Approving a Franchise Site in Lebanon Before Signing the Lease

When turning your existing business in Lebanon into a franchise model, finding attractive premises may seem straightforward. But signing a lease before checking that the property is suitable can leave the franchisee paying for a site that cannot operate to the brand’s requirements. A structured site approval process protects both parties: the franchisor seeking a consistent customer experience, and the franchisee needing a clear investment decision rather than a rushed verbal approval.

1. Turn your business requirements into property criteria

Start with the practical needs of the business, not just the layout of your current branch. Your business may thrive in a building owned by its founder or at a location that benefits from their local connections. Those advantages do not automatically transfer to an independent franchisee. The aim is to identify the conditions any site needs to meet to operate properly.

Prepare an assessment checklist that distinguishes essential requirements from desirable features. Depending on the business, this should cover:

• Usable floor area and layout, not just the advertised total area.
• Electricity, water, drainage and ventilation capacity, and the scope for installing equipment.
• Customer access, deliveries, loading, storage and waste management.
• The ability to install the shopfront and signage and make the necessary alterations.
• The suitability of the surrounding area and permitted opening hours for the service offered.

For each requirement, specify how it must be verified: a plan, a technical inspection, an official document or written consent. Saying that premises are ‘suitable for a restaurant’ is no substitute for checking whether the required ventilation can be installed. If an essential requirement cannot be met at a realistic cost, the site should be rejected, however attractive the rent may seem.

2. Separate commercial approval from legal and technical checks

A franchisor’s approval means that it considers the site suitable for the brand concept, within the agreed scope of its assessment. It should not be presented as an official operating licence or a guarantee of profitability. The site decision should therefore involve separate commercial, technical and legal reviews, with clear responsibility for each review and its cost.

Lebanon has no comprehensive law specifically governing franchise agreements, nor a franchise-specific mandatory disclosure regime comparable to those in some other countries. The relationship is governed primarily by the Code of Obligations and Contracts, alongside commercial, intellectual property, competition and other rules, depending on the obligation concerned. Municipal and administrative permits, safety rules and sector-specific requirements remain mandatory wherever applicable; a franchise agreement does not replace them.

Nor should it be assumed that a franchise automatically falls under Legislative Decree No. 34 of 1967 on commercial representation. Determining the legal classification requires a Lebanese lawyer to review the substance of the relationship, rather than relying on the agreement’s title.

For the property itself, have the landlord’s legal standing and authority to let it checked, along with the permitted use and restrictions on alterations and common areas. An engineer and a lawyer should carry out the relevant parts of this review within their respective fields. Do not rely on an agent’s assurance that the previous business was similar: your operational requirements or licensing circumstances may differ.

3. Sequence commitments before signing the lease

The practical risk is that the franchisee becomes liable for rent while the franchisor’s approval or the prospects of obtaining the necessary licences remain uncertain. To reduce this risk, set out a written sequence: site nomination, preliminary inspection, document review, fit-out cost estimate, then final or conditional approval.

If the property needs to be reserved, ask your lawyer to negotiate a suitable arrangement, such as a preliminary agreement or contractual conditions that make continued commitment dependent on specified outcomes. These are not automatic rights: the landlord must accept them, and they must be clearly drafted. Also specify what happens to any money paid if the conditions cannot be met, rather than leaving this for later discussion.

Pay particular attention to the following in the draft lease:

• The description of the permitted business use and consents for works, signage and equipment.
• The date rent becomes payable and any agreed fit-out period.
• The lease term and renewal options in relation to the term of the franchise agreement.
• The allocation of repair and refurbishment work between landlord and tenant.
• Restrictions on assigning the lease or changing the operator.

Do not assume that the franchisor’s approval gives you a right to occupy the property, or that the lease automatically permits every alteration the brand requires. The two agreements must work together in practice, and any gaps should be reviewed before incurring fit-out costs that may be difficult to recover.

4. Issue a documented approval with clear next steps

Use an approval form that records the site address, the documents examined, the scope of the review, any reservations and any outstanding conditions. If approval is conditional, state who must fulfil each condition, what evidence is needed to confirm completion and when a further review will take place. Avoid a brief message such as ‘Approved — start work’ while significant issues remain unresolved.

For example, premises may be commercially suitable, but their operation may depend on consent to install external equipment. In that case, make clear that approval will not become final until the consent has been secured and the technical checks completed, while keeping financial commitments under control during the wait. If the plans change or additional work becomes necessary, review the cost and viability before proceeding.

Keep a single file containing inspection records, plans, consents and the approval decision. Make sure the franchisee understands what the franchisor has checked and what remains their own responsibility. Clear boundaries are more useful than a broad, vague disclaimer.

Practical takeaway: Do not approve a site simply because it resembles your successful branch. Approve it once its commercial, technical and legal suitability has been established, the lease obligations are aligned with the franchise agreement, and the conditions have been documented before substantial spending begins.