Dubai Chamber working on franchising law in UAE
While there is no law for franchising in the UAE, Dubai Chamber is collecting efforts with the legal firms in the emirates to put down the right legislations to protect this business in the UAE.
Business owners and legal profession describe this situation as not ideal pointing to the risk and main difficulties they face while dealing with this business segment.
Unlike other jurisdictions like the US and Europe, there is no standalone franchise law in the UAE, said Carine Souaiby, Head of Corporate & Commercial, Abu Dhabi Office of Habib Al Mulla.
"There are also no provi- sions in the current legislative framework that specifically deal with the concept of a franchise business," she added,
Aiming to ease businesses and protect brands owners and investors, Dubai Chamber of Commerce and Industry organised a workshop with the participation of leading legal firms to develop franchising law. Pointing to the unavailability of franchising law in most of the countries in the region, Carine added that despite the popularity of franchise businesses in the region, many Arab countries still don't have a law dedicated to regulating franchise agreements."
From a legal perspective, the absence of specific provisions governing the franchise concept, franchise agreements in the UAE are subject to civil and commercial laws, namely the Commercial Agencies Law, the Commercial Transactions Law and the Civil Transactions Law.
Certain aspects of a franchise agreement may also be governed by the UAE intellectual property laws if the main elements of the agreement involve the transfer know how and intellectual property rights such as trademarks, logos, business processes, she remarked.
"This situation is not ideal, given that there are substantial differences between a franchise and an agency, evidenced by the definitions in each agreement. A franchise agreement is essentially defined as a contractual relationship where the franchisor allows a franchisee to use its trade name, trade mark, brand, logo and know how while exercising control over the franchisee and providing ongoing training and assistance to them, in return for financial investment by the franchisee, " Carine said.
Despite the fact the flow of franchising into the UAE has achieved a drastic leap between 2000 and 2013, this business is still in the grey zone, said Grace Milan, department manager of group legal of Allied Enterprises, Chalhoub which is running the business of over 30 international high end trade marks.