Buying a Franchise in Lebanon: Controlling Outlet Refurbishment Costs

When buying a franchise in Lebanon, you may scrutinise the cost of opening your outlet, only to be surprised later by a requirement to replace furniture or equipment before the end of its economic life. Joining a franchise network means maintaining brand standards, but it should not mean accepting capital expenditure without clear limits. Treat the obligation to upgrade your outlet as a separate cost extending throughout the agreement, rather than a minor detail in your opening budget.

1. Establish what you can be required to change

Start by gathering the provisions that allow the franchisor to require an outlet redesign or equipment replacement. These may be spread across the agreement, the fit-out schedule, technical specifications and commitments to maintain the brand identity. Do not simply search for the word ‘refurbishment’: wording such as ‘keeping up with the brand’s latest format’ may create a broader obligation than you expect.

Distinguish between three types of expenditure: routine maintenance to keep equipment working, replacement required because of damage or safety requirements, and brand-led upgrades requested even though the existing assets remain usable. The reason matters when negotiating timing, who pays and whether postponement is possible.

Ask for a written list of the items covered: shopfronts, furniture, lighting, production equipment, service installations and anything else relevant to the business. Ask whether a requirement can cover the entire outlet or only specific parts. Also check whether any known or planned upgrade could force you to replace fittings or equipment purchased for the opening.

Request documented examples of previous upgrades at comparable outlets, explaining their scope and timing. These examples can help you assess the risks, but they do not cap your obligations unless the agreement expressly says so.

2. Understand the legal framework and its limits

Lebanon has no comprehensive franchise-specific law requiring a pre-contractual disclosure document or a dedicated national registration system for franchise agreements. The relationship is governed primarily by the Code of Obligations and Contracts and the Code of Commerce, alongside other rules applicable to the activity and the nature of the obligation. This does not remove the need to register the business or obtain the licences required for its operations.

In practice, do not assume there is an automatic franchise-specific legal cap on outlet upgrade costs, or an automatic right to refuse every request not included in the opening budget. Ask a Lebanese lawyer to review the obligation in the context of the agreement as a whole, particularly the franchisor’s powers, the conditions for approving works and the consequences of failing to carry them out.

Also distinguish between a commercial upgrade requested by the brand and works required by safety rules or the relevant authorities. Cost-sharing arrangements and deadlines may be negotiable, but a private agreement does not exempt you from mandatory legal requirements. Any grace period or financial contribution from the franchisor should be recorded in the contract; neither is a guaranteed benefit of joining the network.

3. Calculate the full cost, not just the equipment price

Work with your accountant to prepare a separate schedule of potential upgrades over the agreement’s term. Do not use a single figure labelled ‘contingency’: break down estimates by asset type, condition, expected useful life and likelihood of replacement before the agreement ends. Separate confirmed upgrades from possible expenditure so that your estimate does not imply more certainty than the available information supports.

Where applicable, your assessment should include:

• The price of new equipment and furniture, shipping, installation and associated expenses.
• Dismantling old fittings and equipment, moving or storing them, and disposing of them.
• Electrical, ventilation and service installation works needed for the replacements.
• Design and supervision fees, and the permits required for the works.
• Ongoing expenses during closure, and the impact of reduced or suspended sales.
• Financing costs if available cash is insufficient to carry out the works.

Be cautious about treating the resale value of old equipment as guaranteed income. It may be bespoke to the brand or difficult to move. Ask your accountant to distinguish between the accounting treatment of assets and your actual ability to pay the bills: equipment retaining a book value does not provide the cash needed to replace it.

Test a scenario in which an upgrade request arrives during a period of weak sales. Could you fund it without compromising wages, stock purchases or essential operating commitments?

4. Link each request to a deadline, a budget and a period of use

Negotiate a written procedure that begins with a notice explaining the scope of the works, the reasons for them, the required specifications and the completion date. Seek enough notice to obtain quotations, arrange funding and organise the work, with separate provisions for urgent safety-related works.

You could propose an initial period during which substantial cosmetic upgrades cannot be required, a minimum interval between major projects, or an agreed cap on certain categories of expenditure. If a fixed cap is not achievable, discuss requiring written approval for budget overruns or carrying out the works in phases. Define exceptions precisely so that they do not undermine the protection.

Pay particular attention to requests made near the end of the agreement. Ask how much time you will have left to use the new fittings and equipment. Discuss postponing non-essential upgrades, a contribution from the franchisor towards their cost, or a written agreement allowing an appropriate period of use. Do not treat approval of the works as an implied promise that the franchise relationship will continue.

Finally, specify how completion will be documented and how disputes over compliance with the specifications will be resolved. Avoid an open-ended obligation to redo works without clear inspection criteria.

Practical takeaway: Before signing, request a schedule of expected upgrades, calculate their costs including downtime and financing, and secure a procedure that defines the scope, notice period and budget. Paying for your outlet’s fit-out once does not mean you have covered those costs for the entire franchise term.