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Absenteeism is one of the most common, and most mismanaged, sources of workplace friction in the UAE. Employers often assume persistent lateness or unexplained absence automatically justifies dismissal, while employees may underestimate how quickly repeated unauthorised absence can become a statutory ground for summary termination. Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (the “Labour Law”), together with its Executive Regulation under Cabinet Resolution No. 1 of 2022, sets out a precise, and narrower than commonly assumed, framework for when absence becomes a lawful basis for dismissal without notice.

The General Rule: Notice-Based Termination

Under Article 43, either party to an employment contract may terminate it for a legitimate reason, subject to a written notice period of 30 to 90 days, as agreed in the contract. Ordinary attendance issues — occasional lateness, isolated unexcused absences or attendance-related performance concerns — would generally be managed through this notice-based route, or through appropriate disciplinary measures under Articles 39 and 40, rather than immediate dismissal. Employers who terminate outside the statutory grounds for dismissal without notice may face disputes over notice pay and other employment entitlements.

Article 44: The Threshold for Summary Dismissal

The decisive provision is Article 44, which sets out the grounds on which an employer may dismiss a worker without notice and without paying notice-period compensation. Among those grounds, absenteeism is addressed specifically: an employer may summarily dismiss a worker who is absent without a legitimate reason, or without an excuse acceptable to the employer, for more than 20 non-consecutive days within one year, or more than seven consecutive days.

This dual threshold is important. The law does not require a single, continuous absence to reach the seven-day mark — a pattern of unexplained absences that cumulatively exceeds 20 non-consecutive days within the relevant one-year period can also satisfy the statutory threshold. Employers tracking attendance should therefore maintain a clear, dated record of absences rather than relying on subjective impressions of chronic absenteeism.

Article 44 also covers other forms of serious misconduct, including falsified documents, serious breaches of safety instructions, disclosure of work secrets causing specified harm, workplace intoxication, assault and unlawful exploitation of a position for personal gain. Where chronic absence coincides with separate misconduct falling within Article 44, the employer should assess each ground independently and document the evidence supporting it.

Mandatory Procedural Safeguards

Meeting the numerical threshold under Article 44 is necessary, but it is not sufficient on its own. The article expressly requires the employer to conduct a written investigation with the worker before imposing summary dismissal. The dismissal decision must then be issued in writing, state the reasons for dismissal and be handed to the worker.

Cabinet Resolution No. 1 of 2022, particularly Article 24, also regulates disciplinary penalties generally. It requires the appropriate penalty to be proportionate to the seriousness of the violation and provides that the worker must be notified in writing of the allegation, with the worker’s statements and defence documented before a disciplinary penalty is imposed.

Skipping the written investigation can undermine an otherwise defensible Article 44 dismissal. Informal warning emails are not necessarily a substitute for the investigation required by Article 44. A robust file should typically include written notice of the allegation, specific dates of unauthorised absence, the employee’s response, an assessment of the 20-day/seven-day threshold, supporting attendance records and a final written decision identifying the statutory basis for dismissal.

Importantly, Article 44 does not prescribe a minimum number of prior warning letters for the specific absenteeism ground. The focus is on establishing the statutory conditions and complying with the required investigation and written-decision process. This should, however, be distinguished from other Article 44 grounds where the law expressly requires prior warnings.

MOHRE Notification Obligations

Employers should also consider any notification obligations that arise from the particular circumstances of the termination. For example, where dismissal relates to a worker causing a serious material loss or deliberately damaging the employer’s property and acknowledging the same, Article 44 requires the employer to inform the Ministry of Human Resources and Emiratisation (MoHRE) within seven business days of becoming aware of the incident. This requirement is distinct from the absenteeism ground itself.

Accordingly, employers should avoid treating MoHRE notification as a generic requirement for every Article 44 absence case. The applicable reporting obligation should be assessed against the specific statutory ground relied upon.

End-of-Service Gratuity Is Not Automatically Forfeited

A frequent misconception is that an Article 44 dismissal automatically strips the worker of end-of-service gratuity. This is incorrect. Article 51 provides for end-of-service gratuity for eligible foreign workers who have completed at least one year of continuous service, calculated on the basis of basic salary. The fact that termination takes place under Article 44 does not, by itself, extinguish that statutory entitlement.

Employers should therefore calculate final employment entitlements separately from the question of whether summary dismissal was justified. Any claim for recovery of losses or deductions should be assessed under the specific statutory provisions applicable to that loss and should not be treated as an automatic forfeiture of gratuity.

