- The UAE has no separate franchise law, so a franchise agreement is an ordinary contract unless the parties register it.
- Registering a franchise with the Ministry of Economy and Tourism turns it into a commercial agency, which gives the local partner extra rights.
- Only UAE nationals and companies they own in full can hold a registered agency.
- Competition rules now cover exclusive territory and supply terms, with fines of up to 10% of annual UAE sales.
Which law applies to a franchise agreement in the UAE
Federal Law No. 3 of 2022 on the Regulation of Commercial Agencies is the main law that can apply to a franchise in the UAE. There is no separate franchise law. A franchise agreement that the parties do not register is an ordinary commercial contract, governed by the Civil Transactions Law and the Commercial Transactions Law.
The law does not require a franchisor to give a prospective franchisee any information before signature. There is no disclosure document and no waiting period. A franchisee that wants financial or operating information must ask for it in the agreement. Our commercial lawyers in Dubai advise franchisors on which of these two positions their draft creates.
When a franchise counts as a commercial agency
Article 1 of Federal Law No. 3 of 2022 defines a commercial agency as one party representing another to sell or supply goods or services in the UAE for commission or profit.
A master franchise for a restaurant brand meets that description. The master franchisee sells the brand's food in an agreed territory and keeps the profit.
The rules in the law apply only once the parties register the agreement with the Ministry of Economy and Tourism, which the law still calls the Ministry of Economy. Under Article 4, registration requires a written contract, attestation, and an entry in the Commercial Agencies Register. An agreement that meets the definition but is never registered stays a private contract between the two parties.
Who can be a registered agent
Federal Law No. 3 of 2022 limits registered commercial agency to UAE nationals and to companies they own in full, with exceptions the Cabinet may allow.
Many experienced restaurant operators in the UAE have foreign shareholders. Those companies cannot be registered agents. Where the franchisor wants one of them as its partner, registration is not available, and the parties sign an ordinary franchise contract.
What registration gives the local partner
Once an agency is registered, Federal Law No. 3 of 2022 applies to it, and any agreement between the parties that contradicts the law is invalid.
The registered agent has exclusive rights in the agreed territory. Customs will not release goods covered by the agency for sale through anyone else. The agent can therefore stop other importers bringing the same branded products into the country.
How a registered agency ends
Article 9 of Federal Law No. 3 of 2022 governs when a registered agency expires, and the parties cannot change those rules by contract.
Three implementing decisions matter. Ministerial Decision No. 215 of 2023 sets how the Ministry assesses an agent's investment where the agent asks that the expiry rules not apply to an agency registered for ten years before the law took effect. Ministerial Decision No. 216 of 2023 allows goods covered by an agency to enter the country temporarily while the principal and agent are in dispute. Cabinet Decision No. 89 of 2023 sets the administrative penalties. All of them are published by the Ministry of Economy and Tourism.
An unregistered franchise ends on whatever terms the contract states, subject to the Civil Transactions Law. What a franchisor can recover from a franchisee that breaches is covered in our article on breach of a commercial contract in the UAE.
Where a dispute about a registered agency is heard
Federal Law No. 3 of 2022 gives UAE courts jurisdiction over disputes about a registered agency, and no claim is heard by a court until the Commercial Agencies Committee has considered it first.
That route adds time and removes the parties' choice of venue. Whether an arbitration clause survives registration is a separate question, covered in our article on arbitration clauses in commercial agency and distribution agreements.
Sub-franchising and the trademark licence
Article 34 of Federal Decree-Law No. 36 of 2021 on Trademarks prevents a licensee from granting sub-licences or assigning the licence unless the trademark owner agrees.
A master franchise depends on the master franchisee appointing sub-franchisees to run individual sites. That right must appear in the licence itself. The agreement should state which brand elements a sub-franchisee may use, what approval the franchisor keeps over each appointment, and what happens to the sub-franchise agreements if the master franchise ends. Where the master franchise ends first, the sub-franchisees lose their licence, and the franchisor has no contract with the operators running the restaurants.
Article 31 requires the licence to be in writing and notarised. Recording it in the trademark register is optional, though recording helps the franchisor prove the licence against third parties. Only a registered trademark can be licensed, so the franchisor must file its marks in the right classes first, as explained in our guide to trademark registration in the UAE. The current instruments are listed by the Ministry of Economy and Tourism.
Exclusive territory, suppliers and prices
Cabinet Decision No. 59 of 2026, the executive regulations to Federal Decree-Law No. 36 of 2023 on the Regulation of Competition, came into force on 30 July 2026 and replaced the 2014 regulations.
Franchise agreements normally contain exclusive territories, minimum purchase obligations, approved supplier lists and resale prices. The Ministry can examine each of these terms.
Fines start at AED 100,000 and go up to 10% of annual UAE sales. A company that fails to notify a transaction when it should have done faces a fine of 2% to 10% of the relevant revenues. Cabinet Resolution No. 3 of 2025, effective 31 March 2025, sets the notification thresholds at combined annual sales above AED 300 million in the relevant UAE market, or a combined market share above 40%.
Two points apply to food and drink in particular. The Ministry has exempted exclusive dealing agreements in the market for food promotion and delivery through digital platforms, which affects the terms delivery apps impose on franchisees. The competition rules also do not apply to companies established in the DIFC or the ADGM.
Which permits the franchisee needs before it opens
Federal Law No. 10 of 2015 on Food Safety requires a food business to hold permits from the local municipality or food authority in addition to its trade licence.
The franchisee obtains these permits in its own name. Dubai Municipality registers food products through the Montaji system, and imported items need Arabic labels. Recipes written abroad often contain ingredients that need separate approval, so the agreement should say who pays and who waits if a product is refused. Our guide to UAE food business compliance and licensing covers the permits, and we advise operators across the hospitality sector.
What to agree before signing
- Decide whether to register, and check whether the intended partner could qualify as a registered agent.
- Register the trademarks in every relevant class before granting the licence, then notarise the licence.
- Define the territory by emirate, and say separately whether it covers delivery apps, online sales and free zone sites.
- Check the exclusivity, supplier and pricing clauses against the competition rules before signature.
- State what happens to the sub-franchisees, the sites and the stock if the master franchise ends early.
Is it better to register a UAE franchise as a commercial agency?
It depends on which side the structure is meant to protect. Registration gives the local partner exclusivity, customs protection and expiry rules the franchisor cannot change, and it limits the choice of partner to UAE nationals and companies they own in full. An unregistered franchise lets the franchisor pick any operator and set its own termination terms, but gives no protection against parallel imports.
Legal advice may be required to assess how the commercial agency, trademark and competition rules apply to a particular brand, territory and partner.
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