Buying a Franchise in Lebanon: Owning the Premises as a Foreign Investor

You may choose to buy the premises for your franchise outlet rather than rent them, securing the business’s location and building a long-term asset. For a non-Lebanese investor, however, entering Lebanon’s franchise market and owning property are two separate legal matters. Before paying for the premises or paying franchise fees, you need to confirm that the buyer is eligible to own the property, that the purchase can be registered, and that it fits with the franchise term and financing conditions.

1. Separate the right to operate the franchise from the right to own property

Lebanon has neither a comprehensive franchise-specific law nor a statutory franchise disclosure regime. The relationship is governed primarily by the Code of Obligations and Contracts, alongside the Commercial Code and other relevant general rules, depending on the issue. Property purchases by non-Lebanese buyers are governed by separate rules, notably Decree No. 11614 of 4 January 1969, as amended by Law No. 296 of 3 April 2001.

Approval from the franchisor to grant you a franchise therefore does not mean you can buy your chosen premises. Nor does registering a company in Lebanon automatically exempt it from restrictions on foreign ownership: some Lebanese companies may be treated as foreign persons under these rules, depending on their legal structure and ownership.

Start by identifying the proposed buyer: will it be you personally, the operating company, or another company that will own the property and lease it to the operator? Ask a lawyer to review the buyer’s nationality, shareholding structure where applicable, and legal status before you enter into any binding commitment. Do not use a sham arrangement to bypass restrictions. The aim is ownership that can be registered and legally protected, not merely a private agreement with the seller.

2. Check ownership limits before choosing a property

The rules allow non-Lebanese buyers to own built property or land designated for construction with a total area of no more than 3,000 square metres across Lebanon without authorisation by decree of the Council of Ministers. Exceeding this threshold requires authorisation. Being below the threshold does not mean every purchase is automatically permitted: other restrictions apply, including geographical caps on foreign ownership and conditions relating to the buyer’s status.

Do not, therefore, consider only the area of the franchise premises. Other properties already owned by the buyer may count towards the limit, and buying a separately registered unit within a building may require a detailed check of how its area and associated ownership shares are calculated. Obtain legal advice specific to the transaction, rather than relying on a verbal assurance that ‘it’s only a small shop, so nothing else is needed’.

Prepare a file for your lawyer containing:

• The buyer’s identification and, if the buyer is a company, its corporate and ownership documents.
• Details of any property already owned in Lebanon.
• The property number, cadastral district and description of the unit to be purchased.
• A recent land registry extract and documents showing the area, rights and registered restrictions.

Ask for a written assessment of whether the purchase requires authorisation and which procedures must be completed before registration. Do not base your opening date on the assumption that approvals or completion of the transaction will follow a guaranteed timetable.

3. Coordinate the property purchase agreement with the franchise agreement

The biggest risk is becoming unconditionally bound by one agreement while the other remains unresolved. You might buy premises that the franchisor rejects, or pay fees for a franchise you cannot operate because the property purchase falls through. The answer is not to combine both agreements into a single document, but to coordinate their conditions, deadlines and the consequences if either transaction fails.

Obtain written approval from the franchisor for the specific property, stating whether that approval is final or conditional on an engineering inspection, permits or particular works. At the same time, discuss including conditions in the purchase agreement covering satisfactory property title and legal status, eligibility to own and register the property, and access to financing if needed.

Each agreement should specify who bears the costs if its conditions are not met, when you may withdraw, and what happens to any money already paid. Negotiate a clear mechanism for refunding or retaining payments; do not assume there is a special right to recover them simply because the project involves a franchise.

Remember that the brand’s approval of the location does not establish that the premises can legally be used for the intended business. Arrange an independent check of planning status and required licences. Equally, protecting your property ownership depends on properly registering the transaction in the land registry, not on signing the franchise agreement or receiving the keys.

4. Assess the property’s viability beyond the franchise term

Buying premises adds an investment that may outlast your relationship with the brand. In your calculations, separate the property price, purchase costs and financing costs from franchise fees, fit-out costs and operating expenses. Obtain an up-to-date estimate of registration costs, transaction charges and professional fees rather than relying on a commonly quoted overall percentage that may not reflect your transaction.

If the property will be mortgaged to finance the business, review the loan and security terms with the bank and your lawyer. Will repayments continue if the franchise ends? Will you need the lender’s consent to let or sell the property? The end of your right to use the brand does not automatically discharge your financing obligations.

Also assess whether the premises could serve another purpose. Can the branded fittings be removed without significant loss? Would the property suit another operator? Compare the financing term with the franchise term, and do not treat renewal as guaranteed.

Practical takeaway: Before buying premises for your franchise outlet, obtain legal advice on eligibility to own the property, confirm that the purchase can be registered, and coordinate the purchase, franchise and financing conditions. Buy a viable investment asset, not a location whose value depends entirely on one brand staying in place.