Buying a Franchise in the UAE: Staffing Requirements and Team Costs

The fees for buying a franchise may look clear, yet significant costs can be hidden in staffing requirements: an approved manager, minimum staffing levels, shift cover and prior approval for replacements. In franchising, the brand needs to protect service quality, but you also need to know who makes hiring decisions and who bears the consequences. Before signing, turn these requirements into clearly defined obligations and a budget you can stress-test, rather than simply estimating monthly salaries.

1. Separate brand standards from employer responsibilities

Start with a direct question: who will be named as the employer in staff employment contracts? Under the usual arrangement, outlet staff work for the franchisee’s business, not the franchisor. Do not therefore assume that the franchisor’s instructions on appearance and service automatically give it the power to amend or terminate employment contracts, or transfer your responsibilities towards employees to it.

The UAE has no specific federal franchise law that, as a general rule, requires a standardised pre-sale disclosure document or the registration of franchise offerings. The relationship is governed by general contract and civil transaction rules, and by the Commercial Transactions Law issued under Federal Decree-Law No. 50 of 2022, depending on the nature of the transaction. Federal Law No. 3 of 2022 Regulating Commercial Agencies may apply if the arrangement meets its requirements and falls within the registration regime; not every franchise is automatically a registered commercial agency.

Employment relationships, where within its scope, are governed by Federal Decree-Law No. 33 of 2021 Regulating Labour Relations, as amended, and its implementing regulations. Some financial free zones, such as the Dubai International Financial Centre and Abu Dhabi Global Market, have their own employment regimes. Ask which regime applies to your business, and do not treat the franchise agreement as a substitute for reviewing local employment obligations.

2. Ask for an operating model that explains staffing levels

Do not settle for a phrase such as ‘a team appropriate to the size of the business’. Ask for a schedule setting out the roles required at opening, staffing levels for each shift, and when an additional supervisor or full-time manager must be appointed. Distinguish mandatory minimums from operational recommendations: the difference affects both your budget and your freedom to make decisions.

Gather the following information before signing:

• Assumed opening hours, peak periods, and arrangements for covering breaks and leave.
• The qualifications and experience required for each role, and any certifications required for the activity.
• Roles that can be combined, and duties that require a dedicated employee.
• Requirements for the owner to be personally present, and whether a manager can be appointed in their place.
• Circumstances in which staffing levels may be reduced when demand falls without compromising quality.

Check the schedule with existing franchisees whose operating model is similar to yours. Ask about actual staffing levels, not just those stated in the sales proposal, and about roles they had to add after opening. This comparison helps test whether the model suits the local market, without treating other franchisees’ experiences as a guarantee of your own results.

3. Calculate team costs beyond salaries

Build a budget that separates start-up costs from recurring operating costs. Start-up costs may include recruitment, work permit and residency procedures where applicable, required medical checks, uniforms and pre-opening salaries. Recurring costs include salaries, benefits, required insurance, absence cover and overtime in accordance with the applicable rules.

Also include future obligations, such as end-of-service benefits or the applicable statutory alternative, and the cost of replacing a key employee. These are not all monthly payments, but they affect the cash available to the business. Ask your accountant to distinguish accounting expenses from cash payments so that your cash position does not appear stronger than it really is.

Test three scenarios without relying on general percentage assumptions: normal operations, a delayed opening after staff have started work, and the manager leaving during a busy period. In each scenario, calculate how long you will need to cover salaries, the cost of replacement cover and the impact on debt servicing if the business is financed. If the business cannot remain viable when one person is absent, the problem lies in the staffing structure, not just the financing.

4. Set limits on manager approval and replacement requests

The franchisor may require approval of the manager or a pass in a specified assessment. Negotiate written criteria, a response deadline, clear grounds for rejection and a reassessment process. Ask for permission to appoint a suitably qualified temporary manager in the event of resignation or illness, rather than leaving the outlet in breach of contract because of an unexpected vacancy.

If the agreement allows the franchisor to request that an employee be removed from brand-related duties, distinguish this from terminating their employment. Any employment action should remain subject to the law, the employee’s contract and the required procedures, rather than being an automatic response to commercial instructions.

Also specify who pays for reassessment, sending a replacement or using a temporary manager supplied by the franchisor. Do not accept the phrase ‘at the franchisee’s expense’ without an explanation of how costs will be calculated and approved in advance. Ask for a realistic period to find a replacement, with separate arrangements for urgent safety-related situations.

5. Make staffing obligations clear before buying

Attach to the agreement a schedule of mandatory roles, manager approval criteria, replacement procedures and agreed costs. Also establish a channel through which the franchisor can raise concerns with your management team, so that employees do not receive conflicting instructions from two parties. These arrangements protect brand quality while clarifying day-to-day responsibilities.

Practical takeaway: Before buying a franchise, ask for a staffing plan you can cost, written limits on the franchisor’s involvement and a cover plan for key roles. Review them with an employment specialist and an accountant: the right brand needs a team you can afford and manage lawfully.