Buying a Franchise in Lebanon: Planning for Emergency Closures and Force Majeure

A franchise agreement may seem clear while the outlet is operating normally, but the real test comes when circumstances beyond your control make trading impossible. When entering Lebanon’s franchise market, do not settle for a clause headed ‘force majeure’. Examine what it actually does: do fees stop accruing? Who decides to close? And how do you resume trading without a temporary closure becoming a breach of contract? This review concerns an outlet that has already started trading, rather than a delayed opening.

1. Distinguish between being unable to trade and higher operating costs

Not every crisis amounts to force majeure, and falling sales or rising expenses do not automatically release you from your obligations. Ask a Lebanese lawyer to review how the agreement defines a qualifying event, its connection to the obligation that cannot be performed, and the conditions for obtaining any relief. What matters is not simply the label given to the circumstances, but their actual impact and whether they can be avoided or mitigated.

Start with a list of scenarios relevant to your business: an official order preventing you from admitting customers, loss of access to the premises, disruption to an essential service, or failure of a central system run by the franchisor. For each scenario, ask: does it prevent all trading, disrupt a particular service, or merely make operations more expensive?

Do not treat all these situations in the same way. One set of circumstances might allow deliveries while preventing customers from entering the premises, whereas another might make it impossible to provide the service at all. Negotiate a definition of partial suspension too, along with the option to introduce shorter opening hours or a temporary range of services with documented approval. These are operational arrangements to be negotiated, not automatic rights arising simply because a crisis has been declared.

2. Understand Lebanese rules and the limits of contractual protection

Lebanon has no comprehensive law specifically governing franchising, nor a statutory disclosure regime dedicated to it. The relationship is governed primarily by the Code of Obligations and Contracts, with provisions of the Commercial Code and other relevant general rules applying according to the issue. The effect of force majeure on contractual obligations should therefore be assessed under the applicable law and the circumstances of the event, rather than according to the label either party gives it.

A force majeure clause does not necessarily exempt the franchisee from every payment or compensate them for their losses. Equally, the fact that a particular event is not listed does not, on its own, establish that it is legally excluded. Ask for a coordinated review of the clauses on mandatory trading, breach, insurance and termination: one clause may grant you a grace period while another treats the same closure as a breach.

The Lebanese Franchise Association’s Code of Ethics calls for complete, accurate and material written information to be provided a reasonable time before a commitment is made. However, it is not a general disclosure law that automatically applies to all franchisors. Check whether it applies to your situation, and request the franchisor’s business continuity policy and any proposed contractual arrangements for emergency closures in writing.

Also ask about previous cases that can be documented without disclosing confidential information: how were closure requests handled? Were fees waived, or merely deferred? Past experience can help you assess how cooperative the franchisor is likely to be, but it does not guarantee the same treatment unless this is secured in your agreement.

3. Establish what happens to each obligation during a closure

Create a table listing each obligation, the party to whom it is owed, how it will be treated during a closure, and what happens when trading resumes. Avoid broad wording such as ‘obligations will be suspended’ without defining its scope, because suspension may mean deferral rather than cancellation.

Pay particular attention to:

• Fixed fees and minimum payments: Do these remain payable when there are no sales? Are the amounts waived, or do they accumulate for payment later?
• Continuing services: What is payable for systems or support that genuinely continue, and how will services that are no longer available be treated?
• Operating obligations: Are requirements relating to opening hours, minimum purchases and campaign schedules suspended?
• Pre-existing payments: Do debts that fell due before the event remain payable under their original terms?

Calculate the effect of each answer on your available cash, and do not treat relief from one fee as a solution to every expense. The franchise agreement does not automatically suspend your obligations to your landlord, employees, bank or suppliers; each relationship has its own rules and agreement.

If protection depends on insurance, put your scenarios to your broker or insurer and request written confirmation of the scope of cover. Do not assume that a business interruption policy covers every reason for closure. Check the conditions for payment, exclusions and waiting periods, and compare them with your contractual obligations.

4. Agree notification and reopening procedures before a crisis

Protection requires procedures that work in practice. Specify how notice must be given, who is authorised to receive it, what information is required and how updates should be provided. Negotiate a reasonable alternative if the usual notification method becomes unavailable, rather than losing protection because that method fails during the event itself.

Keep evidence of the circumstances’ impact: official orders where available, fault reports, correspondence, and a record of closure dates and affected services. Agree reasonable measures to limit losses, without committing yourself to alternatives that are unsafe, unlawful or open-ended in cost.

Set out a reopening process covering readiness checks, necessary approvals and responsibility for agreed additional costs. Specify when the situation will be reviewed if the closure continues, whether the franchise term may be extended by written agreement, and how accumulated obligations will be handled. Do not assume that days lost to closure are automatically added to the contract term.

Practical takeaway: Before signing, test the agreement against both a complete shutdown and a partial suspension of operations. In each case, you should know what you must pay, how to give notice and what is required to resume trading. Any unclear answer deserves written clarification.