Buying a Franchise in Lebanon: Checking the Franchisor’s Signing Authority

You may negotiate with a well-known regional manager and receive an offer bearing the brand’s name, only to discover that the agreement comes from a different company or that the signatory needs authorisation they have not supplied. When buying a franchise in Lebanon, trust in people within the franchising community is not enough: you need to establish that the intended company will actually be bound by the agreement, and that its representative has authority to sign it and receive the associated payments.

1. Identify the contracting company, not just the brand

Start with a direct question: what is the full legal name of the party granting you the franchise? The brand name on an offer or email may differ from the name of the company that owns it, and from the company responsible for contracting or providing support. That difference is not necessarily a problem, but it needs a documented explanation before you pay.

Ask for a recent extract from the relevant register in the company’s country of incorporation, showing its registration number, address and legal form. If the party is a Lebanese company, cross-check the information against its Lebanese Commercial Register documents. Do not treat a website or business card as a substitute for a document identifying the legal entity with which you will sign.

Create a simple checklist comparing:

• The party’s name in the draft agreement and its schedules.
• The company’s name in the registration document.
• The name of the entity issuing the invoice and requesting fees.
• The name of the beneficiary bank account holder.

If the names differ, ask for an explanation of each entity’s role and the basis on which it is authorised to act. Do not assume that a parent company guarantees a subsidiary’s obligations simply because they share a brand or management. If a parent company guarantee is important to your decision, it requires a separate undertaking for your solicitor to review.

2. Distinguish a management role from signing authority

A job title such as ‘Franchise Development Manager’ or ‘Regional Manager’ does not, on its own, establish authority to bind the company. The person may only be authorised to negotiate, while signing the agreement may require another director or manager, two joint signatures, or a resolution from the appropriate governing body.

Ask for the document establishing the signatory’s authority under the company’s constitutional arrangements and governing law. This could be its articles of association, a list of authorised signatories, a corporate resolution or a power of attorney. Not all these documents are necessary in every case; the aim is for your solicitor to be able to trace the source and scope of the authority without gaps.

In particular, check whether the authorisation covers granting a franchise in Lebanon, signing schedules, assuming financial obligations and subsequently amending the agreement. Check its duration and any limits on transaction value or requirements for further approval. If an agent signs, also ask whether their power of attorney remains in force.

For foreign documents, ask a Lebanese lawyer to identify any translation and legalisation requirements. Do not assume that an emailed copy is sufficient for every evidential or official purpose. You can also seek confirmation directly from the company through an independent channel, rather than relying solely on contact details supplied by the negotiator.

3. Understand the Lebanese framework without assuming special protection

Lebanon has no comprehensive law specifically governing franchise agreements, nor a dedicated national system for registering franchise agreements or a mandatory disclosure document comparable to those required in some other countries. Do not, therefore, expect a franchise-specific government certificate confirming the franchisor’s legitimacy or its representative’s authority.

The relationship is subject to general legal rules, notably the Code of Obligations and Contracts, the Code of Commerce, and the rules governing companies, representation and authorisation. Intellectual property rules, tax requirements and other commercial obligations must also be observed, depending on the activity. Consumer Protection Law No. 659/2005 governs consumer protection and should not be treated as an automatic safeguard for a business buyer dealing with a franchisor.

The provisions of Legislative Decree No. 34/1967 on commercial representation may also come into consideration, depending on the substance and legal classification of the relationship; they do not automatically apply to a franchise agreement. Likewise, membership of an association or adherence to a code of ethics does not mean that the association has checked every signatory’s authority on your behalf.

If you discover a gap in authorisation, do not assume that the agreement is necessarily void or that subsequent performance automatically resolves the problem. The consequences depend on the facts and the applicable law. The practical solution is to address the gap before committing, rather than build your investment on a potential dispute over the legal effect of a signature.

4. Make signing and payment conditional on completing the checks

Make verification an explicit step in the transaction timetable. Before transferring franchise fees, ask for a final version containing the correct legal name, the capacity in which the signatory is signing, and all schedules, together with the necessary evidence of authority. Do not leave the contracting-party or signature fields to be completed after payment.

If the franchisor asks you to transfer money to a sister company or collection agent, request written instructions from an authorised person and an acknowledgement that payment to that entity discharges your payment obligation to the franchisor by the amount paid. Verify any change of bank account through independent contact before making the transfer; similar company names are not sufficient grounds for accepting the instruction.

Keep a single file containing the registration and authorisation documents, agreement, invoice, payment instructions and proof of transfer. Repeat the checks when the signatory changes or you are asked to sign a material amendment, rather than assuming that the previous authority still applies.

Practical takeaway: Do not pay because the logo is familiar or the negotiator is persuasive. Pay only after cross-checking the company, the signatory and the payment beneficiary, and resolving any discrepancies in writing with the help of a Lebanese lawyer.