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An established UAE franchisee looking to expand into international markets should approach the move as a new investment rather than assume that an existing franchise agreement automatically provides rights beyond the UAE, legal advisers say.

A strong operating record and an established relationship with an international franchisor can give a franchisee greater commercial leverage when negotiating additional territories. But that history does not, by itself, create a legal entitlement to expand into another country. The rights to operate, develop or sub-franchise in a new market must be expressly granted under the existing agreement or documented through a separate arrangement with the franchisor.

The legal review should extend beyond the proposed new territory. As the franchisee becomes a multi-market operator, its existing corporate structure, financing arrangements, guarantees, non-compete obligations and contractual commitments may all affect how the expansion should be implemented.

Review the Rights Already Held Under the UAE Agreement

The starting point should be a detailed review of the existing UAE franchise agreement. The franchisee should determine whether the contract contains territorial restrictions, rights of first refusal or first negotiation, options over additional territories, development rights, non-compete provisions, assignment restrictions or change-of-control requirements.

If the agreement does not give the franchisee priority over additional countries, it should not assume that successful performance in the UAE gives it a contractual right to enter the next market. Expansion rights should instead be negotiated and documented with the franchisor before substantial expenditure is committed.

The parties should also establish precisely what type of rights are being sought. Direct development rights, area development rights and master franchise rights can impose substantially different obligations. In particular, a master franchise arrangement may require the UAE operator to recruit and manage sub-franchisees, provide training and support, and monitor compliance across an entire territory.

From the UAE side, the applicable statutory framework should also be considered. This may include Federal Decree-Law No. 36 of 2021 on Trademarks and Federal Decree-Law No. 36 of 2023 on the Regulation of Competition, particularly where the proposed expansion involves brand licensing, territorial restrictions, competing businesses or other controls over a franchise network. The new jurisdiction will then require its own detailed legal assessment.

Determine Whether the Business Can Become a Network Developer

Running a successful group of franchise outlets does not necessarily mean that a franchisee has the infrastructure to become a master franchise operator.

An international expansion involving sub-franchising may require substantially greater operational capabilities. These can include franchisee recruitment, training, compliance monitoring, marketing support, financial reporting and enforcement of brand standards.

The legal structure should therefore reflect the business the franchisee is realistically capable of operating. Obtaining the broadest possible contractual rights may appear commercially attractive, but those rights can create significant obligations if development targets or performance requirements are not met.

Structure the Corporate Group Before Adding Territories

International expansion can also change the way the franchise group should be structured. Separate subsidiaries may be established for individual countries, territories or brands, while finance, technology, human resources and other functions may remain centralised in the UAE.

Before implementing such a structure, the franchisee should establish which group entity will hold each franchise right and which entity will operate the relevant business. Existing franchise agreements should also be reviewed before rights are transferred between related companies.

Assignment and change-of-control provisions can require franchisor consent even when ownership remains within the same corporate group. Failing to obtain the required consent could potentially place valuable franchise rights at risk.

Assess Guarantees and Cross-Default Risks

Guarantees become increasingly important as a franchise group expands. A parent-company or shareholder guarantee that was commercially acceptable when the group operated in one territory could create significantly greater exposure once the group has businesses in several countries.

The franchisee should therefore assess the scope of all existing and proposed guarantees before adding new territories. Particular attention should be given to cross-default provisions, which could allow a default or contractual breach in one market to affect obligations or rights elsewhere within the group.

Where possible, liabilities should be allocated deliberately between entities rather than being allowed to spread across the group through broad guarantees or cross-default clauses.

Ensure Financing Arrangements Work With Franchise Contracts

International expansion may require bank financing, private equity investment or other forms of external funding. Lenders and investors may seek security over shares or assets, ownership rights, information rights or remedies if the business defaults.

Those requirements may conflict with restrictions contained in franchise agreements. A franchisor may, for example, have approval rights over changes in ownership, transfers or the creation of security over a franchise business.

The financing and franchise documents should therefore be reviewed together. Accepting financing terms before determining whether the necessary franchisor consents can be obtained could create avoidable legal and commercial complications.

Review Conflicts When Operating Multiple Brands

An established franchisee may also seek to diversify by taking on several international brands. This can create additional contractual and competition-law issues.

The operator should map competing-business restrictions across its franchise portfolio and establish whether those restrictions apply only to the contracting entity or extend to affiliates, shareholders, directors or other related parties.

Confidential information should also be appropriately segregated between brands. Supplier arrangements, pricing information, customer data, business strategies and other commercially sensitive information should not inadvertently move between competing businesses under common ownership.

Competition-law considerations may arise where franchise agreements contain exclusivity, sourcing, resale or market restrictions. In the UAE, the competition framework includes Federal Decree-Law No. 36 of 2023, Cabinet Decision No. 3 of 2025 and Cabinet Resolution No. 59 of 2026. Each proposed overseas market will require a separate assessment of its own competition rules.

Document Shared Management and Services

A regional franchise operator may want to centralise functions such as finance, human resources, procurement, information technology and senior management in the UAE.

While this can create efficiencies, the operating model should be compatible with the franchise agreements. Some franchisors may require particular management structures, named key personnel or minimum levels of local operational capability.

Intercompany arrangements should also clearly document services provided between group entities, particularly where one company is responsible for functions supporting several franchise businesses.

Conduct Due Diligence When Acquiring a Franchise Business

Another route into an international market is to acquire an existing franchise business. In such circumstances, corporate due diligence should be supplemented by a detailed review of the target's franchise arrangements.

The buyer should examine consent requirements, change-of-control provisions, historical defaults, development obligations, unpaid franchise fees, waivers, amendments and side letters. It should also establish whether the franchisor has any outstanding rights or claims that could affect the transaction.

The value of an acquisition may depend heavily on the continuation of an existing franchise right. If that right can be terminated, renegotiated or materially changed following the acquisition, the commercial assumptions underlying the transaction could be undermined.

Establish Group-Wide Contract Management

As the franchise portfolio expands, contractual administration can become as important as the original negotiations.

A multi-market operator may have different renewal dates, notice periods, development deadlines, insurance requirements, reporting obligations and franchisor consent requirements across its territories. Missing one of these deadlines could have consequences for an individual franchise or, depending on the contractual structure, the wider group.

