Franchising in the UAE Guide: 2026 Legal Framework

21 January 2026

Franchising in the UAE is a strategic expansion tool governed by a composite legal framework rather than a standalone statute. The primary governing laws include the New Commercial Agencies Law (2022), the Civil Transactions Law, and the Commercial Transactions Law. Businesses must choose between registering as a commercial agency for statutory protection or utilizing unregistered agreements for greater contractual flexibility.

Understanding UAE Franchise Laws 2026: Absence of a Standalone Statute

At the outset, it is important to note that the UAE does not yet have a specific law dedicated solely to franchising. The concept of a franchise [HM3.1]is not defined in a singular statute, and franchise relationships are instead governed by a constellation of legal instruments and principles.

• New Commercial Agencies Law (Federal Law No. 3 of 2022): Central among these, it applies to arrangements involving the representation of a principal by an agent for distribution, sale, offer or provision of services and may, under specific conditions, encompass certain franchise agreements.
• Civil and Commercial Statutes: Franchises are subject to general contract and commercial law principles under the UAE Civil Transactions Law (Federal Law No. 5 of 1985) and the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022). These statutes govern contractual validity, enforceability, performance obligations and dispute resolution.
• Intellectual Property (IP): IP protection is provided through the Trademark Law (Federal Decree-Law No. 36 of 2021) and related IP laws, underscoring the necessity for franchisors to register and protect their brand assets in the UAE to prevent infringement.

Registration and the Commercial Agencies Regime

A defining feature of the UAE franchise legal landscape is the dual path available to franchisors: to register the franchise agreement as a commercial agency or to operate under general contract law without such registration.
Registration is not mandatory for all franchise arrangements. However, where a franchisee qualifies as a commercial agent—typically by being a UAE national or a legal entity owned by UAE nationals—and where the agreement grants exclusivity over defined territories, registration with the Ministry of Economy creates additional statutory protections. These protections can include:

• Restrictions on parallel imports.
• Limits on termination without justifiable cause.
• Adjudication by UAE authorities.

To effect registration, the franchise agreement must be in writing, notarized, translated into Arabic, and, if executed abroad, legalized through diplomatic channels.

Contractual Freedom and Practical Flexibility

For many franchisors entering the UAE market, operating outside the Commercial Agencies framework by using unregistered franchise agreements offers greater flexibility. These agreements are generally governed by the Civil and Commercial Codes and allow the parties to tailor terms on territory, royalties, renewal, termination and dispute resolution more freely than under the statutory agency regime.
However, unregistered contracts do not benefit from the bespoke protections afforded to registered commercial agencies and must be drafted with careful attention to UAE contractual norms, including clarity on governing law and jurisdiction.

Regulatory Considerations: Competition, Tax and IP

Beyond the principal laws directly governing franchise relationships, other regulatory regimes intersect with franchise operations in the UAE:

• UAE Competition Law: Updated through Federal Decree-Law No. 36 of 2023, this has implications for exclusive distribution rights, territorial restrictions and pricing practices, particularly where provisions may unreasonably restrict competition.
• Fiscal Perspective: Franchises are subject to corporate tax and VAT considerations, including the treatment of royalties, licensing fees and cross-border payments.
• Compliance: Franchisors and franchisees should consider if income streams trigger tax liabilities and ensure compliance with transfer pricing and economic substance obligations.

Emerging Trends and Future Developments

While the UAE currently does not have a dedicated franchise statute, there is ongoing commercial and legal discourse around the potential benefits of such a framework. Industry stakeholders, including chambers of commerce and legal practitioners, have at times highlighted the absence of a tailored franchise law as a gap in the legal architecture that could further enhance investor protection and clarity.
Regardless of future legislative developments, the present regime requires that franchisors and investors adopt strategic legal planning and align contractual terms with applicable laws.

How MIS Legal Can Assist

MIS Legal can assist both franchisors and franchisees by providing expert guidance on structuring agreements, navigating registration requirements, ensuring compliance with UAE commercial, IP and competition laws, and mitigating potential legal risks to secure a smooth and successful market entry.