Defining Your Franchise Outlet Format in the UAE Before Signing

Your business may thrive as a full-service restaurant, only for an investor to ask to operate the brand from a delivery-only kitchen or a shopping centre kiosk. This may seem like a straightforward expansion, but it could change the customer experience, equipment requirements and services you can support. Before granting a franchise in the UAE, define precisely which outlet format you are offering. Clarity helps build a franchise network whose members understand what they are entitled to operate and what requires a new agreement.

Why is the outlet format part of the rights granted?

An outlet format is more than a physical layout. It is an interconnected set of products, services, delivery methods and operating resources. A restaurant that welcomes customers differs from a kitchen preparing orders for delivery, even if both use the same brand and menu. Each format may require different equipment, training, packaging and ordering systems.

The draft restaurant franchise agreement published by the Ministry of Economy and Tourism illustrates this in practice: it permits the opening and operation of one restaurant outlet at a fixed location, and includes both the franchise grant and a licence to use the associated intellectual property. This distinction matters because it does not automatically confer the right to set up temporary outlets, operate mobile sales vehicles or run additional kitchens under the brand.

The draft is a contract template, not legislation making its terms compulsory for all franchise agreements. Use its approach to defining the scope of the grant, but do not copy its outlet description if your business is different. First ask: what operating unit can I genuinely hand over to an independent investor and support?

Create a clear profile for each format you intend to offer

Write a brief format profile before preparing your commercial proposal. Avoid relying on phrases such as ‘approved branch’ or ‘small-format outlet’, which each party may interpret differently. Make the profile a practical reference covering:

• Outlet type: a dine-in restaurant, kiosk, shop or delivery-only kitchen.
• Services included: dining on site, collection or delivery, as specified for the format.
• Core products: what must be available and what is excluded because of space or equipment constraints.
• Required facilities: preparation, storage and customer service areas, along with essential equipment.
• Operating limits: whether the format permits production for another outlet or preparation of catering orders for off-site events.
• Available support: training, operating materials and technical assistance specific to this format.

Next, compare the profile with your existing operation. If your current branch relies on customer seating and table service, do not assume that removing those elements creates a delivery-ready format. Product quality may change in transit, packaging may become central to the experience, or a different workflow may be needed.

Clearly classify the proposed format as ready to franchise, requiring development or currently unavailable. This prevents the sales team from making operational promises that management has not yet approved.

Turn the profile into a workable contractual scope

The franchise agreement should specify the permitted format, the number of outlets covered and whether operations are tied to a fixed location. The format profile and functional layout can be attached as a description of what the parties are agreeing to, rather than simply as marketing materials.

In particular, distinguish between an additional sales channel and an additional operating unit. Accepting a delivery order through the approved kitchen is not necessarily equivalent to setting up another kitchen to fulfil orders. Similarly, selling an outlet’s products at a temporary event differs from operating a permanent sales point. Set out the appropriate provisions for each situation rather than relying on a general clause permitting ‘all sales methods’.

The UAE has no comprehensive federal law specifically governing franchising, nor a general federal disclosure regime dedicated to all franchise agreements. The relationship is subject to the general contract rules under the Civil Transactions Law and relevant commercial legislation. Federal Decree-Law No. 36 of 2021 on Trademarks governs trademark rights and licensing. Federal Law No. 3 of 2022 Regulating Commercial Agencies may apply if the relationship meets its conditions and falls within its scope; it should not be assumed to apply automatically to every franchise.

Nor does describing the format in the contract remove the need for the appropriate economic licence. The Ministry explains that the nature of the activity determines the type of licence required, and that initial approval is not permission to begin operating. Check that the format meets the requirements of the relevant emirate, and do not treat the franchisor’s approval as a substitute for approval from the competent authority.

Establish a process for changing the format rather than relying on verbal approvals

A franchisee may later wish to convert a shop into a collection point, add centralised production or operate a temporary outlet. Create a standard change request that explains the proposal, new services, equipment, impact on the customer experience and support required.

Specify who reviews the request, what information is needed to reach a decision and when a contractual addendum is required. If the change entails additional design, training or support costs, explain how these will be approved before implementation. Do not allow acceptance of an idea in a brief message to be interpreted as unrestricted permission to operate in any format.

Keep an updated profile for each outlet showing its approved format, authorised changes and their effective dates. Inform support teams of these details so that they neither require a small outlet to provide services outside its agreed format nor support an activity that has not been approved.

Practical takeaway: Before offering a franchise, complete one sentence precisely: ‘We grant the right to operate this format, with these services and within these limits.’ If the answer involves guesswork, settle the outlet’s scope before negotiations begin.