The Scope of a Franchise in Egypt: What Exactly Are You Granting the Investor?

Your business may successfully combine in-store sales, corporate orders and additional services, but that does not mean your first franchisee will automatically be entitled to carry out all these activities. Before presenting the opportunity, you need to define precisely what you are granting: which products and services, and under what operating format? This clarity protects relationships within the franchise network and prevents you from selling an opportunity broader than you can replicate and support.

1. Separate your company's activities from the opportunity you are granting

Start by listing the revenue streams in your existing business. Then classify them as activities included in the proposed franchise, activities excluded from it, and activities requiring separate approval. The aim is not to restrict the investor's opportunity, but to prevent the assumption that using the brand entitles them to do everything your company does.

For example, if you run a bakery that sells to the public, supplies cafés and fulfils orders for events, these are distinct business activities with different pricing, equipment, production and customer service requirements. Granting a retail outlet franchise should not automatically be understood as granting the right to supply wholesale or establish a production unit.

Create a practical checklist answering the following questions:

• Which core products and services must the outlet offer?
• Which optional activities can it add with your approval?
• Which activities are expressly excluded from the franchise grant?
• Does the outlet manufacture the product, receive it ready-made or carry out a final preparation stage?
• Does it serve only individual customers, or may it also enter into contracts with business customers?

Do not settle for a phrase such as ‘carrying on the brand's business’. Write a description that the investor, outlet manager and supplier can all understand in the same way, without relying on a verbal explanation from the founder.

2. Link the scope to a specific outlet format

The same product might be sold from a full-sized shop, a small sales point or a dedicated order fulfilment site. These are not necessarily identical versions of a single opportunity: each format requires different equipment, premises, staffing and service processes.

Prepare a profile of the format you intend to grant, covering the type of service, the stages of work carried out within the outlet, essential facilities, required staff roles and what the outlet receives from central facilities. Do not make this merely an equipment list; explain what the model cannot offer as well.

If a sales point relies on receiving ready-made products, do not market it as capable of producing the full range on site. If serving events requires a separate transport and set-up team, do not include that activity in the core franchise without clear arrangements to provide that capability.

Also test the economics of the chosen scope separately from your company's other activities. An outlet may appear profitable because head office absorbs work that does not appear in its accounts, or because wholesale orders support its sales. The aim here is not to prepare profit forecasts for marketing purposes, but to check that the defined opportunity does not depend on revenue from activities excluded from the franchisee's rights.

3. Turn the commercial description into clear contractual boundaries

Egypt has no standalone law governing franchising, nor a general franchise-specific regime requiring agreements to be registered or a standard disclosure document to be provided. However, the relationship is not unregulated: it is subject to the general rules on contracts under Civil Code No. 131 of 1948 and, depending on its nature, the provisions of Commercial Law No. 17 of 1999.

Intellectual Property Rights Protection Law No. 82 of 2002 governs trade mark rights and licensing. If the relationship meets the conditions for technology transfer, the relevant provisions of the Commercial Law may also apply. An Egyptian lawyer should therefore assess the actual legal classification of the arrangement, rather than relying solely on the title of the contract.

Set out the scope of activities in a clear descriptive schedule and refer to it in the rights-granting clause. Distinguish between the right to use the trade mark and the right to carry out the agreed activities: a trade mark licence does not authorise the launch of any product bearing that mark. Nor does the franchisor's agreement replace the government licences required for the activity.

Specify in the contract whether the franchisee may accept large business orders, provide off-site services or manufacture products for third parties. These are questions about the type of activity permitted, not simply the boundaries of the geographical territory.

When allowing an exception, document it in writing, stating its duration, conditions and equipment requirements. Do not allow one-off approval for a single order to become evidence of a permanent grant of an additional activity.

4. Check that everyone understands the scope before presenting the opportunity

Share the scope profile with those responsible for operations, sales, legal affairs and finance. Ask each person to describe what the investor will receive, then compare their answers. Differences indicate that the opportunity has not yet been defined clearly enough to present with confidence.

Use short, realistic scenarios during the review: may the franchisee sell products from another supplier? May they accept an order to supply an organisation? May they add a service under the brand name? Each scenario should have a clear answer: permitted, prohibited or subject to approval, with the decision-maker identified.

Next, align the description of the opportunity across the commercial proposal, contract, training programme and equipment list. Do not advertise a service in sales materials only to exclude it at signing, or require equipment for an activity that the franchise grant does not cover.

Practical takeaway: Before marketing your first franchise, prepare a one-page summary setting out what you are granting, what you are excluding and what requires approval. If the opportunity cannot be understood without a lengthy explanation, refine its definition before asking the investor for a financial commitment.