Pre-contract Franchise Disclosure in Lebanon: A Clear Basis for Decision-making

When you turn an established business in Lebanon into a franchise, prospective franchisees need more than an attractive pitch and a draft contract. They need information that helps them understand what they are buying, which obligations they will take on and what remains unresolved. Preparing a pre-contract disclosure pack is a practical way to build trust within the franchise community, provided it serves as a decision-making tool rather than a promotional brochure that hides restrictions behind photographs of successful outlets.

1. Understand the place of disclosure in Lebanese law

Lebanon has no comprehensive franchise-specific law, nor a mandatory franchise disclosure regime requiring a standard document and a set delivery period, as some countries do. Do not therefore present your pack as an officially approved template, or borrow a deadline from foreign legislation and describe it as mandatory in Lebanon.

However, the absence of a specific regime does not mean that information provided before signing has no legal consequences. The relationship is governed primarily by the Lebanese Code of Obligations and Contracts, including its rules on valid consent, defects in consent and liability, alongside commercial rules, intellectual property provisions and other rules relevant to the arrangement. Inaccurate information or the concealment of material facts may raise legal issues, with outcomes depending on the facts and their legal characterisation.

The substance of some arrangements also calls for an assessment of whether Legislative Decree No. 34 of 5 August 1967 on commercial representation applies: calling an agreement a ‘franchise’ does not settle the question. Ask a Lebanese lawyer to review the disclosure pack alongside the offer and contract, identify the information needed and draft appropriate qualifications without using them to strip the disclosures of their meaning.

2. Build the pack around the prospective franchisee’s decision, not the brand story

Start with this question: what information might change a prospective franchisee’s investment decision or negotiating position? Organise the pack around that information, and make its preparation date and scope clear. If you are offering a particular outlet format, avoid general descriptions suggesting that all formats are available on the same terms.

A practical pack could include:

• Franchisor identity: The legal name of the entity that will sign the contract and its relationship to the trading name being offered.
• Trade mark status: The rights holder, the basis of the franchisor’s authority to license use of the mark, and any restrictions materially affecting the proposed use.
• Operating experience: Outlets actually in operation, distinguishing franchisor-operated outlets from franchisee-operated ones, and which elements of the proposed model have or have not been tested.
• Financial obligations: Fees and other types of payment, who receives them, what they cover and which costs remain payable separately by the prospective franchisee.
• Scope and limits of the relationship: The extent of support and training, and the main restrictions on sourcing, location, expansion and the sale or transfer of the outlet.
• Material facts: Any dispute or restriction affecting a key right, or a planned change that could materially affect the business opportunity being offered.

This is a suggested organisational checklist, not a disclosure template required by specific Lebanese legislation. Adapt it to your business and the arrangement you are offering, and avoid overwhelming prospective franchisees with information that does not help them understand the commitment.

3. Support each statement with evidence and identify what you do not know

Create an internal register linking each statement in the pack to its supporting document, the date it was checked and the person responsible for updating it. A statement about trade mark ownership should be supported by rights documentation; a description of the outlet network should reflect its actual status; and a description of training should be based on a programme you can deliver.

Distinguish clearly between three categories: current facts, future plans and unresolved matters. For example, if training currently takes place at your operating outlet while you plan to establish a separate centre, do not present that centre as already available. If you have not yet approved an alternative supplier, state that alternatives are being assessed rather than implying that options are ready to use.

Do not use ‘information is subject to change’ as a substitute for accuracy. Specify what may change, why and how you will notify prospective franchisees. If material information cannot be verified, state that it remains unresolved and explain how this affects the decision. Being candid about the limits of your knowledge is better than turning an internal assumption into a marketing claim.

4. Manage delivery, questions and updates before signing

Adopt an internal procedure for delivering the pack early enough to allow a meaningful review before signing or requesting a financial commitment. This is a suggested organisational practice, not a specific statutory deadline under Lebanese law. Allow prospective franchisees to share the documents with their advisers, and do not pressure them to pay before answering material questions.

Appoint one person to collate questions and refer them to the relevant specialists within the business. Keep a record of written answers and send corrections to all affected prospective franchisees, rather than allowing each recruitment team member to offer a different interpretation. Before signing, check whether any material information has changed since delivery, then issue a clear update explaining the change and allowing the opportunity to be reassessed.

Keep a copy of the pack supplied, its date, evidence of receipt and a record of questions and updates. Evidence of receipt documents that the information reached the recipient; it does not, by itself, establish its accuracy and should not be presented as a blanket waiver of the prospective franchisee’s rights. Any promise intended to bind the parties should be clearly included in the agreement, rather than left as an oral answer given during negotiations.

Practical takeaway: Before recruiting your first franchisee, prepare a dated decision-making pack, support its contents with evidence and assign responsibility for delivering and updating it. The aim is for both parties to sign on the basis of a clear understanding, not differing assumptions.