisor provides an estimate of staffing costs, ask for the underlying assumptions. Does it include all obligations, and does it relate to an outlet of comparable size and service type? Use it as a starting point for verification, not as a guaranteed ceiling on expenditure.

4. Agree approval and change procedures before signing

If the agreement requires the franchisor’s approval for the manager or other key roles, ask for objective approval criteria, a fixed response deadline and written reasons for any rejection. An open-ended approval right could leave you without an approved manager while payroll and operating obligations continue.

Also discuss an interim procedure for vacancies: who may be appointed temporarily, what authority they will have and when full approval must be obtained. These are arrangements to negotiate and document, not automatic rights that come with buying a franchise.

Where the franchisor requests an employee’s removal, distinguish between preventing that person from performing a task covered by brand standards and terminating their employment. Ask for a process to document, investigate and address the issue in accordance with the law, rather than obliging you to carry out an immediate dismissal at your own risk.

Finally, do not give the franchisor unrestricted authority to increase headcount or impose new pay levels through updates to the operations manual. Negotiate advance notice, written justification, a cost assessment and a reasonable implementation period, while maintaining compliance with mandatory legal requirements.

Practical takeaway: Before signing, prepare three documents: a hiring authority map, a full staffing cost budget and a procedure for changing requirements. If you bear the payroll costs and legal responsibility, you need to know exactly which decisions remain in your hands.