UAE

Buying a franchise from an established international brand can give a UAE investor access to a recognised name, proven business model, training, operational systems and an established customer base. However, becoming a franchisee involves considerably more than paying a franchise fee and obtaining a trade licence. The relationship with the franchisor can create long-term contractual, financial and operational obligations.

A carefully planned legal route map can help minimise those risks.

Identify the Right Franchise And Conduct Due Diligence

The first step is to identify a brand that has a viable business model for the UAE market. Before signing anything, investigate the franchisor's corporate history, financial strength, reputation, existing franchise network, litigation history and experience in international markets.

You should also establish exactly what you are buying. Is it a single-unit franchise, a multi-unit arrangement, an area development agreement or a master franchise covering the UAE or a wider region?

The franchisor should provide sufficient information about the business model, investment requirements, expected fees, training, supply arrangements and territorial rights to allow you to make an informed decision.

Decide Where and How the Business Will Be Established

The next decision is whether the franchise should operate through a mainland company, a free-zone entity or another appropriate structure.

UAE rules allow investors of all nationalities to establish and fully own companies in the UAE, although the appropriate structure depends on the business activity and location.

For a mainland business, the process generally involves selecting the business activity and legal form, reserving a trade name, obtaining initial approval, securing suitable premises, obtaining any sector-specific approvals and applying for the relevant commercial licence.

A free-zone structure can be attractive for certain businesses, but access to the UAE mainland market must be examined carefully. Depending on the nature of the business, a free-zone company may need an appropriate mainland arrangement to conduct certain activities within the UAE market.

Examine the Franchise Agreement Carefully

The franchise agreement is the most important legal document in the transaction.

Do not assume that the franchisor's standard international agreement automatically works for the UAE. A UAE lawyer should review provisions dealing with the initial franchise fee, royalties, marketing contributions, territory, exclusivity, renewal, performance targets, approved suppliers, pricing, intellectual property, confidentiality, audits, insurance, dispute resolution and termination.

Particular attention should be paid to termination provisions. A franchisee may make a substantial investment in premises, equipment, staff, inventory and marketing. The consequences of early termination should therefore be clearly understood before the agreement is signed.

Check Whether Commercial Agency Rules are Relevant

One of the important legal questions is whether the proposed arrangement could fall within UAE commercial agency legislation rather than being treated simply as a franchise.

Federal Law No. 3 of 2022 regulates commercial agencies and establishes specific rules concerning registered commercial agencies. Where an arrangement falls within the relevant legal framework, registration and other statutory requirements can have significant consequences for both parties.

The precise legal character of the arrangement should therefore be assessed before the agreement is signed. This is particularly important where the proposed relationship involves exclusive territorial rights, distribution of products or acting as the foreign brand's representative.

Protect and Verify Intellectual Property Rights

A franchise is fundamentally built around intellectual property. The franchisor's trademarks, logos, trade dress, operating manuals, recipes, software and other proprietary material may be central to the business.

Confirm that the franchisor owns or controls the relevant intellectual property rights in the UAE and that the franchise agreement gives you the necessary rights to use them.

It is also important to establish who will be responsible for registering, renewing and enforcing the brand's trademarks in the UAE. The franchisee should understand what happens to the intellectual property rights if the franchise agreement expires or is terminated.

Review Premises, Employment and Regulatory Requirements

The location can make or break a franchise. Before signing a long-term lease, verify that the premises can legally be used for the intended business activity and that the necessary municipality, health, food, tourism or other regulatory approvals can be obtained.

The lease should also be reviewed alongside the franchise agreement. Ideally, the duration and renewal options of the lease should be aligned with the franchise term so that the franchisee is not left with a long-term property commitment after losing the right to operate the brand.

Employment arrangements should comply with UAE labour legislation, including requirements relating to employment contracts, salaries, working hours, leave, termination and employee benefits.

Sector-specific franchises may face additional regulatory requirements. Restaurants, healthcare businesses, education providers, financial businesses and other regulated activities can require approvals beyond the ordinary trade licence.