Absence During Sick Leave

Absenteeism analysis intersects with, but is distinct from, the sick-leave regime under Article 31. After the probationary period, a worker is entitled to sick leave of up to 90 days per year, subject to the statutory conditions and payment structure. Where the statutory sick-leave period has been exhausted and the worker remains unable to return to work, the employer may have a separate statutory basis for termination, subject to the applicable requirements and payment of the worker’s lawful entitlements.

This is a different pathway from an Article 44 absenteeism dismissal and should not be conflated with it in termination correspondence. The employer should first establish whether the absence is medically certified and falls within the statutory sick-leave regime before treating it as unauthorised absenteeism.

Practical Guidance for Employers

1. Maintain a clear attendance record measured against both the 20 non-consecutive-day and seven-consecutive-day thresholds, rather than relying on subjective impressions of chronic absenteeism.
2. Do not shortcut the written investigation. Document the allegation, the employee’s opportunity to respond and the reasoned decision before issuing an Article 44 dismissal.
3. Assess MoHRE notification requirements according to the specific statutory ground relied upon, and retain proof of any notification made.
4. Calculate gratuity and other final entitlements correctly rather than assuming they are automatically forfeited following summary dismissal.
5. Distinguish absenteeism from sick leave, as the applicable legal basis and procedural requirements may differ.

Conclusion

The UAE Labour Law provides employers with a clear, but procedurally demanding, route to summarily dismiss employees for chronic unauthorised absence. The numerical thresholds in Article 44 are well defined, but they do not eliminate the need for a documented written investigation and a reasoned written decision. Employers must also distinguish the absenteeism ground from other Article 44 grounds, particularly where separate MoHRE notification requirements apply.

The practical lesson is straightforward: attendance records alone are not enough. Employers should establish the legal basis for dismissal, verify the applicable threshold, give the employee a genuine opportunity to respond and document the decision carefully. Employees facing termination on absenteeism grounds should likewise scrutinise whether the employer has established the statutory threshold and followed the required procedure. A carefully documented process can make the difference between a defensible termination and a costly employment dispute.

A franchise relationship can look successful on the surface while serious disagreements are developing behind the scenes. Sales may be strong, the brand may be expanding and both parties may appear commercially aligned. Yet a dispute over money, performance, territory or contractual obligations can quickly turn a profitable partnership into a legal battle.

What makes franchise disputes particularly complex is that they rarely arise from a single issue. A disagreement over royalty payments may be linked to falling sales. A territory dispute may be triggered by a new outlet or online sales. A franchisee's underperformance may lead to arguments over the level of support provided by the franchisor. By the time either party considers termination, several unresolved issues may have accumulated.

The consequences can extend well beyond the immediate financial disagreement. Litigation can disrupt operations, damage the reputation of the brand, affect employees and customers, and destroy a commercial relationship that may once have been mutually beneficial. For both franchisors and franchisees, understanding where disputes typically originate — and how they can be resolved — is therefore critical.

Royalty Payments: The Most Obvious Flashpoint

Money is often at the heart of franchise disputes. Franchise agreements commonly require franchisees to pay royalties based on turnover or revenue, in addition to initial fees, marketing contributions and other charges.

Problems can arise over the calculation of royalties, excluded revenue, accounting practices or alleged under-reporting of sales. A franchisee facing declining profitability may argue that continuing royalty obligations have become commercially unsustainable, while the franchisor may maintain that contractual payments are unrelated to the franchisee's individual profitability.

Disputes can become more serious when an audit reveals discrepancies in reported turnover. Depending on the agreement, the franchisor may seek unpaid royalties, interest, penalties and reimbursement of audit costs.

The lesson is straightforward: payment provisions should leave as little room as possible for competing interpretations.

Misrepresentation Before Investment

Some disputes begin before the franchise agreement is even signed. A prospective franchisee may rely on statements about expected revenues, profitability, market demand, outlet performance or the level of support it will receive. If the business subsequently performs poorly, the franchisee may claim that it was persuaded to invest on the basis of inaccurate or misleading information.

The legal question is not simply whether the business failed to meet expectations. Businesses carry inherent commercial risk. The more important issue is whether material information was misrepresented, omitted or presented in a way that created an unjustified expectation.

Franchisees should independently test financial projections and market assumptions before investing. Franchisors, meanwhile, should ensure that sales representations are properly supported and clearly distinguished from forecasts or estimates.

