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Buying a franchise can give an entrepreneur access to an established brand, operating model and customer base, but the apparent strength of a brand does not by itself establish the strength of the investment.

For a prospective franchisee in the UAE, legal due diligence should begin well before signing the franchise agreement or paying a substantial franchise fee. The exercise is intended to establish who actually owns the business and brand, whether the franchisor has the authority to grant the proposed rights, how the existing network is performing and whether the contractual obligations are commercially sustainable.

The UAE does not have a single federal statute dedicated exclusively to franchising. Franchise relationships can instead be affected by general contract and commercial laws, intellectual-property legislation and, depending on the structure, the Federal Law No. 3 of 2022 on the Regulation of Commercial Agencies. The latter expressly includes arrangements involving franchises within its definition of commercial agency, although not every franchise relationship will necessarily constitute a registered commercial agency. That makes a structured legal review particularly important for a buyer.

Start With The Franchisor

The first question should be simple: who exactly is selling the franchise? A prospective franchisee should obtain the franchisor’s incorporation documents, constitutional documents, trade licence details, ownership information and evidence of authority to enter into the proposed arrangement. If the agreement is being offered by a UAE subsidiary, distributor or master franchisee rather than the brand owner itself, the legal relationship between those entities should also be examined.

The buyer should establish whether the contracting entity actually owns the relevant franchise rights or has been authorised to sub-license them. A master franchise arrangement, for example, may give one company rights over a territory without making that company the owner of the underlying trademarks or business system.

The corporate structure should therefore be mapped from the ultimate brand owner through any regional holding company, master franchisee and UAE operating entity. Any mismatch between the entity making the offer and the entity that owns the intellectual property should be investigated before money changes hands.

Examine The Corporate And Financial Position

A franchise may carry a well-known name but still depend on a financially weak franchisor or an intermediary with limited resources.

The buyer should request available financial statements, audited accounts, management accounts and information about material debts, financing arrangements and related-party transactions. The review should consider whether the franchisor generates sustainable revenue from its underlying business or is heavily dependent on franchise fees, royalties and payments from new franchisees.

Financial due diligence should also extend to the franchisee's projected investment. Initial franchise fees are only one component. Fit-out costs, equipment, rent, staffing, training, technology charges, marketing contributions, royalty payments, inventory requirements and renewal fees can materially affect the economics of the business.

The buyer should compare the franchisor's financial projections with independently prepared assumptions rather than treating projections in the franchise proposal as guaranteed outcomes.

Investigate Litigation And Regulatory History

Litigation can reveal problems that are not apparent from promotional material. The due-diligence process should identify current and material past litigation involving the franchisor, its principal subsidiaries, the relevant brand owner and, where appropriate, the UAE master franchisee. The review should cover commercial disputes, intellectual-property claims, employment cases, regulatory proceedings, insolvency-related matters and disputes with franchisees.

The buyer should pay particular attention to repeated disputes involving similar allegations. Multiple franchisee disputes over termination, royalties, territory, supply arrangements or alleged breaches of the operating system may indicate contractual or operational issues that deserve further investigation.

The same review should consider regulatory compliance in the UAE. The relevant business activity must be properly licensed, and the proposed franchise structure must be compatible with the licensing requirements of the emirate and, where applicable, the relevant free zone. UAE government guidance distinguishes between mainland and free-zone business arrangements and provides official routes for verifying business licences.

Verify The Intellectual Property

For many franchise businesses, intellectual property is the asset being licensed to the franchisee. The buyer should verify ownership and registration of the principal trademarks, logos, trade names, copyrighted materials, domain names, proprietary software, operating manuals and other important intellectual-property rights. Where the franchisor is not the registered owner, the buyer should establish the legal basis on which the franchisor is entitled to license those rights.

Trademark protection deserves particular attention. The UAE's trademark framework is governed by Federal Decree-Law No. 36 of 2021, with executive regulations setting out registration procedures and related requirements.

The due-diligence exercise should therefore establish whether the brand's principal marks are registered in the UAE, whether registrations cover the relevant goods or services and whether there are pending objections, cancellations or disputes.

The franchise agreement should also clearly identify what intellectual property the franchisee is permitted to use, for how long, in which territory and under what conditions. Rights that disappear immediately or become unusable following termination can have major consequences for the value of the business.

Review The Existing Franchise Network

Existing franchisees can provide information that is difficult to obtain from the franchisor. A prospective buyer should ask for details of current and former franchisees in the UAE and, where relevant, comparable markets. The review should consider how long franchisees have operated, how many have closed, whether agreements have been renewed and whether franchisees have faced disputes with the franchisor.

Where possible, the buyer should speak directly with several existing franchisees rather than relying exclusively on references selected by the franchisor.

Questions should cover the accuracy of financial projections, the quality of training and support, supply-chain arrangements, marketing obligations, technology systems, royalty payments and the practical enforcement of contractual restrictions.

Former franchisees can be particularly informative. A pattern of early exits, non-renewals or disputes may warrant further investigation before the buyer proceeds.

Check Licences And Sector Requirements

A franchise agreement does not itself authorise the franchisee to conduct a regulated business activity. The proposed UAE entity must obtain the appropriate commercial licence and any sector-specific approvals required for its activities. Depending on the business, additional regulatory requirements may apply to areas such as food, healthcare, education, tourism, financial services, cosmetics or other regulated sectors.

The buyer should therefore determine in advance which authority will issue the licence, whether the proposed activity is permitted under the chosen corporate structure and whether premises, professional qualifications, health approvals or other permits are required.

This should also be coordinated with the franchise agreement. A franchise term that begins before the required regulatory approvals are obtained could expose the buyer to unnecessary costs and contractual deadlines.

Read Every Commercial Term

The franchise agreement should be reviewed as a commercial document as well as a legal contract. The buyer should identify the initial franchise fee, royalties, advertising contributions, technology charges, purchasing obligations, minimum performance requirements and other recurring payments. It is also important to establish whether the franchisor can change fees, suppliers, technology systems or operating requirements unilaterally.

Territory is another critical issue. The agreement should clearly state whether the franchisee receives an exclusive, protected or non-exclusive territory and whether the franchisor can operate company-owned outlets, appoint additional franchisees or sell through online channels within that territory.

Renewal provisions should be examined carefully, including renewal fees, performance conditions, refurbishment requirements and any obligation to sign the franchisor's then-current form of agreement.

Termination provisions deserve equal attention. The buyer should understand what constitutes a default, how much time is available to remedy a breach and what happens to the business, inventory, premises, employees, customer data and intellectual property after termination.

Understand The Commercial Agency Question

The parties should establish whether the proposed arrangement could fall within the UAE Commercial Agencies Law and whether registration as a commercial agency is contemplated.

Federal Law No. 3 of 2022 defines commercial agency broadly and includes representation under arrangements involving agency, distribution, sale, offer, franchise or provision of commodities or services for commission or profit. Whether a particular franchise arrangement falls within the law depends on its structure and circumstances.

This issue should not be left to assumption. Registration can have significant legal consequences, while an ordinary franchise agreement may operate primarily through its contractual terms and the wider UAE legal framework.

A UAE lawyer should therefore assess the proposed structure, particularly where the arrangement involves a master franchise, distribution rights or exclusive territorial rights.

Check Governing Law And Dispute Resolution

The dispute-resolution clause can become important long after the franchise has started operating.

The buyer should identify the governing law, jurisdiction and dispute-resolution mechanism and understand whether disputes are to be resolved through UAE courts or arbitration. If arbitration is selected, the agreement should specify the institution or mechanism, seat, language and applicable rules.