Understand Tax, Imports and Financial Obligations

The financial model should account for franchise fees, royalties, marketing charges, imported products, customs duties, rent, salaries, insurance, technology charges and other ongoing expenses.

UAE businesses are also subject to the corporate tax regime, while VAT obligations need to be assessed. The Federal Tax Authority states that UAE-resident businesses generally must register for VAT when taxable supplies and imports exceed the mandatory registration threshold of AED375,000, subject to the applicable rules.

Cross-border royalty payments, management fees and purchases from the franchisor should also be reviewed for their tax and accounting implications. The franchisee should understand whether payments to the international franchisor could create additional tax, withholding, reporting or transfer-pricing considerations.

Negotiate Before Committing Capital

The final step should be negotiation, not simply signing the franchisor's standard document.

Try to negotiate appropriate territory protection, development periods, renewal rights, reasonable performance targets, cure periods before termination, transfer rights, supply terms and protections for the franchisee's investment if the relationship ends.

It is also worth negotiating what happens if the franchisor changes ownership, loses its intellectual property rights, becomes insolvent or decides to withdraw from the UAE market.

A prospective franchisee should ideally have three advisers involved before signing: a UAE franchise lawyer, an accountant or tax adviser, and a commercial or business adviser.

The safest approach is to treat the franchise as a legal and commercial project rather than simply a business purchase. Choosing the right brand, conducting thorough due diligence, structuring the UAE entity correctly, reviewing the franchise and intellectual property arrangements, checking licensing and regulatory requirements, assessing tax and financial obligations, and negotiating appropriate exit protections can significantly reduce risks.

For an international franchise entering the UAE, the objective should not simply be to secure the right to use a successful brand. It should be to establish a legally sound structure that protects the investment while allowing the business to grow within the UAE regulatory framework.

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The Abu Dhabi Labour Court of First Instance has ordered a company to pay Dh199,298 to a former employee after finding that he was not paid several employment-related entitlements following the end of his three-year service.

The employee had sued the company, seeking payment of outstanding salaries, disputed deductions, annual leave allowance, notice pay, end-of-service gratuity and other dues.

According to the case details, the employee claimed Dh74,250 in unpaid salaries accumulated over several months, along with Dh34,350 in unauthorised financial deductions.

He also sought Dh27,205 as an annual leave allowance, Dh13,500 in lieu of the notice period, Dh33,116 as end-of-service gratuity and Dh4,000 towards a return air ticket.

The employee additionally requested legal interest at 12 per cent from the date of judgment until the amount was paid in full, as well as court fees, expenses and legal costs.

After examining the claims and evidence submitted in the case, the court ordered the company to pay a total of Dh199,298 in employment dues.

The ruling highlights the potential financial consequences for employers when contractual and statutory employment entitlements remain unpaid after the termination of an employment relationship.

A man has been sentenced to one year in prison and ordered to be deported from the UAE after being convicted of stealing Dh75,000 from shared accommodation in Sharjah and attempting a second theft.

The Sharjah Misdemeanours Court sentenced the defendant to six months in prison for theft and a further six months for attempted theft, with deportation to follow after he completes his sentence.

According to court records, the case began after a resident reported that Dh75,000 had gone missing from his room. The money belonged to the company he worked for and had been kept temporarily before being deposited into the company’s account, Al Khaleej daily reported.

After discovering the cash was missing, the complainant reviewed CCTV footage from the accommodation to identify the person responsible.

The recordings also showed another resident attempting to enter a different room in what appeared to be a separate theft attempt, prompting suspicions about his involvement.

The footage was handed to investigators, who subsequently linked the defendant to both the theft of the Dh75,000 and the attempted theft captured on camera.

The defendant denied both charges during the trial. However, after examining the evidence, the court found him guilty of theft and attempted theft and sentenced him to a total of 12 months in prison, followed by deportation from the UAE.

Three people have been convicted in Sharjah after authorities uncovered an unlicensed operation selling prescription-only Mounjaro injections through social media.