A central contract-management system should therefore record key dates, obligations, amendments, waivers and material approvals for each territory. Maintaining a clear contractual record can also become important when the group later seeks financing, introduces an investor or sells part of its franchise portfolio.

Build a Regional Platform Rather Than Separate Franchises

For an established UAE franchisee, international expansion is not simply a question of whether another country can be added to an existing business. The more significant issue is whether the group can hold, finance and operate multiple franchise rights without allowing one agreement to create problems for another.

A successful expansion strategy should therefore consider territorial rights, corporate ownership, guarantees, financing, competing-business restrictions, intellectual property, management arrangements and contract administration as parts of a single structure.

Treating each new territory as a separate investment, while managing the legal and commercial relationships at group level, can help create a more sustainable regional platform. For franchisees with ambitions beyond the UAE, careful contractual planning at the beginning of an expansion may be as important as the commercial opportunity itself.

Selecting the correct business activity is one of the most important decisions in the UAE company formation process. It is not simply a formality completed on the way to obtaining a trade licence. The proposed activity determines the type of licence available, shapes the permissible legal form of the company and, in certain sectors, triggers a requirement for approval from a specific government authority before the business may operate. Getting this step wrong rarely results in outright rejection. More often, it causes delays: a licence may not reflect what the company actually does and may later have to be amended.

Understanding Business Activities in the UAE

A business activity is the official description of the economic activity a company intends to carry out. Every licensing authority in the UAE, whether a mainland Department of Economic Development or a free zone authority, maintains its own list of approved activities, and an applicant selects from that list, or a closely related equivalent, when applying for a licence. Abu Dhabi’s Department of Economic Development, for example, has registered several thousand commercial and industrial activities that foreign investors can select from, while Dubai’s licensing authority maintains a comparably broad list covering commercial, professional, industrial and tourism categories.

The UAE issues several categories of licence, most commonly commercial, professional, industrial and tourism licences, with agricultural and occupational categories available in some emirates. Which category applies, and therefore which licence a company needs, follows directly from the activity itself. This is why the exercise should begin with an accurate description of what the company will actually do, rather than a search for the activity that appears closest to the intended business or seems administratively simplest.

Why the Activity Drives the Structure

Government guidance on establishing a mainland business consistently places the selection of the business activity as the first step in the process, ahead of choosing the legal form and applying for the trade name and licence. That ordering is not incidental. The legal form available to a company, such as a limited liability company, sole establishment, civil company or branch, must correspond to the nature of the activity being licensed. A professional services activity and an industrial or manufacturing activity do not necessarily sit under the same structure. A business that chooses its legal form first and then attempts to fit an activity around it risks having to unwind the process and refile its application.

The practical implication is that the activity is not simply text appearing on a certificate. It determines the licence category, constrains the legal form and, in turn, can affect office and visa requirements, banking due diligence and how the company can practically operate on a day-to-day basis.

More Than One Activity on a Single Licence

Many businesses provide several related services, and the UAE framework accommodates this. A single trade licence can include more than one business activity, and additional activities can generally be added to an existing licence for a fee. Dubai’s Department of Economic Development, for instance, allows commercial, professional and industrial activities to sit together on one unified licence, subject to conditions relating to the location and nature of the activities involved.

This should not, however, be treated as a licence to select one broad activity and assume that it covers everything the company might eventually do. Each activity the company intends to carry out should be checked individually against the licensing authority’s list, ideally before incorporation, so that the licence matches the business model from the outset rather than having to catch up with it later.

Certain Activities Require Additional Approvals

Some activities cannot be licensed on the strength of approval from the economic department or free zone authority alone. Regulated fields typically require a further no-objection or approval from the competent federal or local authority before the licence can be issued or before operations can begin. Common examples include activities connected to legal consultancy, which may require clearance from the Ministry of Justice or the relevant judicial department; security-related activities, which fall under the Ministry of Interior or local police; and activities involving financial securities and commodities, which require approval from the Securities and Commodities Authority. Healthcare, education and media activities also carry their own sector-specific approval requirements.

It is worth being precise about what an initial approval actually confirms. Initial approval indicates that the relevant authority has no objection to the establishment of the business under the selected activity. It is a step that allows the investor to proceed with the remaining formalities, such as finalising legal documents, securing premises and paying licence fees. It does not, by itself, authorise the investor to commence operations or practise the activity. That authorisation comes only once the trade licence, and any activity-specific approval, has actually been issued.

Mainland and Free Zone Considerations

The choice of activity has to be considered together with the choice of jurisdiction. Mainland companies are licensed by the relevant emirate’s Department of Economic Development, or an equivalent authority such as Abu Dhabi’s Department of Economic Development or the Sharjah Economic Development Department, while free zone companies are licensed by the free zone authority in which they are established. The activities available, documentation required and approval process can all differ between mainland and free zone routes for what may, on paper, appear to be a similar business.

Before incorporating, an investor should confirm that the intended activity is actually available in the chosen jurisdiction and understand whether that jurisdiction imposes any conditions specific to the activity, such as minimum office space, a local service agent or sector-specific approvals.

When the Business Changes After Incorporation

A company’s operations rarely remain static. Where a business introduces a new service line or moves into a different area of work, the first step is to check the existing licence against the new activity. If the activity is not already covered, the licence will usually need to be amended, or the new activity added, subject to the requirements of the licensing authority and, where relevant, any additional government approvals that the activity triggers. A licence should reflect what the company is actually doing at any given time, and businesses should not assume that an existing licence automatically permits a new service simply because it appears commercially related to an activity already listed.

This is particularly important where a change in operations moves the business into a regulated sector. A new activity may require a separate approval, additional premises requirements or a different licensing arrangement. Reviewing the licence before launching a new service can therefore help prevent compliance problems and the expense of restructuring the business after operations have already begun.

Seeking Legal Advice Before Incorporation

Because the business activity affects licensing, legal structure and, in regulated sectors, third-party approvals, it is generally worth taking legal advice before the incorporation application is submitted. A UAE corporate lawyer can review the proposed business model against the available activities, confirm which legal forms and jurisdictions are compatible, and identify any approvals that will be needed from other authorities. This is particularly useful where the business will carry out multiple activities or operate in a regulated sector where getting the activity wrong can be costly to correct.

