Franchisee Independence in Lebanon: Allocating Responsibilities Before Granting a Franchise

When you franchise an established business, you are not necessarily opening a branch that you own and manage yourself. The franchisee invests on their own account and bears the commercial consequences of their operations, while complying with the brand’s system. Before signing your first agreement, you therefore need a clear distinction between overseeing the customer experience and managing the business day to day. This separation builds trust within the franchise network and reduces uncertainty over responsibilities towards employees, customers and suppliers.

What does independence mean under Lebanese law?

Lebanon has no comprehensive franchise-specific law, nor a mandatory franchise disclosure regime comparable to those in some other countries. The relationship is governed by general legal provisions, particularly the Code of Obligations and Contracts. Article 166 establishes freedom to arrange contractual relationships, subject to public policy, public morals and mandatory legal provisions. Commercial, employment, tax, consumer protection and intellectual property rules must also be observed, as applicable to the activity.

In practice, simply stating that ‘the franchisee is independent’ is not enough. The contract must reflect how the business actually operates: who employs the staff? Who makes purchases? Who sells to the customer? And who takes on obligations towards the landlord? This wording should not be used to relieve the franchisor of its own obligations or override third-party rights.

Another legal issue warrants specialist review: whether Legislative Decree No. 34 of 1967 on commercial representation applies to a particular relationship. Calling an agreement a ‘franchise’ does not settle its legal classification. Ask a Lebanese lawyer to examine the actual relationship, and do not assume that choosing a foreign governing law displaces mandatory Lebanese provisions.

Map responsibilities before drafting the clauses

Start with an internal table listing each operational obligation, the party responsible for carrying it out, the party paying for it and the document that records the arrangement. Use the table to describe your intended operating model, then give it to your lawyer and accountant so they can turn it into consistent arrangements.

Focus on four areas:

• Employees: Identify who recruits staff and signs employment contracts, pays wages, makes declarations to the relevant authorities and takes disciplinary decisions. Distinguish between setting staff competency requirements and the franchisor directly managing their employment relationship.
• Premises and licences: Identify the tenant and the party responsible for applying for and renewing licences, and meeting obligations relating to the premises. The franchisor’s approval of the outlet’s design does not replace approvals from the relevant authorities.
• Purchasing and debts: Clarify who orders goods, receives invoices and pays them. Approving a supplier does not automatically mean that the franchisor guarantees the franchisee’s debts to that supplier.
• Sales and payment collection: Identify the party selling to the customer, the holder of the account receiving payments, and the party responsible for recording revenue, issuing accounting documents and settling refunds.

If the franchisor will provide a centralised service, such as order processing or booking management, add a separate description of its authority and how money and information will flow. Shared services need clear arrangements; they do not automatically make responsibilities shared.

Standardise the customer experience without obscuring the operator’s identity

Customers will naturally expect the same brand, design and service standards. But that consistency should not prevent them from knowing which party they have contracted with. Review with your adviser where the operator’s legal name and required details should appear, particularly on invoices, receipts, terms of sale and digital ordering channels.

Where required or helpful, an appropriate statement can explain that the outlet is run by an independent operator under a franchise agreement, without disrupting the visual identity. The key is for that statement to be accurate and consistent with both reality and legal requirements, rather than a blanket disclaimer of liability.

Set out the complaints process too: the brand’s team may receive a customer complaint, but who authorises a replacement? Who issues the refund? And who bears the cost? Record the answers and communicate them to your teams. Do not leave customers being passed between franchisor and operator because the internal agreement left the issue unresolved.

For example, if a customer pays through a central platform and collects their order from a franchised outlet, test in advance how the seller will be identified, how payment will be documented and how a refund will be made. This exercise can expose inconsistencies between a unified customer-facing service and unclear accounting or contractual arrangements.

Set practical limits on the franchisor’s involvement

Protecting the brand requires standards, monitoring and support, but it does not require the franchisor to make every day-to-day decision. Separate decisions that need the franchisor’s approval to protect the system from those that fall to the franchisee as an independent operator.

The franchisor can, for example, set service specifications, approved presentation standards and product-handling procedures. Responsibility for allocating shifts, paying expenses and managing staff should, however, be clearly assigned, with any direct intervention and its legal implications reviewed. Direct monitoring feedback to a designated person within the franchisee’s business, rather than issuing conflicting instructions to individual employees.

Before opening, carry out a desk-based review of the franchise agreement, lease, invoice template, employment contract and electronic payment agreement. Look for discrepancies in entity names, signing authority or responsibility for expenses. Then test simple scenarios: an employee claiming unpaid wages, a supplier seeking payment of a debt and a customer requesting a refund. It should be clear who handles each case.

Practical takeaway: Do not grant a franchise until you have prepared a responsibility map that aligns with the contracts, supporting documents and the way your team works. Standardise brand requirements, but make the operator’s identity and obligations clear and workable.