What is the legal definition of a franchise?
In this article we shall limit our reply with regards to the UAE law but not in respect of the Dubai International Financial Centre or Abu Dhabi Global Markets law.
There is no specific legal definition of franchise in the UAE law, however, franchise is commonly used to refer to a grant of the right to operate and share in the profits of a business or sell goods or services under a brand or chain name. Additionally, franchise may mean the right granted to a person to operate a store or sell goods or services under a franchise agreement. The owner (the franchisor) will license outlets to others (the franchisees) to operate using business concepts, property, trademarks and tradenames owned by the franchisor.
What laws regulate the offer and sale of franchises?
The UAE has no specific laws specifically governing franchising. As a result, certain contracts and commercial law are applicable to franchise agreements in the UAE. In particular, the articles found in the commercial agency, distribution and Intellectual Property (IP) laws/sections of the law would commonly be referred to when resolving a franchise dispute. There are several laws which can apply to franchising relationships including the following:
- Federal Law No. 18 of 1981 on the Organization of Commercial Agencies (as amended by Law No. 14 of 1998) and Law No. 13 of 2006.
- Federal Law No. 18 of 1981 on Organising Commercial Agencies as amended.
- Federal Law No. 5 of 1985 on Civil Transactions.
- Federal Law No. 18 of 1993 on Commercial Transactions.
- UAE intellectual property laws for trademarks, copyright and patents.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.