The Sharjah Misdemeanours Court fined two defendants Dh10,000 each after finding them guilty of selling medicines without a licence and practising pharmacy without the required authorisation.

A third defendant was convicted of carrying out unlicensed financial activities linked to the operation and was fined Dh5,000. The court also ordered the confiscation of the seized medicines and funds connected to the case, according to Al Khaleej daily.

The investigation began after police identified a social media account advertising Mounjaro injections, a prescription-only medicine used to treat diabetes and increasingly sought for weight-loss purposes.

Investigators tracked the account and arrested two suspects accused of selling the medicine without the necessary licences. Their inquiries subsequently led to a third suspect who allegedly handled financial transfers connected to the operation without legal authorisation.

All three defendants denied the charges during the trial. However, the court found the evidence sufficient to establish their guilt and imposed the fines.

The court also ordered the confiscation of the Mounjaro injections seized during the investigation, along with the funds linked to the unauthorised activities.

The Dubai Civil Court has ordered a driver and the restaurant that owned the vehicle to jointly repay an insurance company Dh1,758,000 after the insurer compensated a man seriously injured in an accident involving the driver.

The court also ordered 5% legal interest on the amount from the date the civil lawsuit was filed until full payment, in addition to court fees, expenses and legal costs.

The case followed a ruling by the Dubai Misdemeanours Court, which found the driver guilty of driving under the influence of alcohol and causing an accident that resulted in serious injuries to an Asian national.

The criminal court sentenced him to one month in prison, fined him Dh10,000 and suspended his driving licence for six months. The ruling became final after it was not appealed.

The Insurance Disputes Settlement Committee had initially ordered the vehicle's insurance company to compensate the injured man. The compensation was later increased by the Court of Appeal to Dh1,785,000, a decision subsequently upheld by the Court of Cassation.

The insurance company ultimately paid Dh1,758,602.50, including compensation, interest and related expenses awarded under the judgment.

Following the payment, the insurer filed a civil claim against the driver and the vehicle owner, seeking reimbursement of the amount it had paid.

The insurer relied on the Unified Vehicle Insurance Policy, which allows an insurance company to seek recourse against the driver and insured party when an accident occurs while the vehicle is being driven under the influence of alcohol.

The Civil Court found that the driver's liability had already been conclusively established by the criminal judgment. As the ruling had become final, the issue could not be reconsidered in the civil proceedings.

The court also found that the insurance company had provided sufficient evidence that it had paid the compensation awarded to the injured party, giving it the right to seek reimbursement.

The vehicle was owned by a restaurant where the driver worked. The court therefore held the restaurant jointly liable with the driver for the amount, applying the legal principles governing an employer's liability for the actions of its employee.

The court ordered the driver and the restaurant to jointly pay the insurance company Dh1,758,000, together with 5% legal interest from the date the lawsuit was filed until full settlement.

The court also ordered them to bear the court fees, expenses and attorney's fees.

However, it rejected the insurance company's request to impose a travel ban on the driver over unpaid court fees.

The Dubai Misdemeanours Court has ordered a man convicted of breach of trust to return Dh4.4 million to an investor after he was found guilty of embezzling six kilogrammes of gold and digital currencies entrusted to him.

The court sentenced the defendant to three years in prison, followed by deportation from the UAE, and directed him to repay the value of the misappropriated assets. The Dubai Court of Appeal upheld the verdict after dismissing his appeal over failure to pay the required insurance, making the judgment final.

The case was filed after an investor accused the defendant of unlawfully taking possession of assets handed to him in trust and sought recovery of the value of the items, along with compensation of Dh500,000 for the losses suffered.

Following the criminal conviction, the Dubai Civil Court ordered the defendant to pay Dh4.4 million, representing the value of the embezzled assets, along with Dh300,000 in compensation, legal interest, court fees, expenses and lawyer’s fees.

The civil court noted that the final criminal judgment had conclusively established that the defendant committed the offence of breach of trust by misappropriating funds belonging to the investor. As a result, the matter could not be reconsidered before the civil court.

The court further confirmed that the criminal proceedings had established that the investor had entrusted the assets to the defendant, who later took possession of them unlawfully.