Underperformance: A Dispute Over Responsibility

Poor performance can place both parties under pressure. The franchisor may blame inadequate management, failure to follow the operating system, poor staffing or insufficient local marketing. The franchisee may argue that the brand failed to provide training, operational assistance, marketing support or the promised business infrastructure.

This creates a difficult question: when a franchise outlet underperforms, who is responsible? The answer depends heavily on the contractual allocation of responsibilities and the evidence available. Detailed performance standards, reporting requirements and support obligations can help establish whether a party has failed to meet its commitments.

More importantly, early intervention can prevent an operational problem from becoming a legal dispute. A structured performance-improvement plan may be considerably more valuable than immediately issuing a breach notice.

Territory Infringement: When Competition Comes From Within

Territorial protection can be one of the franchisee's most important commercial expectations. After investing in premises, employees, marketing and local customer relationships, a franchisee may object strongly if another outlet from the same brand is opened nearby.

The problem becomes even more complicated in an increasingly digital marketplace. A franchise agreement drafted around physical locations may not adequately address website orders, mobile applications, delivery platforms or digital advertising.

A dispute may therefore arise over whether the franchisor has effectively allowed another franchisee or the corporate business to compete within a protected territory.

Territory clauses need to account for the way customers actually buy products and services, rather than relying solely on geographical boundaries drawn around physical outlets.

Supply-Chain Disputes

Control over supply is often essential to maintaining consistency across a franchise network. But mandatory purchasing arrangements can become contentious when franchisees believe approved suppliers are charging excessive prices, experiencing repeated shortages or providing products that do not meet expectations.

The franchisor, on the other hand, may argue that alternative sourcing would compromise quality, safety or brand standards.

A well-drafted agreement should address supplier approval, quality requirements, pricing mechanisms, shortages and circumstances in which alternative suppliers may be used. This becomes particularly important during periods of disruption, when rigid supply arrangements can create operational difficulties for otherwise compliant franchisees.

Marketing Funds: Questions of Transparency

Marketing contributions can generate friction when franchisees do not believe they are receiving sufficient value from the funds they are required to contribute.

A central advertising fund may finance national campaigns, digital advertising, brand development or other promotional activities. However, franchisees may question how much of the expenditure benefits their particular market.

The issue is often less about the amount contributed than about transparency. Reporting requirements, permitted uses of the fund and clear financial accountability can reduce suspicion and prevent relatively small disagreements from developing into wider disputes.

Intellectual Property: Protecting the Brand

Intellectual property is at the centre of the franchise relationship. The franchisor permits the franchisee to use valuable trademarks, branding, copyrighted materials, business systems and confidential know-how, but that permission is normally limited by the agreement.

Problems may arise if a franchisee uses the brand outside the permitted scope, copies proprietary materials, retains access to confidential systems or continues using trademarks after the agreement ends.

The reverse situation can also occur. A franchisee may develop local marketing material, customer-facing content or other assets and later dispute who owns them.

IP provisions should therefore address ownership, licensing, permitted use, confidentiality, digital assets and the consequences of termination.

Early Termination: When the Relationship Breaks Down

Termination is often the culmination of a dispute rather than its beginning. A franchisor may seek to terminate because of unpaid royalties, repeated operational failures, reputational damage, misuse of IP or other contractual breaches. The franchisee may challenge the decision, arguing that the alleged breach was minor, capable of being remedied or did not justify termination.

The wording of the termination clause can become decisive. Notice requirements, cure periods, materiality thresholds and specific termination events should be clearly established.

For franchisees, termination can have severe financial consequences because significant capital may already have been invested in premises, equipment, staff and local marketing. For franchisors, allowing a persistently non-compliant outlet to continue can expose the wider brand to reputational and operational risks.

Renewal: The Dispute That Begins Years Earlier

Renewal disputes can be particularly damaging because they arise after the franchisee has invested years building the business.

A franchisee may assume that a successful outlet will naturally continue, while the franchisor may regard renewal as conditional on compliance with updated standards, payment of renewal fees or acceptance of a new agreement.

The original contract should therefore establish precisely what happens when the initial term expires. It should address eligibility, notice periods, renewal conditions, fees and the circumstances in which renewal may be refused.

Ambiguity at this stage can turn a successful long-term relationship into a dispute over whether the franchisee has any continuing right to operate.

Non-Compete Clauses: Protection or Overreach?

