Buying a Franchise in Lebanon: Managing Mandatory Refurbishment Costs

You may be able to finance the opening of an outlet under a recognised brand, only to face a later demand to change the décor or replace equipment that still works. In franchising, a consistent customer experience helps protect the brand, but it can also leave franchisees with expenses they have not budgeted for. Before buying a franchise in Lebanon, examine the franchisor’s power to require refurbishments and upgrades, and how to turn that power into a financial commitment you can assess rather than an open-ended bill.

1. Establish what the franchisor can change after signing

Do not look only for the phrase ‘outlet refurbishment’. The same obligations may appear under brand standards, concept development, equipment upgrades, technology systems or compliance with the operations manual. Read these provisions together: the agreement may specify the opening fit-out in detail, then allow it to be changed later through a manual that the franchisor can amend unilaterally.

Request the current manual and technical specifications, along with a record of substantial upgrades required at comparable outlets. The aim is not to assume that the past will repeat itself, but to understand how decisions are made. Are items replaced at the end of their useful life, or when a new visual identity is introduced? Do requirements differ between new and existing outlets?

Divide potential expenditure into three categories:

• Routine maintenance to keep fixtures and equipment in good working order.
• Changes needed for safety or compliance with applicable legal requirements.
• Commercial upgrades introduced by the franchisor to improve appearance or the customer experience.

This distinction matters in negotiations. Not every cosmetic initiative should become ‘essential maintenance’ that bypasses agreed financial controls. Also request a clear explanation of who decides that equipment is no longer suitable, and which technical criteria they use.

2. Understand the legal framework and the limits of protection

Lebanon has no specific law governing franchise agreements, nor a general franchise-specific statutory regime requiring a standard disclosure document or a set disclosure period. Depending on the subject matter, the relationship is governed by the Code of Obligations and Contracts, the Commercial Code, and relevant trade mark, consumer protection and competition legislation. Do not therefore assume that there is a specific statutory cap on refurbishment expenditure, or an automatic right to refuse an upgrade permitted by the agreement.

The Lebanese Franchise Association also has a code of ethics that addresses disclosure within its scope of application, but it is not a law binding on all franchisors. If the franchisor relies on it, ask for clarification of how it applies and have the commitments that matter to you incorporated into the agreement, rather than relying solely on a reference to association membership.

There may also be a question of whether the relationship qualifies as commercial representation under Legislative Decree No. 34/1967. Beirut Court of Appeal Decision No. 1106/2009 distinguished franchising from commercial representation, but that outcome should not be assumed to apply to every agreement. Ask a Lebanese lawyer to review the substance of the relationship and the legislation in force, rather than relying on the document’s title.

For refurbishments, the lawyer’s practical task is to establish the effect of incorporating the operations manual by reference, the limits on unilateral changes, and whether refusing to spend could constitute a breach of contract. Do not rely on a verbal assurance that the franchisor ‘always takes outlets’ circumstances into account’.

3. Calculate the full cost, not just the price of the décor

Request a written outline of expected upgrade work, while recognising that estimates do not guarantee that further changes will not arise. Then ask a local specialist to assess whether the specifications can be implemented in Lebanon and at what cost, including any approvals required for the type of work involved.

Create a table linking each upgrade to four items: purchase and implementation costs, payment dates, potential downtime, and expenses that will continue during closure. Include removal of old fixtures and equipment, transport and installation, alterations to utility connections, system testing and staff training. List relevant taxes and charges separately so your accountant can assess them for your circumstances.

Ask existing franchisees about their most recent upgrade. What did the original request cover? What was added during implementation? Were they able to keep trading? Request documents with sensitive information removed where possible, and do not treat one outlet’s experience as a definitive cost benchmark.

Assess the timing of the request too. Buying new equipment at the start of the relationship has different financial implications from buying it shortly before the agreement expires. Compare the remaining period of use with the equipment’s expected useful life, without assuming that you will recover its cost when the relationship ends.

4. Turn your findings into written safeguards

Rather than seeking to prevent every upgrade, negotiate a balanced process that protects both brand quality and your ability to carry out the work. A contractual addendum could include:

• Advance notice specifying the scope of work, specifications and required completion date.
• Agreed intervals between major refurbishments, with defined exceptions for safety and legal obligations.
• A cap or special approval process for exceptional capital expenditure.
• The right to propose an equivalent local alternative, subject to clear acceptance criteria and a response within an agreed period.
• Arrangements for upgrades required near the end of the term, such as reducing their scope or sharing their cost by written agreement.

Also establish the order of precedence between the agreement, its addenda and the operations manual, so that amendments to the manual cannot undermine the financial safeguards. Agree on a process for reviewing the technical assessment and budget if a dispute arises, and on how delays beyond your control will be handled. These are rights to negotiate and document, not automatic statutory protections.

Practical takeaway: Before signing, request a list of potential upgrades, a local estimate of their full cost, and an addendum setting limits on the power to require them. The best decision is not to choose the brand that refurbishes least often, but to choose a commitment you can understand, cost and fulfil.