What a Dedicated UAE Franchise Law Could Change for Franchisors and Franchisees

The UAE already regulates franchise relationships through several areas of law. A focused franchise statute could bring greater clarity to disclosure, commercial agency treatment, termination and renewal without removing contractual flexibility.

The UAE has developed into an active franchise market without introducing a standalone federal franchise statute. Franchise businesses operate across food and beverage, retail, education, healthcare, fitness and services, but the legal relationship is governed through several areas of law rather than one franchise-specific code.

That gives businesses contractual flexibility. It also means that questions about disclosure, termination, renewal, territorial rights, brand control and investment protection can depend on the agreement and legal structure selected. The useful question is not whether the UAE needs a franchise law, but what such a law should clarify.

The Current Framework Is Broader Than the Franchise Agreement

A UAE franchise cannot be assessed only by reading the franchise agreement. Contract principles, commercial law, intellectual property, competition rules, consumer protection, company law and sector-specific licensing may all affect the arrangement.

The contractual framework has also changed. Federal Decree-Law No. 25 of 2025 introduced a new Civil Transactions Law that took effect on 1 June 2026 and repealed the 1985 law. Among other reforms, it addresses pre-contractual negotiations and disclosure of fundamental information. That is relevant to franchise negotiations even though it does not create a dedicated franchise disclosure regime.

A Clear Definition Could Reduce Structural Uncertainty

One benefit of dedicated legislation would be a statutory definition of a franchise. Not every licence, distribution arrangement, concession or agency is commercially the same.

A clear definition could identify when franchise-specific rules apply by looking at matters such as use of a brand, operational control, continuing support, fees and the right to operate a business system. It could also make it easier to distinguish franchise arrangements from structures falling within other regulated categories.

Commercial Agency Treatment Needs Careful Separation

The UAE Commercial Agencies Law is important because some franchise structures may intersect with the commercial agency regime where the statutory requirements are met. A franchise should not, however, be assumed to be a registered commercial agency merely because it uses exclusive territorial rights or includes distribution elements.

A dedicated franchise law could clarify the boundary between the two concepts and explain how franchise legislation would interact with the Commercial Agencies Law. That would assist brand owners and local operators when structuring exclusivity, distribution and territorial rights.

Disclosure Could Be One Area for Reform

The UAE currently has no general franchise-specific disclosure document comparable to mandatory disclosure systems used in some other jurisdictions. Prospective franchisees therefore depend heavily on negotiated information, due diligence and the contractual process.

A proportionate disclosure regime could require important information before the franchise is signed or substantial fees are paid. Relevant areas could include ownership of the brand, fees, investment obligations, intellectual property, material litigation or insolvency history where appropriate, network information, renewal and termination provisions, and major restrictions on the franchisee. The purpose should be informed decision-making, not a guarantee that the investment will succeed.

Termination and Renewal Require Balance

Franchise relationships can involve substantial expenditure on premises, equipment, employees, fit-out and local marketing. A franchisee may want greater certainty over termination and renewal. The franchisor needs effective remedies where an operator seriously breaches brand standards, payment obligations or legal requirements.

A future statute could establish minimum procedural standards without removing the parties' ability to negotiate commercial terms. It could address notice, cure periods for remediable breaches, renewal conditions and post-termination obligations. The challenge would be avoiding rules that protect one side so heavily that legitimate brand control or investment decisions become harder.

Competition and Intellectual Property Would Still Matter

A franchise law would not replace the rest of the legal system. Federal Decree-Law No. 36 of 2023 regulates competition in the UAE, and Cabinet Resolution No. 59 of 2026 brought its executive regulations into effect on 30 July 2026. Franchise restrictions involving pricing, territories, suppliers, customers or competing activities may therefore need to be assessed within the competition framework.

Trademark and other intellectual property laws would also remain central. A franchisor needs clear rights over the marks and systems being licensed, while the agreement should control authorised use, confidentiality, digital assets and post-termination de-branding. The UAE's current federal trademark framework is contained in Federal Decree-Law No. 36 of 2021.

The Case Is for Clarity, Not Regulation for Its Own Sake

A dedicated UAE franchise law could improve predictability if it focuses on issues genuinely specific to franchising. Definitions, proportionate disclosure, clearer interaction with commercial agency rules, basic termination and renewal procedures, and recognition of franchise IP and know-how could provide useful structure.

At the same time, the current model gives sophisticated parties room to design agreements around different sectors and investment strategies. Overly rigid rules could reduce that flexibility.

Until any dedicated legislation is introduced, franchisors and franchisees should continue to treat the contract, market-entry structure and due diligence process as central risk-management tools. The absence of a standalone franchise statute does not mean the relationship is legally simple. It means several legal regimes can apply to one commercial model.

While entering the UAE franchise market, appointing a franchisee or restructuring an existing network, Kaden Boriss advises on franchise agreements, market-entry structures, joint ventures, licensing, intellectual property and commercial arrangements. Consult with Kaden Boriss associates to assess the proposed structure and contractual protections before significant rights, fees or expansion commitments are agreed.

FAQs

1. Does the UAE currently have a dedicated federal franchise law?

No. As of August 2026, the UAE does not have a standalone federal statute regulating franchises as a separate category. Franchise arrangements can instead be affected by contract law, commercial legislation, intellectual property, competition rules and other laws relevant to the particular structure or sector.

2. Does that mean franchises in the UAE are unregulated?

No. The absence of a standalone franchise law does not place franchise agreements outside UAE law. The parties still need to consider applicable contractual rules, business licensing, intellectual property rights, competition law, consumer requirements and any sector-specific regulation.

3. Is every UAE franchise agreement treated as a commercial agency?

No. A franchise should not automatically be treated as a registered commercial agency. Whether the Commercial Agencies Law becomes relevant depends on the structure of the arrangement and whether the statutory requirements are satisfied.

4. Does UAE law currently require a standard Franchise Disclosure Document?

No. There is currently no general franchise-specific requirement to provide a standard Franchise Disclosure Document in the UAE. However, the new Civil Transactions Law contains provisions concerning pre-contractual negotiations and disclosure of fundamental information, so pre-contractual conduct should still be considered carefully.

5. Would a new franchise law replace UAE competition and trademark laws?

No. Any dedicated franchise regime would need to operate alongside existing legislation. Competition issues, trademark ownership, permitted brand use, confidentiality and other intellectual property matters would continue to require consideration under the relevant laws.

6. What should franchisors and franchisees do while there is no dedicated franchise law?

They should carry out legal and commercial due diligence before signing, confirm the licensing and market-entry structure, protect the relevant intellectual property and negotiate the agreement carefully. Particular attention should be given to territory, fees, operating standards, supply obligations, renewal, termination, dispute resolution and post-termination rights.