While ordering repayment of the full value of the embezzled assets, the court also ruled that the investor had suffered financial and moral damages due to being deprived of the use of his funds for more than two years, losing potential investment opportunities and incurring expenses while pursuing legal action to recover his rights.

The court assessed the additional compensation at Dh300,000 and imposed a five per cent legal interest on the amount from the date the judgment becomes final until full payment. The defendant was also ordered to bear the lawsuit costs, expenses and legal fees.

A borrower has been ordered to repay a Dh500,000 loan and pay Dh100,000 in compensation after an Al Ain court relied on WhatsApp messages exchanged between the parties as key evidence in the dispute.

The Al Ain Civil, Commercial and Administrative Cases Court ruled in favour of the lender, who had claimed that he transferred Dh500,000 to the defendant’s bank account on the understanding that the amount would be returned within three and a half months.

According to court records, several years had passed without repayment, despite repeated requests from the lender. The borrower allegedly delayed payment and refused to settle the outstanding amount, prompting the lender to file a lawsuit seeking repayment of the loan, compensation for material and moral damages, lost profits, and legal costs.

During the proceedings, the court reviewed the WhatsApp conversations exchanged between the two parties, which supported the lender’s claim regarding the loan arrangement and repayment obligation.

While the plaintiff had sought Dh500,000 in additional compensation, the court awarded Dh100,000, taking into account the financial losses, lost investment opportunities and psychological and moral harm caused by the delayed repayment.

The ruling highlights the growing role of electronic communications, including WhatsApp messages, as admissible evidence in UAE courts when establishing agreements and obligations between parties.

The Dubai Misdemeanour Court has acquitted two individuals accused of forging unofficial documents and cheques worth Dh5.9 million, ruling that the prosecution had failed to present sufficient evidence to prove the charges beyond reasonable doubt.

The court also dismissed the related civil claim against the defendants, ordering the claimant to bear the legal costs and lawyers' fees after concluding that liability had not been established.

The case stemmed from a complaint filed by the owner of a company, who alleged that former company officials had misused several blank cheques that had already been signed. According to the complaint, the accused filled in the cheque values, due dates and beneficiary details before presenting four cheques to two local banks in an attempt to obtain payment. The cheques were subsequently returned because of insufficient funds.

The Public Prosecution charged the pair with forging three cheques issued from the company's bank account and another drawn on the complainant's personal account. Prosecutors alleged that the defendants knowingly used the forged cheques in an attempt to obtain Dh5.9 million. One of the accused also faced a separate charge of embezzling company cheques entrusted to him through his employment for the purpose of settling the company's financial obligations.

The defendant who appeared before the court denied all allegations, maintaining that he had played no role in issuing the cheques. He argued that the criminal complaint had been filed only after a labour court had ordered the company to pay his outstanding employment dues.

His legal team submitted documents outlining the nature of his duties and detailing previous employment disputes with the company in support of the defence. The second defendant did not attend the proceedings despite having been legally notified.

After examining the complainant's testimony and evidence from the company's accountant, the court found significant inconsistencies regarding how the cheques had been delivered, who had received them and the stage at which each defendant had been implicated in the complaint.

The court also noted that the accountant was unable to identify the serial numbers or values of some of the disputed cheques and could not confirm the contents of a sealed envelope that he claimed to have handed to one of the defendants.

Commenting on the ruling, the defence said the judgment reaffirmed the fundamental principle of criminal justice that convictions must be based on clear, consistent and conclusive evidence rather than assumptions or contradictory testimony. It argued that the mere appearance of a person's name on a cheque was, by itself, insufficient to establish forgery or embezzlement.

The defence added that the court had carefully examined the sequence of events, the timing of the complaints and the documentary evidence before concluding that the prosecution had failed to establish the charges with sufficient criminal evidence and that other plausible explanations remained unresolved.

According to the defence, the dismissal of the civil claim was a natural consequence of the claimant's failure to prove that the defendants had committed any wrongful act that caused compensable damage.