Cross-border franchise agreements require particular attention because the franchisor, brand owner, intellectual-property owner and franchisee may be located in different jurisdictions.

The buyer should also review provisions dealing with interim relief, enforcement, legal costs and the treatment of confidential information during a dispute.

Do Not Treat Due Diligence As A Formality

The purpose of franchise due diligence is not simply to confirm that a brand exists. It is to determine whether the person selling the rights has the authority to do so, whether the underlying business and intellectual property are sound, whether the proposed operation is properly licensed and whether the contractual risk is acceptable to the prospective franchisee.

A buyer should obtain the underlying documents rather than relying solely on presentations, brochures or verbal assurances. Material representations about territory, revenue, exclusivity, support, costs or intellectual-property rights should, where appropriate, be reflected in the final contractual documents.

In a UAE franchise transaction, the absence of a standalone franchise statute makes the contractual and structural review especially important. A careful buyer should complete legal, financial and commercial due diligence before signing or paying significant non-refundable amounts, and should have the final franchise agreement and related documents reviewed by UAE counsel familiar with franchising and the relevant sector.

A company's business activities may evolve as its operations, commercial objectives and market focus change. Where a UAE company intends to undertake an activity that is not covered by its existing licence, it should first assess the applicable licensing requirements and obtain the necessary approvals before commencing the new activity. The process will depend on the company's licensing jurisdiction, the nature of the proposed activity and whether additional regulatory approvals are required. Businesses should also consider whether the change requires amendments to their corporate records or whether a separate entity or licensing structure may be more appropriate.

Identifying The Appropriate Business Activity

A business activity is a fundamental part of a company's licensing framework in the UAE. The Ministry of Economy and Tourism states that there are more than 2,000 economic activities available for licensing, with the activity determining the type of licence required. Businesses should therefore identify the specific economic activity that corresponds to their proposed operations rather than relying only on a general description of the intended business.

This is particularly relevant where a company is expanding its services or entering a new sector. An activity that appears commercially similar to an existing activity may nevertheless have different licensing requirements. Before applying for an amendment, the company should establish how the proposed operations are classified by the relevant licensing authority and whether the activity can be added to the existing licence.

The applicable authority will depend on where the company is established. For mainland companies, licensing is handled by the relevant economic department or other competent authority in the emirate. Free zone companies are subject to the licensing requirements of the relevant free zone authority. The UAE's official business guidance directs businesses to the relevant emirate-level authority for information on incorporation and licensing requirements.

The company should also determine whether the proposed activity can be added to its existing licence. Depending on the rules, the amendment may involve adding or removing an activity or making corresponding changes to registered information.

Mainland And Free Zone Considerations

The procedure for changing a business activity is not uniform across the UAE. Each licensing authority has its own procedures and requirements, and the activities available for licensing may differ between jurisdictions. Businesses should therefore rely on the rules and processes of the authority that issued, or will amend, the relevant licence.

For mainland companies, the business should check the requirements of the relevant emirate's licensing authority. The Ministry of Economy and Tourism identifies the departments of economic development and other competent authorities as the bodies through which mainland businesses complete licensing procedures. Process, documents and approvals can vary depending on the emirate and activity.

For free zone companies, the proposed activity must be assessed against the activities permitted by the relevant free zone. The company should also confirm whether the activity can be carried out under its existing licence category and whether the free zone requires additional documentation or approvals.

The distinction between the company's existing activity and the proposed activity is therefore important. A company should not assume that an existing licence automatically covers a new service simply because the activities are commercially related.

The company's legal form may also need to be considered. Depending on the proposed activity and the requirements of the relevant authority, an amendment to the existing structure may be possible, while in other circumstances a different licensing arrangement may be considered.

Additional Regulatory Approvals

Certain activities are subject to regulation beyond the ordinary licensing process. In such cases, obtaining an amendment to the commercial licence may not be the only requirement before the company can commence the proposed activity.

The Ministry of Economy and Tourism identifies various activities that require additional approvals from the relevant government authorities. For example, legal activities and legal consultancy require approval from the Ministry of Justice, while telecommunications activities are subject to approval from the Telecommunications and Digital Government Regulatory Authority. Other sectors, including certain transport, health, tourism and financial activities, may also require additional regulatory approvals.

Businesses should therefore establish whether the proposed activity falls within a regulated sector before submitting an application to amend their licence. The relevant authority may require an approval, permit or no-objection from the regulator responsible for that activity.

Activities with a strategic impact are subject to a separate regime. Under Cabinet Resolution No. 55 of 2021, a list of activities is designated as having a strategic impact and is subject to specific licensing controls. The Ministry of Economy and Tourism states that foreign participation in these activities may be subject to ownership percentages and other conditions determined by the relevant regulatory authority.

The additional approval process will depend on the particular activity. A company should therefore assess these requirements at the planning stage rather than commencing the new activity and addressing the regulatory position afterwards.

Corporate And Compliance Considerations

Changing a licensed activity can have implications beyond the trade licence itself. Businesses should review whether the proposed change requires corresponding amendments to their corporate documents or registered information.

The UAE Commercial Register framework, under Federal Decree-Law No. 37 of 2021, provides for commercial and economic registers covering traders and licensed economic activities, including updates and changes to registered information. Businesses should therefore consider whether a change to the licensed activity must also be reflected in the relevant registers.

The company's existing constitutional documents should also be reviewed where appropriate. Depending on the company's legal form and the nature of the proposed change, amendments to the company's Memorandum of Association or other corporate documents may be required.

Businesses should also ensure that their actual operations remain consistent with their licensed activities. Under Article 11 of the Commercial Companies Law, a company must obtain all the approvals and licences required to engage in its business activities before commencing business practice. This requirement is set out in Federal Decree-Law No. 32 of 2021 on Commercial Companies, which was amended by Federal Decree-Law No. 20 of 2025.

The position for free zone companies should be considered separately because their governing framework may differ. Official UAE guidance states that free zone businesses are governed by the relevant free zone authority and, generally, that the Commercial Companies Law does not apply where the free zone has its own special framework.

This makes the timing of the amendment important. A company should not treat the filing of an application to change its activity as equivalent to obtaining the required authorisation. The company should confirm that the relevant amendment and any additional regulatory approvals have been completed before commencing the new activity.

Changing An Activity Or Establishing A New Entity?

For some businesses, the question may not be limited to whether an activity can be added to an existing licence. It may also be necessary to consider whether the proposed business should operate through the existing company or through a separate entity.

There is no single approach that applies to every business. The appropriate structure will depend on factors including the proposed activity, the company's existing legal form, the licensing jurisdiction and any regulatory requirements applicable to the new business.

Where the proposed activity is substantially different, the relevant authority's requirements should be reviewed before deciding how to proceed. A separate entity may also need to be considered where the proposed activity cannot be accommodated under the existing licensing structure.

Businesses should therefore assess the regulatory position before making structural decisions. Confirming the correct activity classification, the availability of the activity under the relevant licence and any additional approval requirements can help determine whether an amendment to the existing company or a separate licensing structure is appropriate.

Changing a business activity in the UAE should be approached primarily as a licensing and compliance matter, rather than simply an administrative amendment. By identifying the correct activity, confirming the requirements of the relevant licensing authority and addressing any additional regulatory approvals, businesses can ensure that their licensed activities remain aligned with their actual operations.

Your end-of-service gratuity can make up a significant part of your final financial settlement when you leave a job in the UAE. However, employers cannot simply deduct whatever amount they choose from it.

