Granting a Franchise to a Foreign Investor in Lebanon: Management and Residency Requirements

When turning your existing business in Lebanon into a franchise model, you may attract a foreign investor willing to provide funding and manage an outlet. However, the right to own a business does not automatically confer the right to run it personally from Lebanon. To protect the franchise relationship, you need a clear arrangement linking the investor’s actual role to the necessary approvals, and setting out how delays or refusals will affect the contract, payments and operations.

Start with the actual role, not nationality alone

Lebanese rules generally allow foreign nationals to own interests in commercial businesses, subject to restrictions and exceptions for certain activities. However, investment ownership is distinct from working in the business. An investor who does not manage their business from Lebanon does not need a work permit merely because they own it. Local management, by contrast, requires a review of the work and residency requirements applicable to their status.

As a franchisor, ask for a written description of how the outlet will be managed before fixing an opening date. Will the investor live in Lebanon? Will they manage staff and sales day to day? Or will they fund the company and appoint a local manager? Describing them as a ‘partner’ or ‘consultant’ in correspondence is no substitute for documenting their actual duties.

Turn the answers into a written outline of roles covering:

• The identity of the investor and the entity that will hold the franchise.
• Who will handle day-to-day management and where they will perform their duties.
• The limits of the investor’s involvement in operations and physical presence in Lebanon.
• The proposed alternative if they cannot be present or start work.

If your model requires the franchisee’s personal, full-time involvement, this is not a minor administrative matter: it affects whether the agreement can be carried out. Do not approve a replacement manager simply to overcome a legal obstacle if your operating model cannot accommodate that arrangement.

Keep the franchise agreement separate from work and residency approvals

Lebanon has no comprehensive franchise-specific law requiring pre-contractual disclosure or a general registration system specifically for franchise agreements. The relationship is governed primarily by the Code of Obligations and Contracts and the Commercial Code. Other rules apply according to the activity and the terms of the agreement, including intellectual property, employment and tax rules.

The foreign investor’s personal status, meanwhile, is governed by the rules on foreign nationals’ employment, entry and residency. Your approval of their franchise application is not permission to work, and registering their company in the Commercial Register does not replace the appropriate residency authorisation. Likewise, the business’s licences remain separate from the individual’s right to manage it locally.

Ask the candidate to engage a Lebanese lawyer to identify the appropriate procedures with the Ministry of Labour and General Security, based on their role and the business structure. If they choose a sole proprietorship or partnership, do not assume that the requirements are the same as those for investing through another legal structure.

The franchise agreement review should also consider whether Legislative Decree No. 34 of 5 August 1967 on commercial representation could apply, depending on the substance of the relationship. The contract’s title alone does not determine its legal classification, and checking residency requirements is no substitute for reviewing the commercial agreement itself.

Create a tracking file with clearly assigned responsibilities

It is not enough for the candidate to say that the paperwork is ‘in progress’. Agree a written checklist identifying each required approval, the competent authority, the applicant, the necessary documents, and any steps that depend on incorporating the company or securing an address for the outlet. Have the adviser verify the current requirements rather than relying on an outdated checklist or another investor’s experience.

Keep the file proportionate to its purpose, and request only the documents needed to verify the proposed operating arrangements. These may include identity and travel documents, company documents and management authorities, details of required legalisation and translations, and confirmation of any applicable requirements concerning the employment of Lebanese nationals and social security.

Allocate responsibilities clearly: the investor follows up their personal applications; the franchisor supplies documents relating to the franchise relationship within an agreed scope; and the adviser explains the legal requirements. Do not promise an approval you have no authority to issue.

Add a cost schedule separating official fees from application-handling, translation, legalisation, travel and temporary accommodation costs. Then link progress on the applications to project decisions: when should training begin, and when should a major financial commitment be authorised? Avoid basing a public opening date or fit-out expenditure that may be difficult to recover on uncertain expectations about approvals.

Set out the consequences of delay and refusal before collecting payments

If operating the outlet depends on the investor’s presence, discuss with the lawyer whether certain obligations should take effect, or certain payments become due, only once specified approvals have been obtained. Do not use a vague phrase such as ‘completing the paperwork’. Name the approvals, specify the evidence needed to confirm them, and identify who is responsible for following them up.

The agreement should address deadlines for submitting and following up applications, a mechanism for extending deadlines, and the distinction between an application being refused and the investor failing to complete it. Make clear what happens to amounts already paid, services already delivered and expenses previously approved, rather than leaving refunds to tense negotiations after a setback.

Appointing an alternative manager may be an option, but it requires documented operational and legal approval, not merely a change of name on paper. Also specify how the change affects training and management authority, and do not treat submission of an application alone as permission to start work.

Finally, put arrangements in place to monitor the validity and renewal of approvals, and to report changes in the investor’s role or the ownership structure. The practical takeaway: before granting a franchise to a foreign investor, establish who will manage the outlet, verify the requirements applicable to their status, and agree in writing what happens to the parties’ obligations if the approvals cannot be obtained.