The business activity is the starting point of UAE company formation, not an afterthought to it. It shapes the licence, constrains the legal form and, in regulated sectors, determines whether additional government approval is needed before the business can lawfully operate. Businesses should assess their intended operations carefully before incorporation, confirm that each activity they need is properly covered and revisit their licensing position whenever their business model changes materially. Engaging a UAE corporate lawyer at the formation stage is a practical way to get this right from the outset, rather than correcting it after the licence has already been issued.

The UAE's new Personal Status Law provides a legal framework for parents who are unable to support themselves and need financial assistance from their children. Under Federal Decree-Law No. 41 of 2024 on the Issuance of the Personal Status Law, parents who do not have sufficient property or income to meet their needs may be entitled to maintenance from their financially capable children.

The provisions are particularly relevant to elderly parents who have retired or are otherwise unable to earn a livelihood, but the entitlement is not based simply on a parent's age. The central considerations are the parent's financial need and the children's ability to provide support.

What Does the Law Say About Parents' Maintenance?

Article 107 of the new Personal Status Law expressly deals with parental maintenance. It provides that maintenance of parents falls upon their solvent child, whether male or female and whether adult or underage, where the parents do not have property from which they can meet their expenses. Where the parents have some property but it is insufficient, financially capable children are required to provide what is necessary to fulfil their maintenance needs.

This means the obligation is not restricted to sons. A financially capable daughter may also be required to contribute towards the maintenance of her parents.

The law therefore recognises parental support as a legal family obligation rather than merely a matter of personal choice. Where a parent genuinely lacks sufficient resources, a financially capable child cannot necessarily avoid the obligation simply because the parent has not previously received regular financial support.

Is One Child Solely Responsible For Supporting The Parents?

Not necessarily. Article 108 provides that parental maintenance is to be distributed among the children according to the financial capacity of each one.

This is important where a parent has several children. If, for example, one child has a substantial income while another has limited earnings, the financial responsibility need not necessarily be divided equally. The court can consider the respective financial circumstances of the children when determining their obligations.

Therefore, an elderly parent with a son and two daughters may be able to seek maintenance, but the legal responsibility may extend to all solvent children rather than automatically falling exclusively on the son.

The law also recognises situations where one child has already been paying for the parent's needs. Where a child spends on the parents pursuant to a court ruling requiring the children to provide maintenance, that child may, subject to the conditions prescribed by law, seek reimbursement from the other children according to the applicable allocation.

What If the Child Cannot Afford Separate Maintenance?

The law also takes account of the child's own financial responsibilities. Article 109 provides that where a child's earnings do not exceed the child's needs and those of the spouse and children, the child is required to include parents who are entitled to maintenance in the household.

In practical terms, the law does not necessarily require a financially constrained child to pay a separate cash allowance that would leave the child unable to meet essential household expenses. The legislation provides for the possibility of accommodating the entitled parents within the child's household instead.

This provision reflects the broader principle that maintenance must be assessed in the context of both the parent's needs and the child's financial capacity.

How is the Amount of Maintenance Determined?

There is no single fixed monthly amount prescribed for parental maintenance. The court will assess the circumstances of the individual case and determine what is reasonably required.

The assessment can include essential expenses such as food, clothing, housing and medical treatment, depending on the parent's circumstances and needs. The court can also consider the financial position of the person responsible for maintenance, the condition of the person receiving it and the prevailing economic circumstances.

Consequently, a parent's claim is not automatically determined by the child's salary or by a particular percentage of the child's income. Evidence concerning the parent's actual needs and the child's financial capacity can be important in determining the appropriate amount.

Can a Parent File a Case Against a Child in Dubai?

A parent who is unable to meet his or her reasonable living expenses and believes that a financially capable child is failing to provide legally required support may approach the competent court for maintenance.

The new law also contains jurisdictional provisions specifically addressing maintenance claims involving parents. A parent residing in the UAE may, in circumstances provided by the law, bring a maintenance claim before the competent court.

Accordingly, an elderly parent living in Dubai may have legal grounds to seek maintenance from a child who is financially capable of providing support. However, the outcome and amount cannot be guaranteed in advance. The court will examine the evidence, the parent's needs and the financial circumstances of the parties before making an order.

What Happens If a Child Refuses to Comply With a Court Order?

The new Personal Status Law goes beyond establishing the obligation to provide parental maintenance. Article 254 provides criminal penalties for certain conduct involving parents.

A person who abuses, assaults, neglects or refuses to care for a parent despite being able to do so may face imprisonment and a fine of between Dh5,000 and Dh100,000, or either of those penalties. The same provision applies to a person who refuses to provide maintenance to a parent when that maintenance has become an obligation under a court judgment.

The law therefore distinguishes between a parent's right to seek maintenance and the consequences of deliberately refusing to comply with a judicial obligation to provide it.

Overall, the new UAE Personal Status Law reinforces the principle that financially capable children may have a legal responsibility to support parents who cannot adequately support themselves. At the same time, the law seeks to balance that responsibility against the financial circumstances and existing obligations of the children.

Where an international franchise is already being operated successfully in the UAE and the operator proposes to take the brand into India, our advice would be to treat India as a separate cross-border investment. The existing relationship with the brand owner may shorten commercial negotiations, but it does not remove the need to establish the operator’s territorial rights, select the appropriate Indian entry structure and test the franchise arrangements against Indian contract, foreign investment, intellectual property, competition and consumer laws.

1. Confirm Whether the UAE Agreement Gives Priority Over India

For India, our review would be anchored in the Indian Contract Act, 1872, the Trade Marks Act, 1999, the Competition Act, 2002 and the Consumer Protection Act, 2019, together with the applicable foreign direct investment and foreign exchange framework. India does not have a single umbrella franchise statute, so the legal analysis depends on the structure of the franchise and the underlying business activity.

In construction projects, a contractor’s substantive entitlement to an extension of time, additional payment or other contractual relief may appear straightforward. Yet, in practice, the success of such claims can depend on a more fundamental question: was the claim notified within the period prescribed by the contract?

Time-bar provisions are a standard feature of major UAE construction contracts, particularly those based on contracts published by the Fédération Internationale Des Ingénieurs-Conseils (FIDIC). They require contractors to notify the employer or engineer of events giving rise to claims within specified periods and may provide that failure to comply results in the loss of the underlying entitlement.

