Franchising in Lebanon: Activity Slows as Businesses Weigh Up 2027 Budgets

Lebanon’s franchise sector is preparing its 2027 budgets amid declining local business activity and rising operating costs, though there has been no widespread wave of closures so far. In an interview published by Leb Economy on 26 October 2026, Yahya Kassaa, President of the Lebanese Franchise Association, described performance as weaker than last year, with companies reviewing their branches and holding off on major decisions for the year ahead.

Uneven declines following a stronger 2025

According to Kassaa, business activity in the Lebanese market fell by between 18% and 40% during 2026, depending on the sector. These figures reflect differing levels of pressure across business activities, rather than a uniform decline applicable to every brand or branch. They place domestic performance at the heart of the challenges facing franchise businesses, alongside difficulties in their overseas markets.

Kassaa explained that 2025 had brought successes and investment, particularly from Gulf countries, before activity began slowing in March 2026 following the outbreak of regional unrest. In his account, this shift affected business results both within Lebanon and abroad, meaning that year-on-year comparisons reflect different trading and investment conditions.

The challenge is not confined to weaker activity in the domestic market. Kassaa also pointed to slower overseas expansion, particularly in the Gulf countries that represent key markets for Lebanese brands. He named Saudi Arabia, the UAE, Qatar and Kuwait as the four leading destinations historically for this expansion, noting that recent unrest had affected activity in those markets.

Operating costs put pressure on branch management

Kassaa identified rising operating costs as one of the main burdens this year, linking them to global inflation, the energy crisis and higher electricity bills and other running costs. In Lebanon, reliance on generators and backup power systems adds to businesses’ expenses, particularly for those operating a network of sites rather than a single branch.

He noted that these burdens affect cash flow and operating expenditure, alongside the administrative demands of managing numerous branches. He cited businesses running ten, twelve or fourteen branches to illustrate the scale of the challenge when costs are repeated across an entire network.

This raises an issue beyond simply monitoring sales: a business’s ability to fund day-to-day operations and maintain its branches when declining activity coincides with rising costs. Kassaa’s account combines pressure on revenue with growing operational and administrative burdens. These factors feed directly into reviews of existing branches before businesses decide whether to expand or reposition.

Branch reviews do not mean a wave of closures

Despite these pressures, Kassaa stressed that the franchise sector has not yet seen widespread closures. He explained that companies are reassessing their branches in Lebanon and overseas and monitoring developments to determine their next steps, as the year draws to a close and the region’s geopolitical and economic outlook remains uncertain.

This distinction matters when assessing the market: reviewing branch performance and delaying decisions do not, in themselves, amount to an announcement of forthcoming closures. Kassaa emphasised that the outlook remains unsettled and that current indicators do not point to widespread closures warranting serious concern, even as brands continue to face challenges.

However, he did not rule out the possibility that sustained pressure could influence companies’ decisions during 2027. The direction of the next phase therefore depends on changing conditions and business results, rather than any single announced plan covering all businesses. For now, he said, companies are assessing and monitoring the situation before making major decisions for the following year.

Festive trading will be crucial to budgets

Kassaa explained that the final quarter is usually when businesses prepare budgets and plans for the following year. Current conditions, however, are prompting them to wait for a clearer picture before determining their commitments and options for 2027. Results over the remaining months therefore matter not only as a measure of current performance, but also as an indication of branches’ ability to remain viable and grow.

He highlighted the importance of the December festive season, saying it could account for around 60% to 65% of total annual sales for some businesses. As stated, that figure applies to certain businesses, rather than representing an estimate for Lebanon’s franchise sector as a whole. It nevertheless helps explain why some companies are waiting for the season’s results before firming up their plans.

The importance of festive trading intersects with branch reviews and rising expenditure: businesses are watching what the final part of the year can deliver while preparing the budgets that will guide them throughout the next year. Kassaa’s comments do not suggest a definitive outcome. Rather, they describe a period of uncertainty in which decisions hinge on performance and developments in the wider business environment.

Practical takeaway: For franchise operators, the priority is to review each branch’s sales, costs and cash flow before finalising the 2027 budget, rather than applying the reported declines or festive sales figures across all business activities.