The Franchise contract is one of the unidentified contracts, or those that are not governed by civil law and in which the parties may freely formulate the contract's content. The absence of rules, on the other hand, does not necessarily imply that the parties to such agreements have complete control over the terms of the agreement.
The parties have the freedom to contract between themselves under the principle of freedom of contract. Unless the contract's object or intent is incompatible with the relationship's attributes, the law, or social coexistence principles. In this way, the principle of contract freedom establishes the parameters for the formulation of the Franchise Contract's wording.
What is a Franchise Agreement?
A franchise agreement is a legal contract between a franchisor and a franchisee that establishes a franchise relationship. A franchise agreement grants the franchisee the legal right to open and run a franchised outlet within the franchisee's territory, as well as the license and right to use the franchisor's trademarks, trade dress, business systems, operations manual, and sources of supply in providing and selling the franchisor's products and/or services. Prior to offering or selling any franchise, the Franchise Agreement must be lawfully disclosed as an exhibit to the Franchise Disclosure Document, which must be disclosed to prospective franchisees.
Franchise in the UAE
There are a number of requirements that must be met in order to register a contract with the appropriate Ministry, the most important of which are:
- A UAE national or an entity wholly owned by UAE nationals must be the franchisee.
- The franchise agreement must provide exclusivity over the entire UAE or a portion of it.
- A notarized franchise agreement is required.
Many franchise agreements have been signed in the UAE between foreign franchisors and local limited liability companies, with foreign shareholding owning 49 percent of those companies' shares.
