UAE AND FRANCHISING SECTOR

Updated: Jan 23

In October 2017, the Abu Dhabi Chamber of Commerce and Industry established the Emirates Association for Franchise Development in a bid to boost franchising and also offer franchisers the opportunity to look at new promising sectors beyond the traditional Food and Beverage sector (i.e. healthcare, household equipment, banking, pet services, play care, etc.). The Abu Dhabi Chamber started free-of-charge awareness workshops for franchisees as of July 2018. It holds those workshops periodically for Emiratis looking to invest in international franchises.


Initially, only UAE nationals or corporations wholly owned by UAE nationals or those with a UAE partner or sponsor were permitted to carry out operations. The government is trying to attract investors, who can now establish their businesses in the Emirates, without the need to have an Emirati partner or sponsor.


Moreover, the UAE Government issued a list of company types which are not allowed to work with 100 insurance without any local partner. The items are as under.

  • oil exploration and production

  • investigation, security

  • military, banking and financing activities

  • insurance

  • pilgrimage and umrah services

  • certain recruitment activities

  • water and electricity provision

  • fishing and related services

  • post, telecommunication and other audio-visual services

  • road and air transport

  • printing and publishing

  • commercial agency

  • medical retail (including pharmacies)

  • blood banks, quarantines and venom/poison banks

  • from the key provisions that are normally incorporated into franchising agreements, companies should pay attention to the period, area specification, third-party transfer rule, dispute resolution mechanisms, and termination mechanisms. Companies should ensure agreements adequately protect intellectual property (IP). Besides, companies must be sure to understand and pay special attention to Islamic dietary laws (halal meat/cosmetic products, prohibition of pork and alcohol content, etc.) as well as local dress and customs.

  • companies must be aware of relevant trade barriers, such as the Arab League Boycott of Israel which bans any goods originating from Israel. A partner could potentially also request the company to sign a declaration that it has not/will not trade with Israel however Section 999 of the U.S. Internal Revenue Code makes it unlawful for American companies to comply with such agreements.

  • UAE has no specific laws specifically governing franchising. As a result, general contract and commercial law apply to franchise agreements in the UAE. Besides, Sharia law applies to commercial transactions. All franchise agreements must be registered before a UAE court


Agency Law to apply, the following must be considered:

  • The agent must be a UAE national or a company wholly owned by UAE nationals

  • The relationship must be exclusive

  • The relationship between the agent and principal must be registered with the UAE Ministry of Economy


Helpful Tips for New-to-Market Franchisors:

  • Conduct thorough due diligence to select the proper franchisee

  • Understand the UAE Commercial Agencies Law and other relevant laws

  • Consult with a local legal franchise expert

  • Carefully draft the franchise contract and operations manual for the franchisee specifying the way the franchise is to be operated

  • Ensure the franchise agreement is prepared by a legal franchise expert, explicitly spells out the terms and operations of the franchise, and clearly states the rights and duties of the franchisor as well as the franchisee for further details call at +97126399198 or mail us at info@melf.ae or visit www.mealc.org

  • Take steps to protect IP by registering it with the Ministry of Economy, e.g., logos, trademarks, and business processes



Composed and Search by: Sheher Bano


Source: https://www.fad.ae/en/aboutfad/pages/AboutUs.aspx

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