Buying a Franchise in Lebanon: Check the Premises and Lease Before Committing

You may choose the right brand and have the budget for a fit-out, only for your project to stall because the premises cannot be used for your intended business or rent becomes payable before you can open. When entering the franchise market in Lebanon, the franchisor’s approval of the location is not enough. You need legal, technical and commercial due diligence that links your right to occupy the premises with your ability to trade from them, and prevents conflicting commitments to the landlord and franchisor.

1. Separate the location’s appeal from its operational suitability

Start with a precise description of the business activity, not just the brand name. Will you sell ready-made products, prepare food or provide services requiring specialist equipment? Each use has requirements and approvals that may vary according to the activity, the property and the relevant authority. Describing a unit as ‘commercial premises’ in an advertisement or lease does not, on its own, establish that the brand’s business model can operate there.

Ask the landlord for documents proving ownership or the authority of anyone signing on their behalf, and check the identity and boundaries of the registered property unit and the areas covered by the lease. Do not assume that the pavement, storage space, roof or parking area forms part of the leased premises simply because you saw the previous tenant using it.

Commission an engineer to assess operational requirements before approving the final design, including:

• Electricity supply capacity and whether additional equipment can lawfully be installed.
• Ventilation, drainage, emergency exits and the feasibility of the required works.
• Locations for cooling units, generators and signage, and any approvals needed for them.
• Access for deliveries and receiving goods, and waste management arrangements that do not infringe others’ rights.

At the same time, assess the location’s commercial potential at different times. Record footfall, ease of access, the customer profile and the impact of congestion. Ask the franchisor which criteria informed its approval: technical suitability does not mean the location can generate enough sales to cover its costs.

2. Understand the legal framework: brand approval is not a licence

Lebanon has no comprehensive franchise-specific law or statutory franchise disclosure regime. The relationship is governed primarily by the Code of Obligations and Contracts and the Commercial Code, with consumer protection, intellectual property and other laws applying according to the issue and business activity. Occupying the premises also requires a review of the applicable tenancy rules, alongside relevant building, use and licensing requirements.

A separate issue is whether some relationships might be classified as commercial representation under Legislative Decree No. 34 of 1967. Its application to franchising is not automatic, and Lebanese case law has distinguished between the two types of agreement. A Lebanese lawyer should therefore review the substance of the relationship rather than rely on the agreement’s title.

The Lebanese Franchise Association’s Code of Ethics also sets out professional obligations concerning disclosure and contract content, but it is not legislation that replaces applicable laws or licensing requirements. Nor does a franchisor’s membership of an association mean that the municipality or relevant authority has approved the premises.

Request a written list of the approvals required, the authority responsible for each, and who will apply for and pay for them. Distinguish between the landlord’s consent to works, the franchisor’s approval of the design and official permits: these are separate approvals, and none substitutes for the others.

3. Align your commitments before signing the lease and franchise agreement

The greatest risk is becoming bound by a long lease while brand approval is still pending, or paying a non-refundable franchise fee before confirming that the premises are suitable. Draw up a single timetable showing the sequence of approvals, signing, payments, handover, fit-out and opening.

Discuss with your lawyer clear contractual conditions that make your continuing commitment dependent on specific requirements being met, such as written approval from the franchisor, delivery of the necessary property documents and confirmation that essential licences can be obtained. Set a deadline for each condition, specify how its fulfilment will be demonstrated, and agree what happens to payments if it cannot be met and who bears the cost of works already carried out. These rights require express agreement; they are not automatic protections.

In the lease, pay particular attention to:

• Permitted use: wording that covers the actual business activity and associated equipment.
• Handover and rent commencement: the condition of the premises on handover and any agreed fit-out period.
• Works and consents: what the landlord permits and what requires further approval.
• Lease term: whether it suits the franchise operating plan and allows time to recover fit-out costs.
• Identity of the tenant: whether it aligns with the company that will operate the business and its contractual obligations.

In the franchise agreement, avoid a fixed opening deadline that makes no allowance for delays in property handover or approvals. Negotiate a written mechanism for dealing with delays rather than relying on a verbal promise that the franchisor will ‘understand the circumstances’.

4. Calculate the cost of the premises through to opening, not just the rent

Prepare a separate premises budget covering deposits, advance payments, inspection and design fees, works and equipment associated with the property. Add service charges, maintenance, energy and insurance as required by the lease, and ask for clear terms identifying who is responsible for remedying defects that pre-date handover.

Also calculate the cost of waiting: rent during the fit-out, security for the premises, and any salaries or other commitments that begin before the first sale. Test a delayed-opening scenario and another in which an essential technical alteration becomes necessary. Do not treat a landlord’s contribution to works or a rent-free period as guaranteed unless their terms are documented.

Before deciding, bring together the engineer’s report, the lawyer’s review, brand approval, the licensing timetable and the premises budget in one file. If a material issue remains unresolved, postpone any non-refundable payment rather than commit money while uncertainty remains.

The practical takeaway: do not simply rent an attractive address. Choose premises you can operate legally, technically and financially, with commitments that align with your franchise agreement.