Buying a Franchise in Lebanon: Auditing Digital Systems and Customer Data

An ordering platform, accounting software and a loyalty system may seem like technical details when buying a franchise in Lebanon, but they can shape your sales, costs and customer relationships every day. Across a franchise network, standardised systems help improve operations, but they are no substitute for clearly defining both parties’ responsibilities. Before signing, ask for a clear digital systems schedule setting out what you will use, what you will pay and what happens if the service fails or the relationship ends.

1. Identify mandatory systems and calculate their full cost

Start with a written list of every system the franchisor requires you to use: point of sale, stock management, bookings, online ordering, accounting, loyalty and operational monitoring equipment. Distinguish between systems included in the franchise fees and those you must contract for separately with a technology provider. Ask who has the authority to change providers and whether the franchisor can impose a replacement during the contract term.

Do not stop at the monthly subscription price. Request an itemised quote covering:

• Equipment purchase, installation and integration with other systems.
• Activation fees, data migration and account setup.
• Subscriptions for each additional branch, user or device.
• Transaction, messaging, storage and backup charges.
• Maintenance, updates, equipment replacement and technical training.

Ask your accountant to bring these items together in a separate budget covering the contract term, including a scenario involving increased orders or an additional outlet. A system may look inexpensive initially, only for the bill to rise with every transaction or user. If the price cannot be fixed, negotiate a transparent adjustment mechanism, advance notice and a clear allocation of the cost of switching to software the franchisor may impose later.

2. Understand the legal framework before sharing customer data

Lebanon has no comprehensive law specifically governing franchise agreements, nor a dedicated statutory disclosure regime comparable to those in some countries. Depending on its nature, the relationship is governed by the general rules of the Code of Obligations and Contracts, the Commercial Code and other relevant legislation. Legislative Decree No. 34 of 1967 on commercial representation may also be relevant, depending on how the relationship is legally characterised; do not assume it automatically applies to every franchise.

Collecting and using customer data also requires a review of Law No. 81 of 2018 on Electronic Transactions and Personal Data. Your lawyer should identify the obligations and procedures that apply in light of the data involved, the processing activities and any statutory exemptions, rather than relying on a general clause stating that the software is ‘legally compliant’.

The Lebanese Franchise Association’s Code of Ethics includes professional disclosure obligations within its scope, but it is not a generally applicable law that replaces legislation. Request information about digital systems in writing, even if the franchisor does not volunteer it, and do not treat association membership as sufficient evidence of sound data-handling practices.

Turn the legal review into practical questions: who collects the phone number, and for what purpose? Who sends marketing messages? Where is the information hosted? If the franchisor or provider is based outside Lebanon, ask for the data-sharing and transfer arrangements to be reviewed. A customer’s agreement to receive an electronic invoice should not be treated as blanket permission for every marketing use.

3. Specify access rights rather than simply referring to ‘data ownership’

The phrase ‘the data belongs to the franchisor’ does not, on its own, answer operational questions. Nor is personal data a commercial asset that can be used or disposed of without restrictions. In the schedule, distinguish between sales reports, accounting records, customer data and system settings. Define each party’s rights to access, use and export them, while respecting legal obligations towards the people concerned.

Request an administrator account with access appropriate to your responsibilities, separate permissions for employees and an audit trail of significant changes. Do not accept an arrangement in which your ability to export accounting documents always depends on approval from a franchisor’s employee. Agree on a usable export format for the records you need for legal and operational purposes, rather than just images or summary reports.

Also address what happens when the relationship ends or the provider changes: which records will you receive, within what timeframe and at what cost? Who will delete copies that can no longer lawfully be retained? The need to retain legally required documents must be balanced with the protection of customer data. Do not assume you have the right to continue using the brand’s loyalty database after your licence ends.

4. Test failures and clarify responsibility before committing

Ask for a practical system demonstration that includes an internet outage, a point-of-sale device failure and a failure to synchronise orders. In Lebanon, backup connectivity, backup power and temporary offline operation should be part of the operating plan, not verbal promises. Check how transactions are recorded afterwards and how duplicate invoices or lost orders are prevented.

Attach an agreed service-level schedule to the contract, specifying support hours, escalation channels, target response times and responsibility for restoring data. Distinguish between a commitment to respond and a commitment to fix a fault: a quick reply does not mean sales can resume. Also specify who must notify the other party when a breach or loss of information is discovered, who manages the response and who bears the costs, depending on the cause of the incident.

Practical takeaway: Before signing, obtain three things: a complete digital systems cost schedule, a data access rights schedule and a documented business continuity test. Review them with a lawyer, an accountant and a technical specialist. Mandatory software is part of your investment commitment, not merely an add-on tool.