The issue has acquired renewed significance following the entry into force of Federal Decree-Law No. (25) of 2025 Promulgating the Civil Transactions Law (the “New Civil Transactions Law”) on 1 June 2026. Article 816(3) imposes an express obligation on the contractor to immediately notify the employer if defects arise in employer-supplied materials or if other factors arise that would hinder the execution of the works in suitable conditions. Failure to give such notice may make the contractor liable for the consequences arising from the failure to notify. Accordingly, parties should consider contractual notice obligations alongside applicable statutory requirements and any relevant transitional provisions.

Contractual Notice Requirements

Construction contracts commonly impose notice requirements in relation to claims for extensions of time (“EOT”), additional payment, disruption and other loss or expense, while separate provisions may govern variations and valuation of additional work.

These provisions serve an important commercial purpose. Early notification enables the employer and consultant to investigate the event while evidence remains available, assess its impact on the programme and costs, consider mitigation measures and, where appropriate, take steps to prevent further delay or loss.

Accordingly, a contractor should not assume that establishing an underlying contractual entitlement is sufficient. The contractor must also establish compliance with the contractual mechanism for asserting that entitlement. This is particularly important where the contract expressly states that notice is a condition precedent to entitlement.

Procedural Requirement or Condition Precedent?

Not every notice provision necessarily operates as a condition precedent. A procedural requirement may regulate the manner in which a claim is to be submitted. A condition precedent, by contrast, makes compliance with the specified requirement a prerequisite to the existence or enforcement of the contractual entitlement.

The distinction is therefore critical. If a provision merely requires notice within a particular period without prescribing the consequence of non-compliance, there may be scope to argue that late notice does not extinguish an otherwise valid substantive claim. Where the contract expressly provides that failure to give notice within the prescribed period results in the loss of the relevant entitlement, the employer will have a substantially stronger basis for relying on the time bar.

Under UAE law, the wording and interpretation of the parties’ contractual bargain remain central to determining the effect of a contractual notice provision. UAE law does not provide a universal rule that every contractual notice period automatically extinguishes a claim. The effect of late notice will depend on the contractual wording, governing law and circumstances of the dispute.

The FIDIC Position

The issue is particularly significant under FIDIC-based contracts. Under the 1999 edition of the FIDIC Conditions of Contract for Construction, Sub-Clause 20.1 requires the Contractor to give notice to the Engineer within 28 days after becoming aware, or when it should have become aware, of the event or circumstance giving rise to the claim. The Sub-Clause further requires the Contractor to submit a fully detailed claim within 42 days, unless otherwise agreed or approved in accordance with the contract. Importantly, failure to give the initial notice within the 28-day period results in the Contractor losing its entitlement to an extension of time and/or additional payment under that Sub-Clause.

The precise notice requirements will, however, depend on the FIDIC form and edition incorporated into the contract, as well as any amendments made by the parties. Accordingly, the legal effect of a FIDIC time bar must be assessed by reference to the contractual provisions incorporated into the project.

Where the contract expressly provides that failure to give notice within the prescribed period results in the loss of entitlement, the provision may operate as a condition precedent. Conversely, where the contract merely establishes a procedural mechanism for submitting and administering claims, the consequences of non-compliance will depend on the language and structure of the relevant provisions.

Does the Employer Have to Prove Prejudice?

A contractor may argue that the employer suffered no prejudice because it was already aware of the relevant event. However, the significance of prejudice depends on the contractual wording.

Where timely notice is expressly made a condition precedent, the contractor should not assume that the employer must establish actual prejudice before relying on the time bar. Notice may serve wider purposes, including contemporaneous investigation, mitigation and project administration.

Accordingly, the employer’s actual knowledge of an event should not automatically be treated as a substitute for compliance with an express contractual notice requirement. Contractors should therefore avoid relying on the argument that “the employer already knew” as a substitute for contractual notice.

Good Faith and Contractual Cooperation

Under Article 221 of the New Civil Transactions Law, contracts must be performed in accordance with their contents and consistently with the requirements of good faith. However, good faith should not be treated as a general basis for disregarding an express contractual notice requirement.

The statutory notification obligation under Article 816(3) further reinforces the practical importance of prompt and documented communication during construction projects. Contractors should therefore consider contractual notice obligations and statutory notification requirements together.

Preserving Claims Contemporaneously

From a disputes perspective, the safest approach is simple: a contractor should notify first and substantiate later, rather than wait until the full consequences of an event become quantifiable.

A contractor should maintain a dedicated claims and notice register identifying the event or circumstance giving rise to the potential claim, the date on which the contractor became aware, or should have become aware, of the event, the contractual provision governing the notice, the applicable deadline, the recipient and contractual method of service, the potential impact on time and cost, and subsequent updates and supporting documentation.

Where the contract distinguishes between an initial notice and a subsequent detailed claim, the initial notice may not be required to contain the contractor’s final assessment of quantum or delay. The contractor must nevertheless comply with the specific content, timing and service requirements prescribed by the applicable contract.

The contractor should thereafter maintain contemporaneous records, including programmes, progress reports, site diaries, instructions, correspondence, photographs, meeting minutes, labour and equipment records, procurement documents and expenditure records. Under FIDIC contracts, such records can become critical evidence when entitlement and quantum are later disputed.

Conclusion

A contractor can, in appropriate circumstances, lose an otherwise meritorious contractual claim by failing to comply with a valid time-bar provision. The risk is particularly significant where the contract expressly makes timely notice a condition precedent to entitlement. The effect of late notice will depend principally on the contractual wording, the applicable governing law and the nature of the relevant claim.

For contractors, notice should therefore be treated as a substantive claims-management obligation rather than a mere administrative formality. Potential claims should be identified early, contractual and statutory notification requirements should be observed, and contemporaneous records should be preserved throughout the project.

For employers, clearly drafted notice provisions can provide greater certainty and facilitate effective project administration.

Falling behind on personal loan or credit card payments in the UAE can have consequences that go well beyond missed installments. Depending on the terms of the financing agreement and the circumstances of the default, a bank may demand repayment of the outstanding balance, take contractual steps against funds held with it and ultimately pursue court enforcement.

The Central Bank of the UAE regulates personal lending and defines a personal loan as financing for an individual that may be repaid from salary, end-of-service indemnity or another verifiable regular source of income. The regulatory framework also places limits on lending and repayments, including restrictions on deductions from salary and regular income.