UAE Labour Law allows employers to make deductions from end-of-service benefits only in specific circumstances, including certain outstanding loans, disciplinary penalties, court-ordered debts and damage caused by an employee. Here is when a gratuity deduction is legally permitted and what workers can do if they believe money has been wrongly withheld.

When Is An Employer Legally Allowed To Deduct From Gratuity?

The right to deduct from an employee’s end-of-service gratuity is governed by Article 51(7) of Federal Decree-Law No. 33 of 2021 and Article 29 of Cabinet Resolution No. 1 of 2022, which sets out the specific circumstances in which a deduction is permitted.

Under Article 29(1) of the Executive Regulations, an employer may deduct from a worker’s end-of-service pay amounts due under the law or a court judgment, subject to the specified categories.

Loans or overpayments – amounts owed by the worker that are necessary for the repayment of loans, or amounts paid to the worker in excess of his or her entitlements.

Pension and insurance contribution shortfalls – repayment of amounts deducted for calculating the worker’s contributions to pensions and insurance, pursuant to applicable UAE legislation.

Disciplinary penalties – amounts deducted because of violations committed by the worker, subject to the list of penalties applicable at the establishment and approved by the Ministry of Human Resources and Emiratisation (MoHRE).

Court-ordered debts – debts owed pursuant to the execution of a court judgment against the worker.

Damage caused by the worker – amounts required to repair damage caused by the worker and attributed to his or her mistake or violation of the employer’s instructions, resulting in damage, destruction or loss of tools, machines, products or substances owned by the employer.

Where the amount owed results from a worker’s violation or damage attributed to the worker’s mistake, the employer must complete the prescribed procedures within three months from the date the amount became due, unless otherwise agreed.

Outside these specified categories, an employer does not have a general legal basis to deduct amounts from gratuity. Costs such as recruitment fees, visa or medical expenses, uniforms, or unexplained settlement deductions do not fall within the categories listed under Article 29 and therefore cannot simply be taken from an employee’s end-of-service benefits.

Are There Limits On How Much Can Be Deducted?

The UAE Labour Law does not impose one blanket percentage cap on deductions from gratuity in the same way that it regulates certain wage deductions during active employment. Instead, a gratuity deduction must fall within one of the categories specified in Article 29 and be supported by appropriate documentation.

The supporting evidence may include a loan agreement, payroll record, approved disciplinary regulations, court order or documentation establishing the damage and its connection to the employee’s mistake or violation. A deduction is not automatically lawful merely because the amount is small; it must have a recognised legal basis and appropriate supporting evidence.

It is also worth noting, separately, that banks may claim or freeze gratuity to recover outstanding personal loans or credit card debt. However, such action arises from the employee’s contractual relationship with the bank and is separate from the employer’s authority to make deductions under the UAE Labour Law.

What Can An Employee Do If They Believe A Deduction Was Wrongly Made?

If an employee believes that an employer has unlawfully deducted an amount from gratuity, there are several steps that can be taken to establish the basis of the deduction and challenge it where appropriate.

1. Request A Written Breakdown

Ask the employer in writing to specify exactly which Article 29 category the deduction falls under and to provide the supporting document, such as a loan agreement, disciplinary record or court order.

A lawful deduction should be traceable to one of the categories recognised under the Executive Regulations and supported by relevant documentation.

2. Avoid Signing An Unqualified Settlement

If the final settlement or gratuity calculation contains a deduction that is disputed, an employee should consider avoiding the signing of a release or settlement document without first recording the objection in writing. Signing an unqualified settlement may make it more difficult to challenge the deduction later, depending on the circumstances.

3. File A Complaint With MoHRE

For private-sector employees covered by the federal Labour Law, individual labour disputes, including disputes concerning gratuity deductions, are generally submitted to the Ministry of Human Resources and Emiratisation (MoHRE) for resolution.

MoHRE will initially seek to resolve the dispute amicably. Where the value of the claim does not exceed Dh50,000, the Ministry has authority to issue a decision on the dispute. Such a decision has the force of an executive instrument, subject to the procedures for challenging it before the competent Court of First Instance. Where the dispute cannot be resolved through the Ministry’s process, it may be referred to the competent court in accordance with Article 54.

4. Note The Time Limit

Under Article 54(9) of the UAE Labour Law, claims concerning rights arising under the Decree-Law cannot be considered after two years from the date the employment relationship ended. Employees should therefore avoid unnecessary delay when seeking to challenge a disputed gratuity deduction or pursue other employment-related entitlements.

5. Check Your Jurisdiction

Employees in free zones such as the DIFC or ADGM may fall under separate employment frameworks and should not automatically assume that the federal Labour Law or MoHRE complaint process applies to their employment relationship. The applicable rules and dispute-resolution procedure depend on the jurisdiction governing the employment contract.

Employees should therefore first establish which employment legislation applies before starting a claim, particularly where the employer operates in a financial free zone or another jurisdiction with its own employment regulations.

Buying a franchise can offer an investor access to an established brand, business model, operating system and support network, but the arrangement also involves significant financial and contractual commitments. The strength of a brand alone does not establish whether a particular franchise will be commercially viable for an individual investor.

For a prospective franchisee, the period before signing the franchise agreement is therefore a critical stage of due diligence. The investor should seek enough information to understand not only the initial investment, but also the continuing costs, restrictions, obligations and circumstances in which the relationship could end.

Disclosure requirements vary substantially between jurisdictions. In the United States, for example, the Federal Trade Commission's Franchise Rule requires franchisors to provide a Franchise Disclosure Document containing 23 specified categories of information, generally at least 14 days before a prospective franchisee signs or pays money to the franchisor or an affiliate.

The UAE follows a different approach. There is no standalone federal franchise statute imposing a US-style franchise disclosure document requirement on every franchise transaction. Franchise arrangements generally operate under the UAE's wider commercial and civil-law framework, although a franchise may in certain circumstances fall within the statutory commercial agency regime.

That makes contractual due diligence particularly important for a prospective franchisee considering a UAE-based opportunity.

Information About The Franchisor

The first area for investigation should be the franchisor itself. A prospective franchisee should request details of the legal entity offering the franchise, its ownership structure, trading history, principal place of business and experience in franchising.

Information should also be sought about the brand's development in the relevant market. How long has the business operated? How many franchised and company-owned outlets exist? How many have closed? Have franchise agreements been terminated, not renewed or transferred?

The distinction between company-owned and franchised outlets can be particularly important. A business may have performed strongly through outlets controlled directly by the franchisor while individual franchisees have experienced different results.

Prospective franchisees should therefore seek access, where reasonably available, to current and former franchisees. Speaking directly with operators can provide information about training, supplier relationships, marketing support, profitability, disputes, renewal practices and the practical application of contractual provisions.

The US disclosure regime expressly requires information concerning current and former franchisees, illustrating the importance of this type of evidence when assessing a franchise system.

Financial Information And Investment Costs

The financial side of a franchise should extend well beyond the headline franchise fee. A prospective franchisee should establish the total estimated investment required to open and operate the business.

This may include the initial franchise fee, premises costs, fit-out, equipment, technology, licences, professional fees, insurance, inventory, recruitment, training, marketing and working capital. In some businesses, the initial investment can be followed by substantial recurring expenditure on royalties, advertising, technology, supplies and mandatory upgrades.

The franchisee should ask the franchisor to explain the basis for any projected investment figures and identify assumptions that could materially change the final cost. Rent, construction costs, staffing expenses and licensing requirements can vary significantly between locations.

Financial performance information requires particular caution. If a franchisor presents projected revenue, profit, margins, payback periods or other financial results, the prospective franchisee should establish whether the figures relate to actual outlets, company-owned operations, franchisees or projections.

