New franchising law on the cards

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Dubai Chamber of Commerce and Industry is making hectic efforts to protect businesses and investors in the franchise segment.
Dubai Chamber of Commerce and Industry is making hectic efforts to protect businesses and investors in the franchise segment. Image credit-Francorp

The Dubai Chamber is reported to be closely collaborating with legal firms in the emirates to devise a new franchising law to protect businesses in the UAE.

Currently, the UAE does not have a separate law to regulate the franchising business in the emirate. Further, there are no provisions in the existing legal framework to cover franchise business in the emirate. As a result, business owners and legal professionals have to face considerable difficulties in dealing with this form of business, which is immensely popular in the region.

A news report by the Gulf News points out that the Dubai Chamber of Commerce and Industry is making hectic efforts to protect businesses and investors in the franchise segment. The group recently held a workshop featuring top legal firms to develop franchising law in the UAE. Currently, franchise agreements in the UAE are subject to civil and commercial laws, namely the Commercial Agencies Law, the Commercial Transactions Law and the Civil Transactions Law. The UAE intellectual property laws may be applied in some situations, which involve the transfer of know-how and rights such as trademarks, logos and business processes.

Even though government data suggests that there are no pending disputes related to a franchise agreement in the UAE, this may not be an accurate representation of facts as most franchise agreements are treated as commercial agencies. Therefore, any franchising disputes are also categorized as commercial agency disputes.

There is a dire need for a clear franchising law to define the obligations of both the franchiser and franchisee. Implementation of a concrete legislation will encourage the setup of more franchising businesses as investors will feel protected in case of any future disputes. As a result, the franchising business would further develop in the local market and contribute towards the growth of UAE’s economy.

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