A key issue for employees who lose their jobs is the treatment of their end-of-service gratuity. Personal loan documentation approved under the Central Bank framework can require the borrower to arrange for salary and end-of-service benefits to be transferred to the lending bank during the loan period. This means that where gratuity is credited into the account maintained with the lender, the bank may have contractual rights to use those funds towards the outstanding liability, subject to the agreement and applicable law.

The position can become more serious when a borrower’s financial circumstances indicate that future repayment is unlikely. Under the Central Bank’s current definition of default, default may arise from non-payment or an assessment that the borrower is unlikely to repay. For retail borrowers, factors can include the loss or distress of the income source used to repay the facility. A material credit obligation that remains unpaid for more than 90 days is also treated as a default under the Central Bank’s framework.

Loan agreements may therefore contain provisions allowing the lender to treat certain events, such as termination of employment or a significant deterioration in the borrower’s ability to repay, as grounds for demanding the outstanding amount.

Default can also affect the borrower’s credit record and make it more difficult to obtain future loans or credit facilities. The lender may seek repayment through legal proceedings if the debt remains unpaid.

Importantly, imprisonment is not an automatic consequence merely because a person has missed loan installments. However, after a debt has become subject to execution, the UAE Civil Procedure Code permits an execution judge, in specified circumstances, to order detention of a debtor. The law also provides exceptions, including where the debtor provides an acceptable guarantee or identifies sufficient property in the UAE that can be enforced against.

Borrowers facing genuine financial difficulty should therefore avoid ignoring demands from the lender. Negotiating restructuring, revised repayment arrangements or a settlement at an early stage can be preferable to allowing the matter to progress into formal enforcement.

The UAE’s current legal framework also provides mechanisms for dealing with financial distress, although the rules applicable to individuals differ from those governing companies and traders. Personal debts for ordinary family or personal use are not dealt with under the UAE’s current corporate bankruptcy regime in the same manner as business insolvency.

Ultimately, whether a bank can recover a particular amount from salary, gratuity or money held in an account depends on the loan agreement, the nature of the debt, the applicable Central Bank regulations and any court or enforcement proceedings. Borrowers should review their financing documents carefully and seek legal advice before assuming that a bank can automatically take all of their end-of-service benefits.

For UAE franchise businesses, expanding into foreign markets can offer a route to faster growth, new customers and greater brand recognition. But taking an established franchise model abroad involves more than finding a local partner and signing an agreement.

The legal structure used in the UAE may not translate directly into another jurisdiction. Foreign ownership restrictions, licensing requirements, intellectual property protection, tax rules, employment laws, currency controls and dispute-resolution mechanisms can all affect how an international franchise is established and operated.

For franchisors, understanding those issues before entering a new market can be critical to protecting the brand and avoiding costly disputes later.

Foreign Investment Rules

The first question for a UAE franchisor is often whether it can own and operate a business directly in the target market.

Countries differ widely in their approach to foreign investment. Some permit full foreign ownership across most sectors, while others require local participation, impose sector-specific restrictions or require foreign businesses to establish a particular type of entity.

A UAE franchise business may therefore have several options, including establishing a wholly owned subsidiary, forming a joint venture, opening a branch or appointing a master franchisee. The choice can affect control over the brand, profits, operations and local management.

A master franchise structure, for example, may allow the UAE franchisor to enter a market with less direct operational involvement. The local master franchisee may receive rights to develop the territory and, depending on the agreement, appoint sub-franchisees.

That can reduce the franchisor's operational burden but may also make it harder to maintain consistent control over the brand.

Foreign investment rules should therefore be examined before commercial terms are finalised.

Local Incorporation and Licensing

The structure of the overseas operation will also determine its regulatory obligations. A locally incorporated company may provide the franchisor with greater control but can bring additional requirements involving directors, capital, accounting, tax filings and regulatory approvals.

A franchisee-led structure can be simpler from the franchisor's perspective, but the agreement needs to establish clearly who is responsible for obtaining licences, complying with local regulations and dealing with government authorities.

The parties should also establish the territory granted to the franchisee and whether the rights are exclusive.

Development schedules can be particularly important in an international franchise. If a franchisee receives exclusive rights to an entire country but fails to develop the business, the franchisor could find itself locked out of the market.

Agreements commonly address minimum development targets, opening schedules, performance requirements and the circumstances in which exclusivity can be withdrawn.

Protecting the Brand Overseas

Intellectual property is one of the central assets in a franchise relationship. A trademark registered in the UAE does not automatically provide protection in another country. Before entering a new market, the franchisor should determine whether its trademarks, logos, trade names, domain names and other intellectual property are protected locally.

International trademark systems can simplify the filing process in multiple jurisdictions, but protection ultimately depends on the laws of the countries where protection is sought.

The franchise agreement should also regulate how the franchisee can use the franchisor's trademarks and other intellectual property.

This can include brand guidelines, marketing materials, confidential information, operating manuals, recipes, software and other proprietary systems.

Particular care may be required where the franchisee is responsible for registering local domain names, social media accounts or other digital assets. Ownership should be clearly established to prevent disputes if the franchise relationship ends.

Tax and Royalty Payments

Cross-border tax can materially affect the commercial value of a franchise agreement. A UAE franchisor may receive initial franchise fees, continuing royalties, management charges or payments for technical services from an overseas franchisee. The destination country may impose withholding taxes or other taxes on those payments. The parties therefore need to establish how taxes will affect the agreed commercial terms.

Double taxation agreements may provide relief in some circumstances, but their application depends on the countries involved and the nature of the payment.

The UAE's Corporate Tax regime is also relevant when a UAE business establishes an overseas subsidiary or branch or receives foreign-source income.

Related-party transactions between the UAE business and an overseas entity may additionally raise transfer-pricing issues. The terms of payments for intellectual property, management services and other intra-group arrangements should therefore be properly documented and commercially supportable.

Tax planning should be carried out before the franchise structure is finalised rather than after the business begins generating revenue.

Currency and Payment Risks

Currency movements can create another layer of risk. A franchise agreement may set royalties in US dollars or UAE dirhams while the franchisee generates its revenue in a different currency. Significant exchange-rate movements can therefore change the real value of payments.

