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.

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