In jurisdictions with formal disclosure rules, financial performance representations are subject to specific requirements. The FTC, for example, requires earnings claims included in the franchise sales process to meet prescribed standards and requires substantiation to be available.

In other jurisdictions, the absence of a mandatory disclosure document does not make unsupported financial assumptions commercially safe. Investors should independently test the numbers rather than treating sales presentations as guaranteed returns.

Fees, Royalties And Other Payments

The prospective franchisee should obtain a complete schedule of payments before signing. This should identify every known initial and recurring charge and explain when each payment becomes due.

The list may include the initial franchise fee, royalties based on sales or other measures, advertising contributions, technology charges, training fees, renewal fees, transfer fees, audit charges and costs associated with mandatory suppliers or services.

The franchisee should also establish whether additional payments can be introduced during the contract term. A provision allowing the franchisor to impose new charges or modify existing arrangements may have a substantial effect on the economics of the business.

Supplier arrangements deserve particular attention. If the franchisee must purchase products, equipment or services from the franchisor or designated suppliers, the investor should understand how prices are determined and whether alternative suppliers can be used.

Territory And Competition

Territory provisions are another area where apparently simple language can have significant commercial consequences.

A prospective franchisee should establish precisely where the franchise may operate and whether the territory is exclusive, protected or merely allocated for administrative purposes. The agreement should also address the franchisor's rights to establish company-owned outlets, grant additional franchises, sell through digital channels or supply customers directly within or near the territory.

Online sales can create particular difficulties where a franchisee has invested in a physical location on the assumption that the territory provides meaningful protection. The contract should make clear how internet sales, delivery platforms, mobile services and other alternative channels affect territorial rights.

The franchisee should also understand restrictions on competing businesses. Non-compete clauses, confidentiality provisions and restrictions on ownership of other businesses can continue to affect the franchisee during and, in some circumstances, after the franchise relationship.

Operating Obligations And Brand Standards

A franchise is not simply a licence to use a brand. The franchisee normally agrees to operate according to prescribed standards.

Before signing, the investor should request the operations manual, or at least sufficient access to understand the principal operating requirements. These can cover premises, design, staffing, uniforms, products, suppliers, technology, accounting systems, marketing, opening hours, customer service and quality control.

The franchisee should identify which obligations are fixed and which can be changed by the franchisor during the term. A power allowing standards, systems or specifications to be changed can have significant financial consequences if the franchisee must fund the resulting upgrades.

Training and continuing support should also be examined. The agreement should state what training is provided, who pays for travel and accommodation where applicable, and what continuing operational, marketing and technical assistance the franchisor is required to provide.

Renewal, Transfer And Termination

The value of a franchise can depend heavily on what happens at the end of the initial term. Prospective franchisees should therefore examine renewal provisions before entering the agreement.

Questions should include whether renewal is automatic or subject to the franchisor's consent, whether a new agreement must be signed, whether the commercial terms can change substantially and whether a renewal fee applies.

Transfer rights are equally important. A franchisee may eventually want to sell the business, bring in an investor or transfer ownership to another company. The agreement may require franchisor approval, impose transfer fees or give the franchisor rights to acquire the business.

Termination provisions require particularly careful review. The franchisee should identify events that could result in immediate termination, those that provide an opportunity to remedy a breach, and the financial consequences of termination.

The agreement should also explain what happens to inventory, equipment, customer information, intellectual property, leases and outstanding payments after termination.

Intellectual Property And Confidential Information

The brand's trademarks, logos, trade names, copyrighted materials, business methods and confidential information are central assets in a franchise arrangement. The franchisee should establish exactly which intellectual property rights are being granted and for how long.

The agreement should distinguish between permission to use intellectual property during the franchise term and ownership of intellectual property. A franchisee should not assume that investment in local marketing, websites, social-media accounts or customer databases automatically creates ownership rights.

Confidentiality provisions should also be examined carefully, particularly where the franchisee receives access to recipes, processes, customer data, software, pricing information or other commercially sensitive material.

Governing Law And Dispute Resolution

Cross-border franchises require additional scrutiny because the agreement may select the law and courts of a jurisdiction different from the country where the franchise operates.

A prospective franchisee should understand which law governs the contract, where disputes must be resolved and whether arbitration is mandatory. The cost, location and procedure of dispute resolution can become important if a disagreement arises.

In the UAE, the legal position can also depend on whether the arrangement is registered as a commercial agency. A registered qualifying commercial agency may receive statutory protections that do not necessarily apply to an unregistered franchise arrangement.

This is one reason why the legal character of the proposed relationship should be established before the contract is signed rather than after a dispute develops.

Professional Advice Before Signing

A franchise agreement is usually drafted by the franchisor and may contain a substantial number of interconnected obligations. A prospective franchisee should therefore consider obtaining independent legal and financial advice before signing.

The lawyer's review should extend beyond simply identifying unusual clauses. It should examine the relationship between the franchise agreement, lease, guarantees, development obligations, intellectual property licences, supply arrangements and other documents that form part of the transaction.

A financial adviser or accountant can separately test the proposed investment, cash-flow assumptions, break-even point, working-capital requirements and sensitivity to changes in sales, rent, wages and other operating costs.

Professional advice is particularly important where the franchise involves a large investment, personal guarantees, long-term leases, substantial borrowing or cross-border contractual arrangements.

Disclosure Should Lead To Questions, Not Just A Signature

Disclosure is most useful when it allows a prospective franchisee to investigate the business before becoming contractually committed. Receiving documents is therefore only the beginning of the process.

The investor should compare the franchisor's representations with the proposed agreement and supporting financial information. Any discrepancy should be clarified in writing, and important commercial promises made during negotiations should not be left outside the final contractual documents.

The central question is not simply whether the franchisor has supplied information. It is whether the prospective franchisee has enough reliable information to understand what is being purchased, what it will cost, what restrictions will apply and what rights will remain if the relationship does not work as expected.

For investors entering franchise arrangements in jurisdictions without a comprehensive statutory disclosure regime, this process becomes even more significant. A carefully documented due-diligence exercise, supported by independent legal and financial advice, can help turn a heavily marketed business opportunity into a transaction whose commercial and legal risks are properly understood before the commitment is made.

Marriages between spouses of different nationalities are commonplace in the United Arab Emirates. A British national married to an Indian citizen, a French resident married to a Filipino, or a Lebanese expatriate married to a Russian — such families are the norm rather than the exception in Dubai and Abu Dhabi. Yet when one spouse dies, these families can confront a question of considerable legal complexity: which country’s law governs the inheritance of assets located in the UAE?

The answer is rarely intuitive. It can depend on the religion and nationality of the deceased, the nature and location of the assets, whether a will exists and where it was registered, and the interaction between UAE legislation and the conflict-of-laws rules of the relevant foreign jurisdictions. This article sets out the principal framework following the reforms introduced in recent years.

The Default Position Under UAE Law

Historically, inheritance in the UAE was governed primarily by the Personal Status Law, with succession based on Sharia principles in cases falling within that framework. Under the rules of fixed shares, an estate is distributed among prescribed heirs according to defined entitlements. A surviving wife, for example, may receive one-eighth where the deceased has an inheriting descendant, while parents, siblings and other relatives may receive defined shares depending on the circumstances. The current federal Personal Status Law, Federal Decree-Law No. 41 of 2024, retains detailed Sharia-based inheritance provisions, including fixed shares for spouses and other heirs.