The agreement should specify the payment currency, exchange-rate mechanism, payment dates and responsibility for banking and transfer charges.

The franchisor should also determine whether the target country has restrictions on converting or transferring foreign currency outside the country.

Where payment restrictions exist, the contractual arrangements may need additional safeguards to address delayed or blocked payments.

Employment Laws

A UAE franchisor cannot assume that its employment practices will apply unchanged to an overseas operation.

Employees working for the foreign franchisee will generally be governed by the employment laws of the country in which they work. Those laws may cover minimum wages, working hours, leave, social security, employee benefits, termination and severance.

The distinction between the franchisor and franchisee should be clearly maintained. Unless the parties agree otherwise, the local franchisee should normally be responsible for employing staff and complying with local labour, immigration and payroll requirements.

At the same time, franchisors often impose operating standards covering staff training, uniforms, customer service and brand presentation. Those requirements should be reviewed to ensure they do not conflict with mandatory local employment rules.

The issue can become more complicated where the UAE franchisor sends managers or trainers to the foreign operation. Immigration, work permits, payroll and tax consequences may then need to be considered in both jurisdictions.

Choosing the Dispute Mechanism

Cross-border franchise agreements can become difficult to enforce when the parties are based in different countries. The agreement should therefore specify the governing law and the mechanism for resolving disputes before the relationship begins.

The parties may choose court litigation or arbitration, depending on the jurisdictions involved and the nature of the relationship.

International arbitration can be attractive in cross-border transactions because the parties can select a neutral seat and, where applicable, rely on international enforcement frameworks.

The agreement should not simply state that disputes will be referred to arbitration. It should also address the seat of arbitration, language, number and appointment of arbitrators and the applicable procedural rules.

The enforceability of any eventual judgment or arbitral award should also be considered at the drafting stage, particularly where the franchisee's assets are located outside the UAE.

Due Diligence Before Signing

Legal due diligence on the franchisee can be just as important as drafting the franchise agreement. The UAE franchisor should assess the prospective partner's financial position, ownership structure, management experience, reputation and ability to meet development obligations.

The target market should also be reviewed for competition rules, consumer protection, advertising restrictions, data protection, product standards, import requirements and sector-specific licensing.

Some countries have specific franchise legislation that may impose disclosure or registration requirements. These rules can affect the timing and form of the transaction.

The franchisor should also consider whether the proposed arrangement could create a local taxable presence or permanent establishment and whether the structure has implications for the repatriation of profits.

A Different Legal Playbook

For a UAE franchise business, international expansion can turn a relatively familiar domestic business model into a multi-jurisdictional legal exercise.

The commercial appeal of a new market may be clear, but the legal structure needs to work alongside it.

Foreign investment restrictions may determine who can own the business. Local licensing rules can affect how it operates. Intellectual property laws determine how the brand is protected. Tax rules influence the value of royalties and profits, while employment laws govern the workforce. Currency controls and dispute-resolution provisions can ultimately affect whether the franchisor can receive its money or enforce its contractual rights.

The strongest international franchise structures are therefore likely to be those designed around the laws of the target market rather than simply copied from the UAE model.

For UAE businesses looking overseas, legal due diligence is not a final check before signing the franchise agreement. It is part of the market-entry strategy itself.

The United Arab Emirates presents a legal architecture that is, by regional and international standards, unusually layered. A single commercial transaction concluded in Dubai may be governed by federal civil law, regulations issued by a free zone authority, or an English-language common law regime administered by an independent judiciary, depending entirely on where the contracting parties are established and what their agreement provides. Federal legislation, principally Federal Decree-Law No. 32 of 2021 on Commercial Companies, the Civil Transactions Law and the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022), applies broadly across the seven Emirates.

Yet the Constitution and Federal Law No. 8 of 2004 on Financial Free Zones permit designated zones to disapply federal civil and commercial law altogether, while dozens of non-financial free zones operate their own licensing and regulatory frameworks within the federal system.

The practical consequence is that a counterparty's jurisdiction of incorporation is not a formality. It determines the substantive law presumptively governing the contract, the courts with jurisdiction over any dispute, the language of proceedings, and the route to enforcement. Counsel who structure transactions without mapping this terrain expose their clients to avoidable uncertainty at precisely the moment certainty matters most: when the relationship breaks down.

The Mainland Commercial Law Framework

Companies licensed onshore by an Emirate-level economic department operate wholly within the federal civil law system. Their corporate existence and governance are regulated by the Commercial Companies Law; their commercial dealings by the Commercial Transactions Law; and their general contractual obligations by the Civil Transactions Law, which codifies principles derived from the civil law tradition and Islamic jurisprudence, including good faith performance under Article 246 and the prohibition on abuse of rights.

Disputes involving mainland entities fall, by default, before the onshore UAE courts: the local courts of Dubai and Ras Al Khaimah, and the federal courts elsewhere, applying the Civil Procedure Law (Federal Decree-Law No. 42 of 2022). Arabic is the official language of proceedings, and documentation and evidence must be submitted in Arabic or accompanied by certified translation. This has real significance: where an English-language contract is litigated onshore, the Arabic translation placed before the court becomes central to the proceedings, and translation disputes are a recurring feature of onshore litigation.

Onshore judgments are enforced through the execution courts, which possess robust powers of attachment over accounts, assets and receivables in the UAE, providing the most direct enforcement route where a counterparty's assets sit onshore. Mainland parties should also note doctrinal features of the civil law system that differ from common law expectations: liquidated damages clauses are subject to judicial adjustment under Article 390 of the Civil Transactions Law, while concepts such as promissory estoppel and comprehensive pre-contractual disclosure duties have no direct equivalent.

Free Zone Commercial Law

The Non-Financial Free Zones: Companies incorporated in non-financial free zones such as JAFZA, DMCC, Dubai Internet City and their many counterparts occupy an intermediate position that is frequently misunderstood. Each free zone authority exercises delegated regulatory power over licensing, corporate registration and governance within its geographic remit, and free zone companies are formed under the implementing regulations of their authority rather than, in most respects, the Commercial Companies Law. Article 5 of that law expressly carves out free zone companies, except where free zone regulations permit them to operate onshore.

