Buying a Franchise in Lebanon: Review the Dispute Resolution Clause Before Signing

Dispute resolution may seem a distant concern when you choose a brand and join Lebanon’s franchise community. Yet a short clause at the end of the contract could require you to pursue your rights abroad, in a language that adds to your costs, and before a court or tribunal that is difficult to access. Before signing, assess this clause as part of the cost of your investment and your ability to protect your rights, rather than treating it as standard legal wording.

Separate the governing law from the forum deciding the dispute

Start with three separate questions: which law governs the contract? Who will decide any dispute? And where will the proceedings take place? Choosing a particular country’s law does not automatically give its courts jurisdiction. Equally, opting for arbitration does not, by itself, determine which law the arbitrators will apply.

Lebanon has no comprehensive franchise-specific law requiring a pre-contractual disclosure document or registration in a dedicated national register of franchise agreements. The relationship is governed primarily by the Code of Obligations and Contracts and the Commercial Code, with other rules applying according to the issue involved. Litigation and arbitration procedures connected with Lebanon fall within the framework of the Code of Civil Procedure, subject to applicable international conventions.

If your arrangement includes elements of commercial representation, ask a lawyer to check whether Legislative Decree No. 34 of 1967, as amended, applies. Do not assume that calling the agreement a ‘franchise’ settles its legal classification, or that choosing foreign law excludes every mandatory Lebanese rule. The legal classification may affect the assessment of the jurisdiction clause and its consequences.

Ask a Lebanese lawyer for a short written opinion explaining the implications of the choices in your specific draft agreement. Do not take an international franchisor’s template as evidence that the clause is suitable for an outlet operating in Lebanon.

Calculate the cost of enforcing your rights

You may have a clear contractual entitlement, but pursuing it could involve costs that the outlet’s cash flow cannot support. Compare the proposed routes against the likely value of potential disputes, rather than assuming that arbitration is always faster or courts are always cheaper.

If the contract provides for arbitration, check the name of the administering institution, the applicable rules, the legal seat of arbitration, the number of arbitrators, the language of the proceedings and how the arbitrators will be appointed. Distinguish between the legal seat and the venue for hearings: the seat affects the procedural framework and court supervision, even if some hearings take place remotely.

Work with your adviser to prepare an estimated cost breakdown covering:

• Lawyers’ fees and the possible need for legal advisers in another country.
• Court or arbitration institution fees, and arbitrators’ fees.
• Translation, experts, travel and preparation of evidence.
• The costs of applying for urgent measures, followed by recognition and enforcement of the judgment or award where necessary.

Ask when these costs will fall due, not just what the total will be. You may need to fund the claim before recovering any money. Do not assume that the losing party will cover all your legal fees: review the contract, the applicable rules and the court or tribunal’s discretion to allocate costs.

Make the resolution process clear and workable

The clause may begin with written notice, followed by negotiations between authorised representatives, then mediation or referral to the competent court or tribunal. The key is to prevent these stages from becoming an open-ended sequence that stops you taking action while losses mount.

Specify what the notice must cover, where it must be sent and the accepted means of proving receipt. Then agree a clear deadline for each stage and what happens if the other party refuses to participate. Avoid wording such as ‘negotiations shall continue until a solution is reached’ without an endpoint that allows you to move to the next step.

Discuss explicitly whether you can seek interim or protective measures when necessary, and how this fits with the arbitration or jurisdiction clause. Some disputes cannot wait for a final resolution, particularly where important evidence could be lost or assets that may be needed for enforcement could be disposed of. Whether an application is granted, and on what conditions, depends on the law and the competent court or tribunal, not simply on your wish to act urgently.

Do not assume that negotiations suspend legal time limits for bringing a claim. Ask your lawyer to identify the relevant deadlines and explain how to preserve your rights within them. At the same time, clarify how a dispute affects continuing obligations: disputing an invoice does not automatically entitle you to stop all payments or suspend operations.

Test the clause before approving the final version

Test the clause against a specific dispute: you paid for a service that was not delivered, requested a refund and were refused by the franchisor. Write down the steps you would follow, from notice through to enforcement, identifying who would act at each stage and which documents would be needed. If the process cannot be explained clearly, the wording needs revision.

Also check where the contracting party’s assets are located, rather than looking only at the brand’s address. Obtaining a judgment or arbitral award does not guarantee recovery. You may need recognition and enforcement proceedings in the country where the assets are held, subject to its legal requirements.

Check that the dispute resolution clause is consistent with the schedules, guarantees and related agreements. Different jurisdiction provisions across the transaction documents could split a single dispute across several proceedings. Keep a consolidated final version and a record of correspondence, invoices and evidence of performance: a clear procedure cannot make up for missing evidence.

Practical takeaway: Before paying non-refundable fees, establish where you would pursue your rights, under which law, in which language and at what cost, and how the outcome could be enforced. Negotiate a process you can actually use, not merely a clause that looks reassuring on paper.