For expatriate families accustomed to systems in which the surviving spouse may inherit most or all of an estate — as can occur under English intestacy rules or through different matrimonial-property regimes elsewhere — the operation of UAE succession rules can come as an unwelcome surprise, particularly if no effective estate-planning arrangements have been made. Bank accounts and other assets may also become subject to estate administration procedures after death, while questions concerning guardianship and the care of minor children may require separate consideration under the applicable legal framework.

The Choice Of Foreign Law

UAE law provides mechanisms under which non-UAE nationals can invoke their personal or home-country law in relevant family and succession matters. Under the current Personal Status Law, the federal framework applies to non-UAE citizens unless one of them insists on applying their own law, or another law has been agreed to be applied, where permitted by UAE legislation. This means that nationality and the applicable foreign law can be important factors in determining how a cross-border succession is handled.

At the same time, non-Muslim expatriates have access to separate civil-law mechanisms. Federal Decree-Law No. 41 of 2022 on Civil Personal Status established civil rules for non-Muslims within its scope, including succession provisions under which, in the absence of a will, 50 per cent of the estate passes to the surviving spouse and the remainder is divided equally among the children. Abu Dhabi also operates a civil wills and inheritance framework for non-Muslim foreigners.

The result is that forced-heirship principles are not necessarily the only route available to expatriate families. However, the protection of a particular succession arrangement is not automatic. The precise legal regime, the deceased’s status, the wording and validity of any will, and the nature of the assets must all be considered.

Mixed Nationalities: Whose Law Governs?

Where spouses hold different nationalities, an essential principle must be understood: succession is considered in relation to the deceased, rather than simply to the nationality of the couple as a unit. Each spouse’s estate is a separate succession and may therefore be governed by a different legal framework. In a marriage between a German and an Indian national, for example, the German spouse’s estate and the Indian spouse’s estate may be subject to different rules, depending on the applicable UAE and foreign laws. Indian succession law itself may involve different statutory regimes, including the Hindu Succession Act and the Indian Succession Act, depending on the circumstances.

Complexity can increase where the deceased’s home country applies its own conflict-of-laws rules. Some jurisdictions connect succession to nationality, while others give greater weight to domicile or habitual residence. Some legal systems also distinguish between movable and immovable property. A renvoi — where the foreign law referred to by the UAE rules refers the matter back to UAE law, or onward to another legal system — can therefore arise in genuinely cross-border estates.

Real Estate: The Special Case

Immovable property occupies a special position in succession law worldwide, and UAE property is no exception. Land and buildings are closely connected to the law and jurisdiction of the place where they are situated, making the treatment of UAE real estate a particularly important issue in cross-border estate planning. The extent to which a foreign-law election affects UAE property must therefore be considered alongside the applicable UAE legislation, the relevant emirate’s procedures and the nature of the will.

The practical significance is obvious. For many expatriate couples, the family home or an investment property in Dubai or Abu Dhabi represents the largest asset in the estate. Whether that property ultimately passes to the surviving spouse or is distributed among a wider class of heirs may depend on the applicable succession regime, the deceased’s will and the legal treatment of the property. These issues are better addressed during the planning stage than left to be resolved after death.

Wills: DIFC, Abu Dhabi And Local Registration

The UAE offers several mechanisms through which expatriates can record testamentary wishes and establish a framework for the administration of their estates. The DIFC Wills Service provides a dedicated wills and probate regime for eligible non-Muslims, with rules governing the registration and enforcement of wills and the subsequent probate process. DIFC materials also confirm that the framework is used for succession planning involving Dubai and other UAE assets.

The Abu Dhabi Judicial Department operates a civil wills system and provides procedures for registering wills for non-Muslims. Its official guidance states that a registered will can cover the distribution of the testator’s UAE estate and that wills may also address assets situated outside the UAE. The department also provides standard will forms in English and Arabic.

For mixed-nationality couples, mirror wills — separate wills for each spouse, coordinated with one another and with any wills made in their home countries — can be an important estate-planning instrument. Care is required, however, to ensure that a later will does not inadvertently revoke an earlier instrument covering assets in another jurisdiction, and that each will satisfies the applicable requirements concerning form, capacity, execution and registration.

Recognition And Administration Across Borders

A succession rarely ends at the UAE’s borders. Estates commonly comprise UAE bank accounts and property alongside assets in the spouses’ home countries, with each jurisdiction applying its own procedures to assets located within its territory. A foreign probate order or succession document may therefore require recognition or additional procedures before it can be relied upon in the UAE, while a UAE order may similarly need to satisfy the requirements of a foreign jurisdiction where assets are held.

This is why estate plans for mixed-nationality families are best designed as a coordinated whole rather than as a collection of unconnected national arrangements. A will prepared in one country should be reviewed against any UAE will, property arrangements, banking structures and succession documents in other jurisdictions. Particular attention should also be given to the possibility that different legal systems may apply different rules to the same family relationship or category of asset.

Concluding Observations

For mixed-nationality couples in the UAE, the governing inheritance law is not necessarily a single answer but a matrix of factors. It can vary according to the deceased’s nationality and religion, the applicable UAE legal framework, the character and location of each asset, and the choices made through valid estate-planning documents. Recent reforms have expanded the succession options available to non-Muslim residents and have established dedicated civil mechanisms for wills and inheritance in relevant circumstances.

For families with cross-border assets, the central lesson is that succession planning should be undertaken before a death occurs and reviewed periodically thereafter. Marriage, the birth or adoption of children, the acquisition of UAE real estate, a move to another country, or changes in the law can all affect the effectiveness of an existing estate plan. In mixed-nationality families in particular, coordinated advice covering the UAE and every relevant foreign jurisdiction can help ensure that the intended succession arrangements are legally coherent and capable of being administered when they are needed.

The UAE’s Involuntary Loss of Employment (ILOE) insurance scheme provides temporary financial support to private sector and federal government employees who lose their jobs due to termination rather than resignation. The scheme is designed to provide short-term income protection while individuals look for new employment.

Here is how the system works, when payouts stop and what can affect eligibility.

When You Can Start Claiming ILOE Compensation

You can claim unemployment insurance only after completing at least 12 consecutive months of subscription to the scheme. This means you must remain enrolled and comply with the applicable premium payment requirements before becoming eligible for compensation.

When Unemployment Insurance Payouts Stop

The insurer’s obligation to provide compensation ends in specific circumstances. These include reaching the maximum compensation limit applicable during the insurance period and reaching the overall maximum of 12 months of compensation across all claims during the insured person’s employment in the UAE. Coverage also ends upon the death of the insured person, from the date of death.

Compensation also stops if the insured person secures a new job or leaves the UAE, even if the three-month compensation period has not been completed.

How Much Compensation You Can Receive

Compensation is calculated at 60 per cent of the insured person’s average basic salary during the six months preceding the loss of employment. The amount is subject to the applicable category and monthly limits.

Category A: Basic salary of Dh16,000 or less
Maximum monthly compensation: Dh10,000

Category B: Basic salary above Dh16,000
Maximum monthly compensation: Dh20,000

Payments are available for up to three months for each claim, or until you secure new employment or leave the UAE, whichever occurs first. The aggregate compensation cannot exceed 12 months over the insured person’s entire employment in the UAE.

Eligibility Requirements For ILOE

To qualify for compensation under the scheme, you must have been subscribed to the unemployment insurance scheme for at least 12 consecutive months before losing your job and must have paid the required insurance premiums according to the agreed payment schedule.

You must also demonstrate that you lost your job for a reason other than resignation and must not have been dismissed for disciplinary reasons. An existing absconding complaint, a fraudulent claim, employment with a fictitious establishment, or loss of employment resulting from non-peaceful labour strikes or stoppages can also affect eligibility. The insured person must have legal residence in the UAE.