Critically, however, this regulatory autonomy does not extend to substantive commercial law. A DMCC company contracting with a supplier is subject to the same Civil Transactions Law and Commercial Transactions Law as its mainland counterpart. The free zone regime displaces federal law principally in the administrative sphere — licensing conditions, permitted activities and corporate filings — rather than in the law of obligations. Nor do non-financial free zones generally possess their own courts: disputes involving free zone companies are heard by the onshore courts of the Emirate in which the zone sits, in Arabic, under federal procedural law, unless the parties have validly agreed otherwise.

Free zone companies may contract freely with mainland entities as a matter of contract law, although conducting licensed activities onshore requires appropriate authorisation. When disputes arise between free zone and mainland parties, jurisdiction ordinarily lies with the onshore courts. The commercial lesson is that free zone incorporation changes a company's regulatory supervisor, not necessarily its litigation environment.

2. The Financial Free Zones: DIFC And ADGM: The Dubai International Financial Centre and the Abu Dhabi Global Market are categorically different. Established pursuant to the constitutional framework and Federal Law No. 8 of 2004, they are empowered to enact their own civil and commercial legislation, and both have used that power to create common law jurisdictions within a civil law state. The DIFC has enacted a comprehensive body of statutes covering contracts, obligations, companies, insolvency and arbitration, modelled on English and international principles, with English case law serving as persuasive authority. The ADGM went further, directly applying English common law and specified English statutes through its Application of English Law Regulations 2015.

Each centre maintains independent courts. The DIFC Courts, constituted under Dubai Law No. 12 of 2004, as amended, and the ADGM Courts operate in English, follow adversarial common law procedure and are staffed by senior common law judges. Since 2011, the DIFC Courts have accepted jurisdiction by agreement even where neither party has a DIFC connection, allowing international parties to opt in contractually. Doctrinally, parties gain access to remedies and concepts familiar from English practice, including freezing injunctions and indemnity costs, alongside robust enforcement of contractual damages subject to the applicable legal framework.

Enforcement flows in both directions. Memoranda and statutory mechanisms allow DIFC and ADGM judgments to be executed through the onshore Dubai and Abu Dhabi execution courts without a re-examination of the merits, and the financial free zone courts have at times served as a conduit for enforcing foreign judgments and awards against onshore assets. Federal criminal law, anti-money laundering legislation and immigration law continue to apply within both centres; the carve-out is primarily civil and commercial.

Commercial Contracts and Dispute Resolution Considerations

These structural differences converge in the drafting of governing law and jurisdiction clauses. The same distribution agreement may yield different outcomes onshore and in the DIFC on questions as fundamental as penalty clauses, damages quantification and interpretation methodology. Cross-jurisdictional contracts should therefore address governing law, forum and language expressly and consistently; hybrid or asymmetric clauses can invite jurisdictional contests that the region's courts have repeatedly been asked to resolve.

Arbitration adds a further layer. Onshore-seated arbitrations are governed by Federal Law No. 6 of 2018, as amended, while DIFC and ADGM seats apply their own UNCITRAL-based arbitration laws, and Dubai Decree No. 34 of 2021 consolidated Dubai's arbitral institutions into DIAC. Because the UAE is a New York Convention state, a well-drafted arbitration clause with a deliberately chosen seat frequently offers the most predictable enforcement path for cross-border parties.

Conclusion

Jurisdictional analysis in the UAE is a risk allocation question, not merely an incorporation question. Before entering any material commercial arrangement, a business should identify where its counterparty is established, which substantive law will govern by default, and where and in what language any dispute will be fought. The choice between mainland, free zone and financial free zone exposure shapes contractual certainty, the availability of remedies and the practicality of enforcement against the assets that matter. Businesses that treat these questions as front-end structuring issues, rather than matters to be confronted when a dispute has already crystallised, hold a decisive advantage in the UAE market.

For an international brand looking to expand in the Middle East, the UAE can be an attractive first step. Its established business infrastructure, international consumer base and position as a regional commercial hub have made it a popular destination for franchise businesses across sectors ranging from food and retail to education, healthcare and professional services.

But taking a franchise into the UAE is not simply a matter of finding a local partner and signing an agreement.

Behind the familiar franchise model sits a network of legal and regulatory considerations. The structure through which the business operates, the licences it requires, ownership of the brand, employment of staff, treatment of customer data and tax implications can all affect the commercial relationship between franchisor and franchisee. For foreign brands, getting those foundations right before entering the market can be critical.

The structure comes first

One of the first decisions is how the franchise will actually operate in the UAE. A foreign franchisor may establish its own UAE presence, appoint an independent franchisee, create a master franchise arrangement or use an area development structure under which a partner is given responsibility for developing a defined territory. The choice can have consequences well beyond corporate registration.

The UAE has opened most mainland business activities to 100% foreign ownership, although certain activities remain subject to specific restrictions and regulatory requirements. That has removed one of the traditional obstacles for international businesses, but it has not eliminated the need to select the appropriate corporate and licensing structure.

A franchisor establishing a subsidiary, for example, faces a different set of considerations from one operating through a branch of its overseas company. A free-zone structure may also be appropriate for some businesses but not necessarily for every customer-facing activity or physical operation. The proposed business model, therefore, needs to be considered alongside the jurisdiction in which it will operate.

A Franchise Agreement is Not a Business Licence

The distinction is an important one. A franchise agreement gives the franchisee contractual rights to operate under the franchisor's brand and business system. It does not, by itself, authorise the franchisee to conduct business in the UAE.

The franchisee will generally need the appropriate commercial licence, together with any sector-specific approvals required for its activities.

That can become particularly important in regulated sectors. Food and beverage businesses, healthcare operators, educational establishments and financial services companies, for example, can face additional regulatory requirements beyond ordinary commercial licensing.

The franchise agreement should consequently make clear who is responsible for obtaining and maintaining each licence and approval.

It should also anticipate what happens if a licence expires, an approval is withdrawn or the franchisee operates outside the scope of its authorised activities.

For the franchisor, these are not merely administrative matters. A regulatory failure by one franchisee can potentially damage the wider brand.

The Brand May Be the Biggest Asset at Risk

For many international franchises, the principal asset being transferred to the UAE is not the physical business but the intellectual property behind it. That can include trademarks, logos, trade names, software, copyrighted materials, recipes, designs, operating manuals, websites and confidential business processes. Protecting those assets in the UAE should therefore be addressed before the franchise begins trading.

