Selecting a Franchisee in Lebanon: A Pre-Contract Approval Process

When you decide to franchise an established business in Lebanon, a candidate who can pay the fees may seem like an opportunity too good to miss. But the ability to pay does not prove they can run an outlet or follow your system. Selecting a franchisee is a decision about bringing a partner into your franchise network, not simply selling the right to use a name. You therefore need an approval process that establishes compatibility before final negotiations and prevents commercial enthusiasm from overriding warning signs.

Define your ideal partner before accepting applications

Start with a written profile of the franchisee your model needs, rather than a vague ideal of a ‘successful investor’. Does the business require the owner to be present every day, or can management be delegated? Does it require experience in managing staff, or can the technical skills be acquired through training? Which decisions must the franchisee be equipped to make from day one?

Separate non-negotiable requirements from skills that can be developed. Following safety procedures and handling cash responsibly may be essential, while using the ordering system can be taught. Do not automatically require previous experience unless it is necessary: experienced managers sometimes find it difficult to set aside their own methods and follow a standardised model.

Create a shared scorecard for the selection team covering:

• Genuine willingness to commit the necessary time or appoint a qualified manager.
• The ability to manage a team and resolve day-to-day disputes.
• Acceptance of standards, reviews and accountability.
• Clarity about funding and existing financial commitments.
• Understanding of the local market and customer service.

For each criterion, specify the evidence required, such as a practical example from previous experience or an appropriate financial document. The scorecard is a tool for fair comparison, not a formula that guarantees a candidate’s success.

Gather evidence in stages, not all at once

Use a short initial application covering experience, the proposed operational role, the requested territory and the identity of any prospective partners. Avoid requesting extensive sensitive documentation before establishing an initial fit. Explain why the information is needed, specify who can access it and how it will be stored, and review the legal obligations relating to personal data processing with your adviser.

After initial screening, request what you need to verify financial capacity and the proposed business structure. Do not rely on a verbal assurance that ‘the funding is ready’. Distinguish between available funds, a loan awaiting approval and a promise from a partner who has made no written commitment. The aim is to establish whether the application is viable, not to redo the feasibility study on the candidate’s behalf.

If the applicant is a company, review its documents, commercial registration, and the identity and authority of its representative. If the company will be formed later, record this as an outstanding condition; do not treat a proposed name as an existing legal entity. Commercial registration is a general requirement for conducting business, not a specific accreditation for franchisees.

Seek professional references after informing the candidate and obtaining appropriate consent. Ask about facts relating to management and reliability, rather than personal impressions. Document inconsistencies and ask for explanations before treating them as grounds for rejection.

Test behaviour through realistic outlet scenarios

A successful interview does not necessarily translate into successful management. Present the candidate with scenarios drawn from your business: a key employee is absent during peak hours, a customer asks for an exception that is not permitted, or a supplier offers a cheaper, unapproved alternative. Ask them to explain their decision, what information they need and when they would consult the franchisor.

Do not look only for an answer that matches your manual: the candidate has not yet been trained. Observe how they think. Do they ask questions before acting? Do they balance customer service with compliance? Would they conceal a mistake or report it? Do they understand that owning an independent business does not entitle them to change the model unilaterally?

You can arrange an observation visit to an existing outlet, with safeguards for customers, staff and confidential information. Make it an opportunity to understand the pace of the business, not unpaid training or an informal assignment to carry out actual work. If you need a practical trial, have its legal arrangements reviewed beforehand.

Also interview the person who will actually manage the outlet. Approving an excellent investor does not make up for the absence of a suitable manager. Where there are partners, ask them together about their respective roles and how decisions will be made. Differences in their answers may reveal a problem before it reaches the outlet.

Separate preliminary approval from legal commitment

Lebanon has no comprehensive franchise-specific law or dedicated 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 and the Commercial Code. Article 166 of the Code of Obligations and Contracts enshrines freedom of contract within the limits of public policy, public morals and mandatory legal provisions. Depending on the substance of the relationship, Legislative Decree No. 34/1967 on commercial representation may also be relevant, making a legal review of the actual agreement necessary.

Draft approval correspondence carefully. Specify whether the decision is conditional preliminary approval and identify any outstanding conditions. Avoid promising a territory or an opening date before these have been approved. The absence of a mandatory franchise-specific disclosure format does not justify misleading the other party or withholding information material to their decision.

Make the final decision one of three outcomes: approval, approval subject to specified supporting evidence, or rejection. Record the reasons and involve the person responsible for operations, rather than leaving the decision solely to someone whose incentive depends on awarding the franchise.

Practical takeaway: Before recruiting candidates, prepare a scorecard, an evidence checklist, interview scenarios and a clear decision template. Do not award a franchise because the candidate can afford to buy it; award it when you have documented reasons to believe they can operate it.