Updating a Franchise System in Lebanon: Managing Changes and Costs

When you turn your existing business in Lebanon into a franchise, you are not offering a model that will remain unchanged forever. You may later need to change your point-of-sale software, service equipment or shop layout. The problem is not development itself, but requiring a franchisee to make changes whose scope or cost was not defined in advance. A franchise network therefore needs a clear process for managing updates, established before the first agreement is signed, that balances a consistent customer experience with the stability of each party’s investment.

1. Classify changes before giving yourself the right to impose them

Start by listing potential changes to your business, then classify them by their impact rather than the label you give them. An update to the operations manual might be a minor correction, or it might entail buying new equipment or reconfiguring the premises. Calling something an ‘operational update’ does not automatically make it inexpensive to implement.

You can use three practical categories:

• Routine adjustment: Such as improving the sequence of tasks or clarifying the steps for handling a complaint, without significant investment.
• Significant operational change: Such as introducing new software, changing production methods or adding mandatory staff training.
• Capital investment change: Such as replacing equipment, refurbishing the shopfront or refitting part of the premises.

For each category, specify who approves the change, the type of notice required, the information to be provided and how costs will be allocated. Also distinguish between mandatory updates and optional improvements. If a franchisee can decline an optional improvement, that decision should not later be treated as an operational breach.

Pay attention to the combined impact of updates, too: a succession of small changes can create a greater burden than a single refurbishment. Monitor cumulative costs and implementation time, not just the price of each individual request.

2. Align the right to make updates with the agreement and Lebanese law

Lebanon has no comprehensive franchise-specific law, nor a dedicated pre-contractual disclosure regime prescribing a standard format or a uniform statutory delivery period. The relationship is governed primarily by the Code of Obligations and Contracts, alongside commercial rules and laws on intellectual property, competition and other matters, depending on the activity. The absence of a specific regulatory framework does not mean that every change requested by the franchisor is automatically binding.

Whether Legislative Decree No. 34 of 1967 on commercial representation may apply depends on the legal classification and substance of the relationship, and has been the subject of debate among legal scholars and in the courts. A Lebanese lawyer should therefore review the actual agreement, rather than relying on the title ‘franchise agreement’ to exclude provisions that may be relevant.

In practice, the agreement should specify what can be updated through the operations manual and what requires separate written consent. Do not use the power to amend the manual to change fees, the contract term or core investment obligations without a clear contractual basis and legal review.

The update clause should ideally address:

• The legitimate purpose of the change, such as improving service or complying with a legal requirement.
• The limits of the franchisor’s authority and how the franchisee will be notified.
• How changes involving substantial costs or temporary closure will be handled.
• The process for raising and resolving technical or financial objections.

Explain this process to prospective franchisees before signing as a matter of transparency, not as a disclosure document required under a franchise-specific Lebanese law.

3. Test the update and calculate its full cost

Before rolling out a significant change, test it at a location you operate or through an agreed limited pilot. The aim is not to reassess whether your business is suitable for franchising, but to check that the update itself is workable and offers a clear benefit over the current system.

If you want to replace your point-of-sale software, for example, do not simply compare subscription fees. Examine data migration, hardware compatibility, staff training, the ability to keep operating if the connection fails, and procedures for reverting to the previous system if the transition is unsuccessful. Specify who will bear the cost of correcting migration errors.

Prepare a short decision paper covering the current problem, the alternatives considered, the pilot results, and direct and indirect costs. Include training hours, potential service disruption, installation and maintenance work, rather than just the purchase price. If you expect savings or increased sales, explain your assumptions and do not present them as a guaranteed return.

Then propose an explicit allocation of expenses. The franchisor might pay to develop the shared solution while the franchisee pays for equipment at their premises, or the parties might agree on another contribution arrangement. What matters is that responsibility is clearly assigned, rather than inferred from a broad phrase such as ‘maintaining brand standards’.

4. Implement changes with clear notice and documented exceptions

Send a practical notice explaining what will change, why, when and who is responsible for each step. Attach the specifications, training plan, cost estimate and procedure for requesting clarification. Set an implementation period that reflects equipment availability, installation work and the circumstances of the location; a single deadline for every outlet is not always the best solution.

Establish a separate process for urgent updates relating to safety or legal requirements. Document the reason for urgency and do not use it to bypass the procedures for ordinary changes. If a location needs an exception, record the reason, its duration, the acceptable alternative and the review date.

After implementation, keep a record of the approved version, evidence of training, technical observations and follow-up results. If the pilot reveals a problem, adjust the rollout plan rather than insisting on a change that does not achieve its purpose.

Practical takeaway: Before granting your first franchise, prepare an update clause, a notice template and a cost-estimation worksheet. A structured approach to development keeps the franchise network consistent without turning every improvement into a financial surprise or contractual dispute.