Single-Unit or Multi-Unit Franchising in Lebanon: How Do You Choose?

When the owner of an established business in Lebanon decides to enter the franchise market, they may receive an attractive proposal: one partner will take responsibility for opening numerous outlets. But the number of outlets is not the most important detail. The key questions are who will operate them, who can grant rights to third parties, and who will fulfil the franchisor’s obligations towards each outlet. Choosing a franchise structure before negotiations begin protects the business from taking on more than it can handle and makes expansion manageable, rather than simply a promise of a widespread presence.

1. Distinguish between three structures before discussing the proposal

A single-unit franchise gives the franchisee the right to operate a specific outlet under the agreed system. The relationship remains directly between the franchisor and the operator, making it easier to identify who receives guidance and support and who is responsible for implementation. This right does not automatically include permission to open further outlets or grant franchises to third parties.

A multi-unit development agreement sets out a partner’s commitment to open and operate an agreed number of outlets, according to a specified timetable and conditions. Each outlet may be governed by a separate agreement linked to the development agreement. The intention is for the partner to develop outlets that they operate themselves or through entities approved under the contract—not to recruit independent franchisees on their own initiative.

A master franchise may give the partner the right to enter into sub-franchise agreements with third parties, within limits set out in writing. This introduces an additional layer between the owner of the franchise system and the outlet operators. The master franchisee may take on some responsibility for selection, training, support and monitoring.

These are practical labels, not a substitute for examining the rights granted. An agreement may be called a ‘development agreement’ while actually granting the right to contract with third parties. Always ask: is the partner buying operating rights alone, or also gaining the authority to grant rights under the franchise system?

2. Choose a structure based on your ability to manage the relationship

Do not let the size of the proposed investment alone determine your decision. Start by mapping out who will perform each function as you move from one outlet to several: approving operators, reviewing opening plans, providing know-how, responding to problems and monitoring compliance with the system.

In a single-unit franchise, these functions remain more directly with the franchisor. Under a multi-unit development arrangement, you deal with one partner, but several outlets may need support at the same time. A master franchise, meanwhile, requires confidence that the partner can manage franchise relationships—not merely run a successful shop.

Test your decision against the following questions:

• Can you support openings in quick succession without disrupting your original business?
• Does the partner have a team to manage several locations, or do they rely on being personally present?
• Can you monitor outlet performance if you are not a direct party to the agreements governing their operation?
• Will the transfer of know-how remain clear if it passes through an intermediary?

If the answers are uncertain, you can start with a single unit and a written mechanism for considering future expansion. There is no need to grant broad powers now on the assumption that the capacity to use them may emerge later.

3. Turn the promise of multiple outlets into measurable milestones

In a development agreement, distinguish between the expansion target and the actual right to open each outlet. The phrase ‘opening several outlets’ does not explain when the obligation begins, what counts as an opening or which requirements must be met beforehand.

Prepare a schedule setting out the deadline for each stage, the responsible party, the documents required and the conditions for moving to the next stage. Permission to open a new outlet can be linked to stable operations at the previous outlet and fulfilment of specific obligations, rather than simply the passage of time.

Also distinguish between delays attributable to the partner and those linked to an approval or action required from the franchisor. Specify how delays will be documented and reviewed, and whether the timetable can be amended by written agreement. These are not statutory deadlines, but contractual tools that need appropriate drafting.

It is also useful to separate the status of operating outlets from future development rights. If a new milestone is missed, the consequences for an existing outlet that is complying with its agreement should not remain unclear. A lawyer should expressly address the relationship between the overarching agreement and the individual unit agreements.

4. Define the legal authority to grant sub-franchises

Lebanon has no comprehensive franchise-specific law, nor a dedicated franchise disclosure regime comparable to those in some other countries. Franchise agreements are governed primarily by the Code of Obligations and Contracts, alongside commercial rules, intellectual property rules and other provisions applicable to the activity concerned. The absence of specific legislation does not mean there are no obligations, or that any contractual term can be included without restriction.

If you choose a master franchise, ask a Lebanese lawyer to review the full chain of rights: your agreement with the partner, the template sub-franchise agreement, the limits on use of the trade mark and the authority to transfer know-how. The nature of some arrangements also warrants checking whether commercial representation provisions may apply; calling the document a ‘franchise agreement’ does not settle the issue.

Specify who signs with the sub-franchisee, who owes them support obligations and which approvals are required before a franchise is granted. Set out what happens to sub-franchise agreements if the master franchise relationship ends, without assuming that they will transfer automatically to you. Nor should you rely on the partner’s promise to handle ‘everything’. Allocate obligations in writing so that every operator can identify the party responsible to them.

The practical takeaway: Before offering expansion rights, draw a simple chain showing who grants rights, who operates outlets, who provides support and who is entitled to contract with third parties. Choose the narrowest structure that meets your current plan, then extend the rights through documented stages once the capacity to fulfil them has been demonstrated.