When And How To File A Claim

You must submit your claim within 30 days of the termination of the employment relationship or, where applicable, within 30 days of the resolution of a labour complaint referred to the courts. Claims can be submitted through the official ILOE website, mobile application, call centre or other channels approved by the Ministry of Human Resources and Emiratisation.

The United Arab Emirates is home to one of the world's most internationally diverse populations, and its family law framework has evolved significantly to reflect that reality. For non-Muslim expatriates — whether Hindu, Christian, or of any other faith or none — the question of how a marriage may be dissolved in the UAE, and which law may apply, is no longer answered by a single statute. It is governed by a layered framework involving civil personal status legislation, the Personal Status Law and conflict-of-laws principles that can allow foreign law to be applied in UAE courts.

This article explains how that framework operates and what non-Muslim residents should understand before commencing divorce proceedings in the UAE.

The Legal Framework: Two Parallel Regimes

Family matters involving non-Muslims in the UAE can be governed by two principal legal frameworks.

The first is the civil personal status regime established by Federal Decree-Law No. 41 of 2022 on Civil Personal Status. The federal law applies to non-Muslim citizens and non-Muslim foreign residents in matters including marriage, divorce, inheritance and child custody, subject to its scope and provisions. It provides a civil framework for resolving personal status matters and permits non-Muslim couples to initiate divorce proceedings without having to establish fault.

The second is Federal Decree-Law No. 41 of 2024 on the Issuance of the Personal Status Law, which came into force six months after publication. The law applies to non-UAE citizens unless one of them requests the application of their own law, or another law is agreed for application where permitted by UAE legislation. This creates an important choice-of-law dimension in cases involving foreign nationals.

The practical consequence is significant. Depending on the circumstances of the parties, their nationality, the nature of their marriage and any applicable election of law, a non-Muslim expatriate couple divorcing in the UAE may proceed under the UAE civil personal status framework or may seek the application of another law where UAE legislation permits it.

Civil Divorce Under The Civil Personal Status Law

The civil regime represents a significant departure from traditional personal status procedures. One of its central features is that either spouse may unilaterally request a divorce without having to prove harm, fault or a particular matrimonial ground. The law expressly recognises the right of both husband and wife to seek divorce.

Civil divorce proceedings are also excluded from referral to Family Guidance Committees. Instead, proceedings under the Civil Personal Status Law are presented directly to the court, with the legislation providing for the court to consider the divorce at the first hearing. This distinguishes the civil procedure from proceedings governed by the general Personal Status Law.

Financial claims following divorce are dealt with under the applicable legal framework and may involve consideration of the parties' financial circumstances and other statutory factors. The civil regime also provides for joint custody, with men and women having equal rights to assume joint custody of a minor child until the child reaches the age of 18, after which the child has freedom of choice under the law.

The civil framework also provides a route for non-Muslim residents to conclude civil marriages in the UAE. Federal legislation and implementing regulations establish the procedures governing such marriages and their subsequent personal status consequences.

In Abu Dhabi, non-Muslim personal status matters are also addressed through the emirate's dedicated civil family law framework and judicial mechanisms. This reflects the UAE's broader development of civil family-law procedures for its international resident population.

The Application Of Home-Country Law In UAE Courts

The alternative route rests on the UAE's conflict-of-laws framework and the provisions of the 2024 Personal Status Law. Under Article 1, the law applies to non-UAE citizens unless one of them requests the application of their own law or another law is agreed for application, where permitted by UAE legislation. The courts also have jurisdiction over personal status claims involving foreigners who have a domicile, place of residence or place of work in the UAE.

For particular communities, this possibility can have significant consequences because the substantive rules governing divorce, maintenance, matrimonial property and related issues may differ considerably between jurisdictions.

Hindu expatriates. Parties may seek the application of Indian personal law where the relevant legal requirements are satisfied. Depending on the nature of the marriage, this may involve legislation such as the Hindu Marriage Act 1955 or, for marriages solemnised under that statute, the Special Marriage Act 1954. The grounds for divorce, maintenance and other matrimonial consequences under Indian law can differ materially from the UAE civil framework, making the applicable law an important issue at the outset.

Christian expatriates. Christians from jurisdictions with distinct matrimonial or personal laws may likewise seek the application of their home-country law where permitted. Where a marriage was solemnised religiously abroad, questions concerning the form and validity of the marriage, as well as the grounds available for dissolution, may depend on the applicable law and the circumstances of the case.

Filipino expatriates. The position of Filipino nationals requires particular care because Philippine law generally does not provide for divorce between Filipino citizens. A UAE court may nevertheless dissolve a marriage under the UAE legal framework where it has jurisdiction and the applicable law permits it. Whether and how such a divorce is subsequently recognised in the Philippines is a separate question governed by Philippine law and judicial proceedings. A UAE decree therefore does not automatically determine its civil effects in the Philippines.

Two procedural considerations apply across nationalities. First, where a party relies on foreign law, the relevant law and supporting documents must be properly established before the UAE court, with translation and legalisation requirements potentially applying. Secondly, the choice or assertion of applicable law should be addressed at the beginning of proceedings because changing the legal basis of a case after it has progressed may create procedural and substantive complications.

Recognition Of UAE Divorces Abroad

A divorce that is valid in the UAE is not automatically effective in every other jurisdiction. Recognition abroad depends on the private international law of the country where recognition is sought.

Indian courts, for example, examine foreign matrimonial decrees against principles established in Indian jurisprudence, including questions concerning jurisdiction, the grounds on which the divorce was granted and whether those grounds are recognised under the applicable Indian matrimonial law. The precise requirements depend on the circumstances and the legislation governing the marriage.

In the United Kingdom and other jurisdictions, recognition may depend on statutory rules concerning matters such as domicile, habitual residence, jurisdiction and procedural fairness. In the Philippines, a foreign divorce involving a Filipino citizen may require judicial recognition before it can produce civil effects under Philippine law.

For internationally mobile families, therefore, the enforceability of a divorce decree in every relevant jurisdiction can be as important as obtaining the decree itself. This may include countries where the parties reside, where their children live, where substantial assets are located or where either party may subsequently seek to remarry.

Custody, Children And The 2025 Reforms

Whichever legal framework applies to the divorce, issues involving children remain subject to the applicable UAE rules and the best interests of the child. The 2024 Personal Status Law, which took effect in 2025, contains provisions governing custody, parental responsibilities and travel.

Under the law, custody generally ends when the child reaches 18, while a child aged 15 or above may choose which parent to reside with unless the court determines otherwise in the child's best interests. The legislation also contains rules governing travel with children and the use and retention of children's official documents.

These provisions need to be considered alongside the legal framework governing the divorce itself. A choice of foreign law concerning the dissolution of marriage does not necessarily mean that every issue concerning children, residence, travel or enforcement will be determined exclusively by that foreign law.

Concluding Observations

The UAE now provides non-Muslim expatriates with a more developed range of legal mechanisms for the dissolution of marriage, including a civil framework designed for non-Muslim residents and the possibility, where legally permitted, of applying a foreign law. The two routes can differ in procedure, substantive consequences and the way a resulting decree is treated abroad.

The appropriate legal framework depends on the parties' nationality, the place and form of their marriage, the applicable law, the location of their children and assets, and their future plans. These factors can also affect whether a UAE divorce will subsequently be recognised in another country.

Given the interaction between UAE law, foreign personal laws and recognition rules in other jurisdictions, parties contemplating divorce proceedings in the UAE should obtain advice on jurisdiction, applicable law and overseas recognition before taking a procedural step. A divorce decree may resolve the marriage in the UAE, but its wider legal consequences can extend well beyond the jurisdiction in which it was granted.

