Buying a Franchise in Lebanon: Protecting Your Rights When Opening Is Delayed

You may choose the right brand and secure funding for your business, only to discover that the opening date in the contract takes no account of licensing procedures or the franchisor’s approvals. In franchising, commercial readiness alone is not enough to begin trading. Before buying a franchise in Lebanon, negotiate clear arrangements for a delayed opening: who is responsible, which fees continue to apply, and when can you recover payments or end your contractual commitment?

1. Turn the opening date into verifiable milestones

Do not accept a final deadline that is disconnected from the work needed to meet it. Ask for a timetable attached to the contract, starting when specified conditions have been met rather than necessarily on the signing date. The project may require administrative approvals, fit-out work and inspections that vary according to the business activity, municipality and relevant authorities.

Divide the timetable into milestones, such as design approval, submission of licence applications, fit-out work, systems testing and, finally, approval to begin operating. For each stage, record who is responsible, which document will confirm completion and how long the other party has to respond.

In particular, distinguish between three dates:

• Fit-out completion: completion of the agreed physical works.
• Legal and operational readiness: fulfilment of the requirements needed to begin operating.
• Commercial opening: the start of serving customers and making sales.

This distinction prevents the arrival of equipment from being treated as an opening, or you being required to operate before the necessary requirements have been met. If the franchisor proposes a soft opening, agree in writing whether this triggers fees and the start of the franchise term, and under what conditions it can be suspended if a problem arises.

2. Allocate responsibility for delays rather than placing it all on the buyer

Ask your lawyer to turn the statement ‘the franchisee is responsible for opening’ into detailed obligations. You may be responsible for submitting the licence application, but the franchisor may be responsible for supplying specifications or drawings needed for that application. You should not be contractually liable for the consequences of its delay in supplying them.

Create a simple matrix covering each task, the decision-maker, the documents required and the completion deadline. Add a deadline for reviewing drawings and a process for consolidating feedback, so that new requests do not keep arriving indefinitely. Do not treat the franchisor’s silence as a substitute for formal approval required by a public authority.

Distinguish between delays caused by your own failure to meet obligations, delays caused by the franchisor and external delays beyond either party’s control. Each calls for an appropriate response: a corrective action plan, an extension or a reallocation of certain costs. Where responsibility is shared, document each party’s contribution rather than assuming that the buyer must bear the entire loss.

3. Control the costs that build up before trading begins

Ask for a list of every payment that could fall due before opening: reservation fees, systems subscriptions, pre-opening management fees, fit-out instalments and any contractual minimum fees. Discuss the due date for each item separately, rather than accepting its inclusion in a ‘start-up package’.

Where possible, negotiate payments linked to documented milestones, and defer operating-related fees until trading actually begins. If the franchise term starts on signing, ask for provisions addressing the impact of delays that are not your fault, so that you do not pay for an operating period that is shrinking before you welcome your first customer.

Prepare a monthly statement of the costs of waiting, including wages paid, storage, insurance and financing costs under your agreement with the lender. The aim is not to secure automatic compensation, but to identify what needs to be negotiated. Also discuss safeguards against being required to order perishable supplies before readiness is confirmed, and a process for approving additional expenditure in writing.

4. Understand the Lebanese legal framework for protection

Lebanon has no comprehensive law specifically governing franchise agreements, nor a franchise-specific statutory disclosure regime requiring a standard format and a generally applicable pre-signing disclosure period. The relationship is governed primarily by the Code of Obligations and Contracts, with provisions of the Commercial Code and rules specific to the business activity and licensing applying as appropriate. This makes the drafting of opening obligations and remedies for non-compliance essential, subject to mandatory legal rules.

Legislative Decree No. 34 of 1967 on commercial representation also requires attention when determining the legal nature of the relationship. Its application to arrangements labelled as franchises is not automatic; it depends on their substance, legal classification and case law. Do not assume that buying a franchise gives you the protections afforded to a commercial representative.

The Lebanese Franchise Association’s Code of Ethics also includes professional disclosure obligations within its scope, but it is not a general law binding all franchisors. Obtain an up-to-date legal review, and do not treat membership of any association as a substitute for contractual clauses protecting you against the consequences of delay.

5. Set out a clear process if opening proves impossible

Agree on a final deadline for waiting and what happens if it is exceeded. You can negotiate a written extension, suspension of certain obligations or a right to terminate on specified grounds. Define the notice procedure and the period allowed to remedy the problem, and clarify what happens to each payment, the required equipment and fit-out, and costs that cannot be recovered.

Keep a record of correspondence, approval requests and receipts confirming submission of applications. When a delay is anticipated, give notice in the manner specified in the contract; do not rely on a phone call or a verbal understanding.

Practical takeaway: Before signing, ask for an opening schedule attached to the agreement that brings together milestones, responsibilities, fees and procedures for handling setbacks. A realistic opening date matters, but it matters even more that every cause of delay does not become a loss for you alone.