Trademark protection is particularly important. Registration in the franchisor's home market does not automatically provide equivalent protection in the UAE. International brands should consider registering the relevant marks locally and carrying out appropriate searches before allowing a franchisee to use them.

The franchise agreement should then establish that ownership remains with the franchisor and that the franchisee receives only the rights necessary to operate the business.

The same principle applies to confidential information and know-how. A franchisee may have access to information that took years for the franchisor to develop. Recipes, supplier arrangements, pricing models, training materials and operating procedures can all have commercial value. Confidentiality provisions and post-termination restrictions therefore become important parts of the relationship.

Local Employment Rules Still Apply

Another common misconception is that a global franchise can simply reproduce its headquarters' employment policies in the UAE.

Where the UAE franchisee employs local staff, the employment relationship must comply with applicable UAE labour legislation. That covers matters such as employment contracts, wages, working hours, leave, termination and other employee rights. Immigration and work-permit requirements must also be addressed.

Emiratisation can add another layer of compliance for businesses that fall within the applicable requirements. The obligations depend on factors including the nature and size of the employer and the relevant rules in force at the time.

For franchisors, the issue is also one of contractual allocation. The franchise agreement should make clear which employment and immigration responsibilities belong to the franchisee, while ensuring that the franchisor's operational and brand standards remain consistent with UAE law.

Tax Can Change the Economics of the Deal

Tax is another area where an international franchise arrangement can become more complicated than it initially appears.

The UAE's introduction of Corporate Tax has made tax structuring an important part of market-entry planning. VAT also applies to taxable supplies subject to the relevant registration rules.

For franchises, the analysis can extend beyond the tax position of the UAE franchisee itself. Royalties, management fees, technology charges, marketing contributions and other payments to an overseas franchisor may raise questions about VAT, transfer pricing and the tax treatment of cross-border transactions.

The parties also need to consider the tax position in the franchisor's home country and whether the UAE structure could have consequences for the overseas business.

These issues can affect the economics of the franchise agreement and should be considered before the royalty and fee structure is finalised.

Customer Data is Increasingly Part of the Franchise Model

The traditional franchise model has also changed as businesses have become more dependent on technology. Customers may place orders through a central website or app, join a global loyalty programme, receive targeted marketing or interact with a central customer database. The UAE franchise may therefore be collecting and transferring personal data across borders as part of ordinary operations.

That brings data protection into the franchise discussion. The UAE Personal Data Protection Law establishes a federal framework governing the processing and protection of personal data. Businesses must consider issues including the lawful processing of personal information, security measures and cross-border transfers.

For an international franchisor, one of the most important questions is who controls the data. The franchise agreement and related data-processing arrangements should establish the respective responsibilities of the franchisor and franchisee and address how information can be collected, used, stored and transferred.

A global privacy policy may also need to be reviewed for compatibility with the UAE's legal requirements and any sector-specific rules.

The Franchise Agreement Becomes the Operating Blueprint

In practice, the franchise agreement is likely to determine much of the relationship between the international brand and its UAE partner. Its provisions may cover the territory, exclusivity, franchise fees, royalties, marketing contributions, approved suppliers, training, quality standards, reporting, audits and renewal.

Territory can be particularly sensitive. A franchisee may have a physical outlet in a defined area, while the franchisor simultaneously operates a website, mobile application or regional delivery service. The agreement needs to establish how those digital channels interact with the franchisee's territorial rights.

Termination provisions can be equally significant. Non-payment, repeated operational failures, misuse of intellectual property, regulatory breaches, insolvency and serious reputational damage may all become grounds for ending the relationship, subject to the applicable law and the terms of the agreement.

What happens afterwards matters just as much. A departing franchisee may need to remove signage, stop using trademarks, return confidential materials, cease using proprietary systems and rebrand its premises. Digital assets and social media accounts may also need to be addressed.

No Single Franchise Law Means Greater Attention to Detail

Unlike some jurisdictions that have introduced dedicated franchise legislation, the UAE does not currently have a single comprehensive statute governing franchise relationships.

Instead, franchising can intersect with different areas of UAE law, including civil and commercial legislation, intellectual property, competition, employment, tax and data protection.

The distinction between a franchise arrangement and a commercial agency can also be important. Depending on how the relationship is structured and the rights granted, commercial agency rules may become relevant, potentially creating consequences that the parties did not anticipate when negotiating the deal. That makes the legal characterisation of the arrangement important from the outset.

The UAE's broader legal framework is also continuing to develop. The new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, came into effect on June 1, 2026, replacing the previous civil transactions framework and making it important for businesses entering into or renewing long-term agreements to review their contractual arrangements against the current law.

Choosing the Partner Can Be as Important as Choosing the Structure

For a foreign franchisor, legal due diligence should not stop with the documents. The UAE franchisee is effectively becoming the local face of the international brand. Its financial resources, management experience, reputation and ability to maintain the franchisor's standards can therefore be as important as the contractual protections negotiated between the parties.

Due diligence can include reviewing the franchisee's corporate ownership, financial position, existing businesses, regulatory history and management capabilities.

The prospective franchisee, meanwhile, has its own reasons to scrutinise the franchisor. It should understand who owns the intellectual property, whether the franchisor has the authority to grant the proposed rights and whether the international business has the resources to provide the promised training, technology and support.

Expansion Requires More Than a Strong Brand

The UAE's openness to international business has made it an important market for global franchise brands, but a successful entry depends on more than consumer demand.

The legal structure must support the commercial model. Licences must match the activities. Intellectual property must be protected. Employment practices must comply with local requirements. Tax and data obligations need to be understood. And the franchise agreement must provide a workable framework for both operating the business and dealing with its eventual exit.

For international franchisors, the most important decision may therefore come before the first outlet opens: understanding how the global franchise model needs to be adapted to the UAE's legal and commercial environment.

A franchise that enters the market with those issues resolved is better placed not only to launch successfully, but also to expand across the Emirates and potentially use the UAE as a platform for wider regional growth.

Dr. Sunil Ambalavellil is the Global Executive Chairman of Kaden Boriss, an international law firm specialising in franchise and business agreements. A seasoned legal adviser, he has advised and supported the international growth of numerous global brands, helping them navigate the legal complexities of cross-border expansion.