Owners of two-storey villas in Dubai who wish to rent each floor to a different family must consider both the emirate’s tenancy regulations and the rules governing shared accommodation before entering into separate lease agreements.

The landlord-tenant relationship in Dubai is primarily regulated by Law No. (33) of 2008, which amended Law No. (26) of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai. Under Article 4(1), the contractual relationship between a landlord and tenant must be governed by a written lease contract containing key details, including a clear description of the leased property, the purpose of the lease, the term, the rent and its payment method.

This means that where a villa owner intends to lease the ground floor to one family and the first floor to another, each tenancy arrangement should clearly identify the particular premises being leased and comply with the applicable registration requirements.

New Rules For Shared Accommodation

The position also needs to be considered in light of Dubai Law No. (4) of 2026 Concerning the Regulation of Occupancy and Management of Shared Accommodation in the Emirate of Dubai, which came into force on August 26, 2026.

The law establishes a regulatory framework for properties designated for shared accommodation and gives Dubai Municipality responsibility for regulating the activity. It applies to real estate units across Dubai, including properties located in private development areas and free zones, as well as owners authorised to designate their properties for shared housing.

The legislation defines shared accommodation as the joint residence of a group of individuals or families where space within a real estate unit is allocated to each of them for living purposes and facilities or services such as kitchens, dining rooms, bathrooms and outdoor areas are shared.

The law also establishes the concept of a real property unit designated for shared housing after meeting the conditions, controls and standards prescribed by the legislation and related decisions.

A digital platform, referred to as the digital window, is also provided for under the law. It is intended to receive, study and decide applications for permits and other requirements connected with the organisation and management of shared accommodation, as well as facilitate monitoring and inspections.

Separate Floors May Be Different

The distinction between separate tenancies and shared accommodation is important for villa owners. If a property owner leases the entire ground floor independently to Family A and the entire first floor independently to Family B, with each family occupying a self-contained residential area and neither family sharing facilities or services with the other, the arrangement may not necessarily fall within the statutory definition of shared accommodation under Article 2 of Dubai Law No. (4) of 2026.

In such circumstances, the arrangement may instead be treated as two separate residential tenancies, provided the physical configuration of the property and the proposed use comply with applicable Dubai regulations.

The position can be different where portions of the villa are allocated to different families or groups and they share facilities or common areas. Where residents share facilities such as kitchens, bathrooms, dining areas or other services within the property, the arrangement is more likely to fall within the definition of shared accommodation.

In that situation, the owner must comply with the requirements of Dubai Law No. (4) of 2026, including any applicable conditions and the requirement to obtain the relevant permit before designating the property for shared accommodation.

Dubai Municipality Has Regulatory Role

Dubai Municipality is the competent authority responsible for regulating shared accommodation under the new law. Article 5 gives the municipality broad powers to establish the framework governing the activity.

These powers include preparing policies and strategic plans, determining the conditions for allocating a property for shared housing, setting the maximum number of residents permitted in a unit and specifying the minimum space and shared facilities required.

The municipality is also responsible for determining the areas where shared accommodation may be permitted, taking into account factors such as urban planning, population density, infrastructure, sewage systems and the social character of residential neighbourhoods.

The authority is further empowered to create and manage the digital window through which applications and related requirements for shared accommodation can be handled.

Lease Contracts Must Be Clear

Even where a villa arrangement does not constitute shared accommodation, landlords must still comply with Dubai’s tenancy rules. Each lease should clearly identify the premises being rented, its intended purpose, duration and rent. Where different floors are leased to different families, the contracts should accurately describe the relevant floor or self-contained portion rather than creating uncertainty about the property covered by each tenancy.

The tenancy arrangements must also comply with the applicable requirements for registration with RERA through Ejari.

The fact that a villa has two floors does not, by itself, automatically mean that each floor can be rented separately. The owner must consider whether the property is legally configured and authorised for the proposed use and whether the arrangement creates shared accommodation within the meaning of the 2026 law.

Owners Should Check Before Leasing

Villa owners considering separate tenancies should therefore establish whether the proposed arrangement involves genuinely independent residential units or whether the occupants will share facilities and services.

Where there is uncertainty, the owner should approach Dubai Municipality for clarification before entering into the tenancy arrangements. This is particularly important where the proposed occupation could fall within the regulatory framework for shared accommodation.

If the arrangement is permitted, the owner should ensure that each tenancy agreement complies with Dubai’s tenancy legislation and that the relevant contracts are properly documented and registered.

The introduction of Dubai Law No. (4) of 2026 therefore adds an important regulatory consideration for villa owners. Renting different floors to different families is not necessarily prohibited, but the legality of the arrangement depends on how the property is configured, how it is occupied and whether the occupants share facilities or services.

Owners should establish the applicable requirements before renting individual floors rather than assuming that separate physical floors automatically qualify as separate, unrestricted residential tenancies.

A federal judiciary task force has made dozens of recommendations about courts’ use of artificial intelligence, the group’s leader said.

Judge Sidney Thomas of the Ninth Circuit, who chairs the judiciary’s AI task force, said the group may issue final guidance by as soon as the end of this year on what courts might want to do to address use of the platforms.

He said interim guidance that the group issued last year addresses judges’ use of the tools, by making it clear that the platforms can’t be used for “core functions” like deciding cases. But Thomas said AI seems to be most effective in handling administrative tasks in the courts.

“Publicly, I think people have focused on the use in chambers, but actually I think the more important and significant use may be in court operations,” Thomas said during a federal judiciary press briefing Thursday.

Some court clerks last year have experimented using AI for their administrative tasks, Bloomberg Law reported. Some courts have publicly rolled out use of AI for some functions: The Fifth Circuit, for example, offers the use of AI to help attorneys properly file documents.

The federal judiciary described the AI task force’s interim guidance last year after a pair of judges acknowledged that the tools were used by their staff, resulting in fake or incorrect case citations.

Thursday’s press briefing took place after the biannual meeting of the Judicial Conference, the courts’ policy-making body. That group heard a presentation about the AI task force at its meeting, held at the US Supreme Court.

Thomas told reporters that the task force is solely an advisory body, and its recommendations will have to be considered by other judiciary committees in order to be formally implemented.

Courts have also been facing AI-generated content from attorneys and self-represented litigants, with judges issuing discipline in some cases.

Chief Judge Jeffrey Sutton, who chairs the Judicial Conference’s Executive Committee, said AI use by litigants is an issue that may be addressed by potential changes to the courts’ procedural rules.

The Administrative Office of the US Courts also said it will start rolling out this year a new case management system for court documents, after repeated hacks targeted the current infrastructure for hosting filings. Bloomberg Law reported last year that hackers targeted sensitive, sealed court documents, using the same vulnerabilities that were exploited in a previous breach.

All new district court cases will be in the new case management system by the end of next year, according to the judiciary’s press release, and appellate and bankruptcy courts will then adopt it.

Judge Robert J. Conrad, director of the AO, said at the press briefing that the changes will take place on the back-end of the courts’ websites, and users will see “little to no difference in the way that system is accessed.”

“We can offer litigants, cooperating witnesses in criminal cases, businesses with trade secrets, the confidence they deserve with their case is tried in federal court,” Conrad said.

A franchise agreement is the central legal document governing the relationship between a franchisor and franchisee. It sets out the rights granted to the franchisee, the obligations that must be followed and the conditions under which the relationship can continue or end.

For franchisors, the agreement serves two important purposes. It protects the business model and intellectual property while providing a framework through which franchisees can operate independently but consistently with the wider brand.

