Explore the legal intricacies of cross-border franchising in Europe, the UAE, and Saudi Arabia. Learn how to protect your brand and navigate complex disclosure laws for successful expansion.

Franchising Across Borders: Legal Smarts You Can’t Ignore

Created on:
November 12, 2025 10:04 PM
Last modified on:
November 12, 2025 10:04 PM

By Mohamed Darwish – Founder of Darwish Legal Consultants | Hospitality Lawyer & Mediator

Picture this: you launch a vibrant café in Dubai. It becomes a local favorite. Then you think bigger; now let’s franchise it across the UAE. Your brand evolves into a boutique hotel concept, and you decide to license your modular room-build designs in Saudi Arabia. Overnight, you’re not just in cafés; you’re in hospitality and construction too. You may find yourself facing strong competition from competitors who have been in the market for years. Now, your only concern is how to penetrate a market that already has established tycoons in your industry. How do I start, and what are the laws that govern my project?

It’s thrilling. But behind that excitement, there’s the quiet reality of law. Because when you span sectors and borders, legal clarity becomes your anchor.

Europe: Legal Depth, Growth Trade-Offs

Let's start from a broader view. In France, franchisors must comply with the Loi Doubin. It requires that franchisors (and similar licensors) provide a Pre-contractual Disclosure Document (PDD) at least 20 days before the signing of a franchise agreement or any financial commitment. That means transparency, yes—yet it also slows expansion. Similarly in Germany, though there is no specific franchise statute, courts rely heavily on competition law. Under Article 101 TFEU, any clause that restricts competition—like fixed resale prices or excessively broad territorial exclusivity—can be struck down.

In practice, a hotel chain wanting rapid rollout across Germany or France might find itself held up by lengthy legal reviews, disclosure demands, or competition investigations. The framework is solid and protective—but in fast-moving industries like hospitality or modular build-outs, speed matters.

UAE: Flexibility Meets Progress

Shift to the UAE and you’ll see a different dynamic. The old Commercial Agencies Law (Federal Law No. 18 of 1981) created risks for franchisors: a contract that looked like an agency could trigger unwanted rights for the local partner. That changed with the New Commercial Agencies Law (Federal Law No. 3 of 2022). Effective June 2023, the updated law offers clearer definitions and better separation between agency and franchise models.

Then there’s the Competition Law (Federal Decree-Law No. 4/36-2023), which modernizes how competitive practices are regulated in the UAE. Intellectual property is also taken seriously: for example, brand owners are encouraged to register trademarks and protect “look and feel” across sectors such as F&B, hospitality and construction.

Importantly, the UAE not only legislates but also aligns its laws with economic growth. The tourism and hospitality sector recorded over 30 million hotel guests in 2024 and the government predicts 40 million annual visitors and AED 450 billion investment by 2031. The laws being introduced aren’t just reactive—they’re designed to support that growth. They say: “Scale confidently.” They don’t say: “Please wait your turn.”

Real Contract Risks in Multi-Sector Franchising

Here’s where it gets real. Suppose your café brand becomes a hotel brand and then a modular hotel-room build-out concept in another country. You sign a Saudi franchise agreement under Royal Decree No. M/22-1441H (2019) and its implementing regulation. Under the Saudi framework you’re required to register the franchise with the Ministry of Commerce, disclose key obligations, and define the trademark, know-how and business model clearly.

If your contract is vague and doesn’t specify who owns the modular build design, or if the territory rights are unclear, you may end up with disputes you’re not ready for. In the UAE, too, consider Federal Case No. 50/2017, where a franchise agreement that carried agency-like elements was treated as an agency, triggering long-term obligations for the local partner. Check the analysis of the case on Muhami.com and The Jurist

When you mix café, hotel, and construction, you have to think: whose brand is it? Who collects the data? Who supplies the materials? And under which country’s law will disputes be settled? These are not side issues, they lie at the core of successful expansion.

What You and Your Lawyer Should Ask Today

If you’re a franchisor, you must ask: Is your franchise model clearly distinguished from an agency? Can you protect your IP—the café design, hotel look, room modules? Have you considered data privacy, especially guest data and supplier data across borders? Are your contracts aligned with both the UAE’s flexible approach and the stricter disclosures of Saudi or European regimes?

If you’re a franchisee, ask: Does the disclosure comply with Saudi or European expectations? Are your rights protected if the franchisor delays rollout or changes design? Is your agreement fair under competition law? Too often, partners sign first and review later and that’s where problems appear.

Lawyers, in particular, must shift from drafters of contracts to architects of networks. Whether you’re advising a café chain, a hotel brand, or a modular build-out service, you’re dealing with intersections—industries, jurisdictions and business models. Your value lies in tying all the threads together.

Watch the full episode The Power of Franchising: How to Build and Expand Your Brand Successfully! with Ahmed Elnaggar

Mohamed Darwish the founder of Darwish Legal Consultants, along with Ahmed Enaggar the managing partner of ElNaggar and Partners.

A Legal Ground for Growth

Franchising across cafés, hotels and build-outs is no longer niche—it’s real. The UAE, with its mix of legal flexibility and protective growth strategy, offers one of the most promising platforms in the world. But growth without clarity is fragile.

When you combine smart contracts, strong IP, robust data governance and jurisdictional foresight, you turn opportunity into scale—and risk into resilience.

In the end, the brands that win are those whose lawyers didn’t just ask “What if things go wrong?” but “How do we make sure things go right from the start?”

Mohamed Darwish Founder of Darwish Legal Consultants Hospitality Lawyer | Mediator | Host of The Legal Lobby Podcast