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Franchising

STA's Franchise capabilities rely on the extensive corporate, commercial, transactional, and litigation experience of its seasoned team of lawyers in Dubai and across vital global jurisdictions. Our team advises and counsels domestic and international franchisors, distributors and manufacturers in crucial aspects of franchising, structuring of franchise network(s), and distribution.

STA's skilled Franchise team within our global Commercial Law Practice includes lawyers who have expertly advised significant brands and franchise parties across several industry verticals. Our multidisciplinary team has substantial experience in advising companies in a wide range of industries including retail, fitness, education, hospitality,  restaurants, cafes and food, and beverage, automotive industry, fashion, technology besides other sectors. We represent clients that have adopted franchising as a means of distribution across the entire spectrum of businesses, from entrepreneurs and startup companies that are establishing new programs to the largest manufacturers and distributors.

Our team of dedicated franchise lawyers specialized in managing and sealing franchise arrangements, structuring franchise programs (including vetting of disclosure documents), compliance, co-branding, intellectual property and litigation services. 

Which franchise agreements grant parties the right to use a trademark or trade name for the marketing of a good or service. Our lawyers understand the specific challenges facing those who engage in franchise projects in this part of the world such as agency laws, risk management, and quality control. Our team is proficient in the incorporation of all types of business entities, ranging from sole establishments to partnerships, as well as Limited Liability Companies, and public organizations and to free zone businesses.

We encounter many sights of famous international brands, namely clothing brands, restaurants, coffee shops, hotels, food, and beverage companies. It is needless to say that we live in an age where the trademarks of international businesses are omnipresent. Given that Dubai is one of the fastest growing investment destinations in the world, an increasing number of F&B, Retail and SMEs are looking to establish their presence there. The characterization of United Arab Emirates is as a vibrant business environment, a multicultural population, a high customer purchasing power, and a steady stream of tourists. These aspects have rendered the country a fertile ground for franchising.

The franchise market in the UAE has proved to be advantageous for franchisors who want to test their products or services on a wide array of clients. For many businesses, franchising is the most profitable path to grow, especially in the Middle East and North African region. This profitability is because franchising presents corporates with a way of achieving successful international growth without the need for either substantial capital investment or a sizeable managerial infrastructure. Setting up the franchise of a successful brand is a productive activity, which can benefit an entrepreneur in the following ways: immediate brand recognition, support and directions from the franchisor, and the freedom to manage one's own business. STA's lawyers, many of whom are bilingual English and Arabic speakers, work with our global and unrivaled network of franchising experts, to assist persons in the following challenges:
 

  • Negotiation of Franchise Agreements
  • Tax Structuring
  • Due Diligence 
  • Franchise System Expansion
  • Unit Franchising
  • Area Development
  • Commercial Agency Laws
  • IP Protection
  • Dispute Resolution
  • Risk mitigation
  • Master Franchising
  • Area Directorships
  • Competition Legislation
  • Import/Export
  • Domestic franchising
  • Legal Compliance
  • Licensing and distributorships 

 

The full breadth of issues that arise in franchising has led to the emergence of franchise law as a distinct specialty, but it also draws from numerous practice areas including contracts, securities, trademarks and copyright, advertising, fraud and misrepresentation, antitrust, employment, and dispute resolution. No legislation explicitly focuses on franchising in the UAE. The civil and commercial law in the UAE governs franchise agreements, the Commercial Agency Law, Commercial Transaction Law and Civil Transactions Law.

A franchise agreement must meet the following conditions:

  •  The franchisee must be a UAE national or a company wholly owned by UAE nationals
  •  The franchise agreement must grant exclusivity over all or parts of the UAE
  •  The relationship between the agent and the principal must be registered, and the franchise agreement notarized

A valid franchise agreement, registered with the Ministry of Economy, will provide the franchise distributor with the following rights:

  • The franchisee may block parallel imports by informing the UAE Federal Customs Authority of the import of goods covered by the registered Franchise Agreement.
  • The franchise agreement is difficult to terminate by the franchisor.  There must be the very careful drafting of the termination clauses.

As our client, you will benefit from STA’s global network and our local knowledge, in your franchising projects on various matters, including franchise and distribution formation and structuring, regulatory compliance, real estate, supply chain management, franchise relations, employment, tax, licensing, product marketing and sales, and customer data management.

We draft the required documents that will be the foundation of a franchise system, namely the franchise disclosure document, and the franchise agreement. Our team of franchise lawyers also draft the contracts that go with the FDD and the franchise agreement: guarantees, confidentiality agreements,  non-compete agreements, expansion agreements and liability protection.

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