A strong agreement should therefore do more than describe the franchise concept. It should anticipate the commercial issues that are likely to arise during the relationship and establish clear procedures for dealing with them.

Poorly defined obligations can create uncertainty, particularly when a franchise expands across different markets. A clause that appears straightforward may become difficult to enforce if it does not specify what the franchisee is required to do, when it must be done and what happens if the obligation is breached.

Defining The Franchise Grant

One of the first issues a franchise agreement should address is the precise nature of the rights being granted. The franchisor should identify the business model, trademarks, systems, know-how and other intellectual property that the franchisee is permitted to use.

The agreement should also establish whether the franchise is exclusive, non-exclusive or subject to defined territorial restrictions. If a territory is granted, its boundaries and the rights associated with it should be clearly described.

Territorial provisions can become particularly important as a franchisor adds outlets or develops online sales channels. The agreement should address, where relevant, whether the franchisee has rights relating to customers in a particular geographical area, online orders, delivery services or sales through digital platforms.

Clarity at the outset can help prevent disagreements over whether the franchisor has the right to open another outlet or sell products directly into the franchisee's market.

Setting Out Financial Obligations

Financial terms are another core component of the agreement. The document should clearly identify the initial franchise fee, ongoing royalties, marketing contributions and any other charges payable by the franchisee.

It should also explain when payments are due, how they are calculated and what records the franchisor may inspect to verify amounts owed.

Where royalties are linked to revenue, for example, the agreement should establish how revenue is defined and whether particular transactions are included or excluded. Payment provisions should also deal with late payments, disputed amounts and the consequences of persistent non-payment.

Franchisors should avoid relying on broad language that leaves significant financial obligations open to interpretation. A transparent payment structure can make the commercial relationship easier to administer and reduce the scope for disputes.

Protecting Intellectual Property

For many franchise businesses, the brand and its associated intellectual property are among the most valuable assets. A franchise agreement should therefore establish strict rules governing the use of trademarks, logos, trade names, copyrighted material, business methods and confidential information.

The franchisee should generally be authorised to use the intellectual property only for the purposes of operating the approved franchise business and only during the period permitted by the agreement.

The agreement can also establish procedures for approving new advertising, packaging, websites, social media material and other customer-facing content. This allows the franchisor to maintain consistency across the network.

Confidentiality provisions are equally important. Franchisees may receive access to information about suppliers, pricing, customer management, technology, recipes, operating procedures and other commercially sensitive material. The agreement should establish how such information must be protected during and, where legally permissible, after the franchise relationship.

Establishing Operating Standards

A franchise succeeds partly because customers expect a consistent experience regardless of which outlet they visit. The agreement should therefore contain sufficiently clear operating standards to protect the business model.

These provisions can cover premises, opening hours, staffing, training, customer service, equipment, uniforms, product specifications, health and safety procedures, record-keeping and approved suppliers.

The franchisor should retain appropriate rights to inspect the franchise operation and assess compliance. Depending on the business, this may include announced or unannounced inspections, audits, mystery shopping or reviews of operational records.

At the same time, requirements should be drafted with sufficient precision to make clear what constitutes a breach. An agreement that gives a franchisor unlimited discretion without establishing meaningful standards may be harder to administer and could create unnecessary disputes.

Controlling Quality And Supply

Quality control is particularly important for franchises in food, hospitality, retail and other consumer-facing sectors. A franchisee's failure to meet required standards can affect customers' perceptions of the entire network.

The agreement should therefore specify quality requirements and identify circumstances in which the franchisor can require corrective action.

Where the franchise depends on particular products, ingredients, equipment or technology, the agreement may require the franchisee to purchase specified items from approved suppliers. Such provisions should be drafted carefully to reflect applicable competition and commercial laws in the relevant jurisdiction.

The agreement should also explain what happens if an approved supplier becomes unavailable, prices change or alternative products are proposed. A clear process for dealing with these situations can help preserve operational consistency without creating unnecessary rigidity.

Setting Training And Reporting Requirements

A franchisee may be an independent business owner, but the franchise agreement can require participation in training and compliance programmes necessary to operate the franchise correctly.

Training provisions can address initial training before opening, continuing training, management development and training for new employees. The agreement should state which training is mandatory and who bears associated costs.

Reporting requirements are also important. Depending on the business model, the franchisee may be required to provide sales figures, financial information, inventory records and other operational data.

Accurate reporting allows the franchisor to monitor the network and calculate payments where royalties depend on revenue. It can also help identify operational problems before they develop into larger disputes.

Addressing Marketing And Digital Operations

Modern franchise agreements increasingly need to account for digital channels. Social media, websites, online ordering, mobile applications and digital advertising can create opportunities as well as risks for franchisors.

The agreement should establish who controls official digital accounts, who can create marketing material and what approvals are required before brand-related content is published.

It should also address the use of the franchisor's trademarks online and establish procedures for dealing with unauthorised websites, misleading advertisements or social media activity that could damage the brand.

Digital operations can also create questions about customer data, online sales and geographical markets. These issues should be addressed consistently with applicable privacy, consumer protection and data laws.

Managing Transfers And Changes Of Ownership

A franchisee may eventually want to sell the business, transfer the franchise or bring in a new owner. Franchisors commonly seek control over such changes because the identity and capability of the operator can directly affect the brand.

The agreement should therefore establish whether transfers require prior written consent and the criteria that may apply to an incoming franchisee. These can include financial capacity, experience, training and willingness to comply with the franchise system.

The agreement should also address changes in ownership or control of a corporate franchisee. Without such provisions, a franchisor may discover that effective control of an outlet has changed without its approval.

Preparing For Breach And Termination

A strong franchise agreement should anticipate the possibility that the relationship will fail. Termination provisions should clearly identify circumstances that may justify termination and distinguish, where appropriate, between breaches that can be remedied and those that may justify immediate action under applicable law.

Typical issues may include non-payment, serious operational failures, misuse of intellectual property, unauthorised transfer, insolvency, fraud or repeated breaches of the franchise system.

Where a cure period applies, the agreement should establish how notice is given, what corrective action is required and the period available for compliance.

Post-termination obligations are equally important. The franchisee may need to stop using trademarks, remove branding, return confidential material, discontinue use of the franchise system and deal with remaining inventory or equipment in accordance with the agreement.

These provisions should be drafted with the applicable law in mind because the enforceability of termination rights and post-termination restrictions can vary between jurisdictions.

Choosing Governing Law And Dispute Resolution

Cross-border franchises require particular attention to governing law and dispute resolution. The agreement should identify the law governing the relationship and establish how disputes will be handled.

Depending on the parties and jurisdictions involved, disputes may be referred to courts or arbitration. The agreement should clearly identify the chosen mechanism, including the relevant forum or arbitral institution where appropriate.

Notice provisions should also be practical and precise. A dispute-resolution clause is of limited value if the parties cannot establish how formal notices or proceedings are to be initiated.

Reviewing The Agreement Before Signing

A franchise agreement should reflect the actual business model rather than simply relying on a standard template. Different industries, territories and franchise structures can create substantially different legal and commercial requirements.

Franchisors should review the agreement whenever the business model changes, particularly when introducing digital sales, new territories, new intellectual property or different supply arrangements.

The objective is not to create an agreement filled with complicated legal language. It is to create a document that clearly explains the commercial relationship, protects legitimate business interests and gives both sides a workable framework for dealing with foreseeable problems.

A strong franchise agreement cannot eliminate every dispute. But by defining rights, responsibilities, standards and remedies before the franchise begins, it can reduce uncertainty and provide a clearer legal framework for managing the relationship throughout its life.