Buying a Franchise in Lebanon: Clarifying Responsibility for Complaints and Refunds

A ‘customer satisfaction’ policy may look attractive when buying a franchise, but it can become an open-ended financial commitment if your outlet pays for promises it cannot control. Before entering Lebanon’s franchise market, examine how complaints, warranties and refunds are handled. The aim is not to limit consumer rights, but to establish who fulfils those obligations and bears the cost—and to put this in the contract before you invest.

Separate consumer rights from the allocation of responsibility between the parties

Lebanon has no comprehensive franchise-specific law, nor a dedicated statutory framework requiring a pre-contractual disclosure document or separate national registration of franchise agreements. The relationship is governed primarily by the Code of Obligations and Contracts, the Code of Commerce and other relevant general rules. The agreement’s legal classification must also be assessed according to its substance.

Customer dealings, where applicable, are subject to Consumer Protection Law No. 659 of 2005, as amended, which the Ministry of Economy and Trade has responsibilities for enforcing. It is therefore not enough for the brand’s policy to set out return or warranty conditions; those conditions must be checked against mandatory Lebanese legal provisions. Nor should you assume that a customer’s change of mind automatically entitles them to a refund. This depends on the reason for the request, the nature of the transaction and the applicable rules.

Distinguish between two levels: the customer’s rights against the party legally responsible, and your contractual right to recover costs from the franchisor or supplier. An internal agreement does not override consumer rights, and the brand’s logo above the door does not automatically mean the franchisor will pay every claim. Ask a Lebanese lawyer to review the customer policy alongside the franchise agreement, rather than waiting until complaints arise.

Map the complaints process before accepting the brand’s policy

Request written copies of the sales, returns, exchange and warranty policies, along with the instructions used by customer service staff. Compare these with what appears in advertising, on invoices and in sales apps. A mismatch between a marketing promise and internal instructions could leave your outlet facing the customer, even if you did not write the advertisement.

Draw up a table of likely scenarios and identify, for each one, who makes the decision, who pays initially and who ultimately bears the cost. In particular, test the following:

• A defective item supplied by a supplier mandated by the franchisor.
• A service delivered at your outlet that does not meet the required standard.
• An order paid for through a central channel but fulfilled by your outlet.
• A product bought at another outlet that the customer wants to return to yours.
• A warranty or compensation promise made by the brand across the network.

Also ask whether your team can offer an immediate solution within defined limits of authority. What happens if a response requires the franchisor’s approval and that approval is delayed? Establish a clear escalation process and contractual response deadlines, without making compliance with any legal duty towards the consumer conditional on that approval.

Calculate the full cost of resolving the issue, not just the invoice value

Refunding the price of a product is not always the only cost. Resolving the issue may also involve transport, inspection, repairs, repeating a service, staff time and non-refundable payment processing fees. Ask the franchisor for available complaints and settlement data from comparable operating models, with the reporting period and calculation method clearly explained. Customers’ personal data should not be shared unnecessarily or without a lawful basis.

Do not rely on statements such as ‘complaints are rare’. Examine an actual settlement record with identifying details removed: who approved it, who paid, and when was the outlet reimbursed? If usable data is unavailable, include explicit, conservative assumptions in your budget rather than presenting an unsupported estimate as fact.

Review the accounting treatment too. If a sale is cancelled or partly refunded, does the contract provide for an adjustment to the basis on which related fees are calculated? How is that adjustment documented? The aim is to avoid bearing a final charge on a cancelled transaction, not to assume an automatic right to deduct it.

Pay attention to settlement timing as well. Paying out today in return for a future credit from the franchisor may put pressure on your cash flow. Specify whether reimbursement takes the form of a cash transfer or a credit note, when the credit can be used, and how disputed amounts are handled.

Turn the policy into enforceable obligations

Request a schedule to the agreement allocating responsibility according to the cause of the problem, rather than a clause making you responsible for all customer complaints simply because you operate the outlet. The schedule should explain reporting procedures, required documents, settlement authority, the cost-recovery mechanism and how cases involving faults by more than one party are handled.

Also discuss your right to claim compensation when costs arise from the franchisor’s instructions or promises, including the limits of that right and the evidence needed to support a claim. In turn, define your responsibility for operational errors within your control. These are negotiated provisions that require legal drafting, not guarantees provided by a franchise-specific law.

Before signing, run a desk-based simulation of a single complaint with the franchisor’s representative, from the customer’s first contact through to the final financial settlement. If you cannot identify who is responsible for a particular step or payment, that is a gap that needs to be resolved in writing.

Practical takeaway: Do not buy into a general promise of customer service. Secure a policy that complies with Lebanese law, a clear allocation of responsibilities and a transparent financial settlement mechanism, so that each party knows its obligations without diminishing consumer rights.