Staff Responsibilities Before Granting a Franchise in the UAE

When an established UAE business adopts a franchise model, product specifications and outlet fit-out requirements are relatively straightforward to replicate. Staff management, however, needs clearer boundaries. Who signs employment contracts? Who approves leave and pays salaries? Before welcoming your first franchisee, establish a system that ensures a consistent customer experience without confusing the franchisor’s authority with the employer’s responsibilities. This clarity protects relationships across the franchise network and prevents operational support from turning into unplanned day-to-day management.

Separate brand standards from employer responsibilities

In the usual model, where a franchisee operates its outlet through an independent entity, that entity is the employer of its staff. It handles recruitment, employment contracts, wages, working hours, leave and disciplinary procedures in accordance with applicable legislation. The franchisor, meanwhile, sets the service, competence, appearance and safety requirements associated with its operating system.

The UAE has no standalone federal franchise law, nor a general federal regime requiring a franchise disclosure document or a uniform pre-signing disclosure period. The relationship is governed by general contract and commercial transaction rules, as well as trademark and competition legislation. Federal Law No. 3 of 2022 on the Regulation of Commercial Agencies may also apply where the relationship qualifies as a registered commercial agency.

Employment relationships in private-sector establishments subject to the federal regime are governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, its amendments and its implementing regulations. Check which regime applies to the establishment’s location: the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) have their own employment regimes. A franchise agreement does not replace employment contracts or release an employer from its legal obligations.

Do not, therefore, rely solely on a statement that ‘the franchisee is responsible for its staff’. Review how the business actually operates. If the franchisor’s team sets shifts, approves leave and imposes disciplinary sanctions directly, practice contradicts the separation your documents seek to establish. That calls for a legal and operational review.

Create a responsibility matrix before drafting contract clauses

Start with a list of staffing decisions, then identify who implements and approves each decision, who bears the cost and who keeps the records. Avoid placing employees in a position where they receive conflicting instructions from the outlet manager and the brand supervisor.

The matrix could allocate responsibilities as follows:

• Staff selection: The franchisor defines the competencies required for roles that affect the customer experience; the franchisee recruits staff and checks that legal requirements are met.
• Employment contracts and permits: The employer handles these through the applicable procedures. The franchisor’s approval of a candidate is not a substitute.
• Rotas and leave: The franchisee manages these while meeting agreed service levels and complying with legal limits on working hours and rest periods.
• Assessing compliance with brand standards: The franchisor records observations and sends them to a designated contact at the franchisee, rather than imposing disciplinary sanctions on employees.
• Addressing poor performance: The franchisor requests a corrective action plan; the employer takes and documents lawful employment action.

If you require approval of the outlet manager, specify objective criteria, a reassessment process and an interim arrangement if the position becomes vacant. Avoid giving yourself unrestricted authority to demand the dismissal of any employee. Failure to meet an operating standard does not automatically constitute a lawful ground for terminating an employment contract.

Test staffing costs without relying on the founder’s intervention

Before marketing the franchise, observe how your outlet operates when the founder does not step in to cover absences or resolve every problem. The aim is not to retest the entire outlet model, but to establish whether the allocation of staffing responsibilities is workable for an independent employer.

Identify the roles needed on each shift, the essential skills and the plan for covering leave and absences. Your cost estimate should include wages and benefit entitlements, recruitment, permits and insurance where required, overtime, provisions for statutory entitlements, and the cost of replacement staff. Do not present an employee’s salary alone as the full cost of employing them.

Test practical scenarios: the manager resigns, a key employee is absent, or demand rises unexpectedly. Ask who takes action, what authority they have and who pays. If the answer is always ‘the franchisor sends someone’, you need a clearly defined support arrangement, not a verbal promise.

When sending the franchisor’s staff to a franchisee’s outlet, check in advance that the working arrangement is lawful and that the necessary permits are in place. Document the assignment’s duration, supervision, costs and safety responsibilities. A commercial agreement between the parties is not, on its own, enough to override employment requirements.

Turn the allocation into an enforceable contract and workable procedures

The franchise agreement should identify the party responsible for recruitment, the limits of the franchisor’s role and the process for reporting breaches of operating standards. Put details that may change, such as escalation forms and competency lists, in an operational annex consistent with the agreement. Do not use manual updates to impose substantial new obligations outside the agreed contractual mechanism.

Also establish a procedure for urgent incidents: who protects staff and customers, who stops unsafe activities, and who contacts the relevant authorities when necessary. Limit access to employee data to what is needed for the relevant purpose, rather than routinely requesting complete personnel files.

Before signing, ask the franchisee to explain how they would handle the manager’s absence or an employee’s breach of a service standard. Their answer will reveal whether they understand their independent responsibilities or expect the franchisor to manage their team for them.

Practical takeaway: Prepare a responsibility matrix, a realistic staffing budget and a written escalation procedure. Then, with specialist advice, check that these align with the franchise agreement and employment contracts. Consistent standards do not require everyone’s staff to be managed from a single office.