Franchising in the Middle East: The Example of Egypt

Abstract

With the largest population in the Arab Middle East and a central location between Europe and East Asia, Egypt offers one of the biggest sources of franchising markets in the world for new business opportunities. Egypt, however, does not have specialized laws regulating franchising, which results in real challenges for investors who are seeking to franchise their businesses in Egypt, along with their legal advisors. It also creates problems for the courts who must rule on disputes arising from franchising transactions.Because of this lack of formal legal guidance in Egypt, other laws, including contract, commercial and agency laws, have had a substantial impact on franchising. This inconsistency in application can lead to contradictions as to the specific nature of franchising, which can make it difficult to negotiate and decide various issues arising under franchise agreements. Further, the variety of applications can impose heavy burdens on franchising parties.With all of these factors in place, it seems like a perfect time to discuss a new legal framework for franchising in Egypt. Such legal reform will be important for Egypt in order to recover from the economic impact of the January Revolution and subsequent political unrest, and also to improve the chances for foreign investment. A comprehensive Egyptian franchise law proposal should address various issues that are commonly dealt with in other franchise law frameworks around the globe, such as disclosure commitments, registration requirements, and substantive rights and obligations of the parties.