Post-termination restrictions can generate their own legal challenges. Franchisors have a legitimate interest in protecting confidential know-how, customer relationships and the business model. However, franchisees may argue that an excessively broad non-compete prevents them from earning a livelihood or operating a legitimate business.

The enforceability of such provisions depends on the applicable law and the drafting of the restriction. Duration, geographical scope and the activities covered are all important considerations.

A narrowly tailored restriction designed to protect legitimate commercial interests is generally easier to defend than a sweeping prohibition extending well beyond the franchise relationship.

Litigation, Mediation or Arbitration?

Once a dispute has escalated, the parties must decide how it should be resolved. There is no universal answer: the appropriate mechanism depends on the nature of the dispute, the relationship between the parties and the jurisdictions involved.

Litigation may be necessary where a party requires urgent court intervention, particularly in cases involving serious contractual breaches, injunctions, IP infringement or other matters requiring judicial authority. Court proceedings can provide a definitive judgment, but they can also be lengthy, expensive and adversarial.

Mediation is often more suitable where both parties see value in preserving the relationship. A mediator does not impose a decision but helps the parties negotiate a settlement. A dispute over poor performance, for example, might be resolved through additional training, revised targets, temporary payment arrangements or changes to operational support.

This makes mediation particularly attractive where the underlying franchise remains commercially viable.

Arbitration can be useful for cross-border franchise arrangements, particularly where confidentiality, specialist decision-makers and international enforceability are important. The parties can generally choose the arbitral process and decision-maker, although arbitration can become costly and complex in its own right.

The dispute-resolution clause should therefore be negotiated before a dispute occurs. It should establish the governing law, forum, procedure and whether mediation must take place before arbitration or litigation.

Prevention Starts With the Franchise Agreement

The strongest protection against franchise disputes is not a sophisticated litigation strategy but careful preparation before the relationship begins.

Franchisors should avoid unrealistic sales claims, define operational obligations clearly and establish transparent systems for royalties, marketing contributions, supply arrangements and performance monitoring.

Franchisees should conduct independent financial and commercial due diligence rather than relying solely on the franchisor's projections. They should also understand precisely what they are receiving in return for their investment and what happens if the business does not perform as expected.

Both sides should pay particular attention to termination, renewal, territory, IP and post-termination restrictions. These provisions may appear secondary when the relationship is new, but they can become the most important clauses when the relationship deteriorates.

From Commercial Partnership to Legal Battle

Franchise disputes are rarely caused by one clause in isolation. They are usually the result of commercial expectations colliding with contractual obligations.

A franchisee may believe that a strong brand should guarantee a certain level of success. A franchisor may expect strict compliance regardless of local market conditions. Both assumptions can become problematic when the business encounters difficulties.

The objective should therefore be to identify potential points of conflict before they become disputes. Clear contracts, realistic expectations, regular communication and effective mechanisms for addressing underperformance can resolve many problems before lawyers and courts become involved.

Where conflict does become unavoidable, the parties should choose their dispute-resolution mechanism strategically. Litigation may be necessary in some circumstances; arbitration can provide a private and potentially effective alternative, particularly in international relationships; and mediation may offer the best opportunity to preserve a commercially valuable partnership.

Ultimately, the most successful franchise relationship is not one in which disputes never arise. It is one in which the parties have anticipated where disagreements are likely to occur and created practical mechanisms to resolve them before a temporary commercial problem becomes a costly and complex legal battle.

Dr. Sunil Ambalavellil is the Global Executive Chairman of Kaden Boriss, an international law firm specialising in franchise and business agreements. A seasoned legal adviser, he has advised and supported the international growth of numerous global brands, helping them navigate the legal complexities of cross-border expansion.

Franchising can be an effective way for Indian businesses to expand across cities and into international markets. However, rapid growth can expose weaknesses in the underlying business model, documentation and franchise management systems. A strong brand and a successful outlet alone do not guarantee a successful franchise network.

Here are ten common mistakes Indian franchisors should avoid.

1. Franchising an Unproven Concept

A popular first outlet is not necessarily a replicable business system. Before franchising, the franchisor should validate performance over a meaningful period, document the owner's involvement and test whether the business can operate successfully without the founder's constant presence.

Ideally, the model should be tested through at least one controlled pilot and supported by documented processes, financial assumptions, staffing requirements and customer-service standards. If the business cannot be consistently replicated, it may not yet be ready for franchising.

2. Selling Before Protecting the Trademark

Franchise negotiations expose valuable intellectual property to prospective partners, brokers, employees and vendors. Franchisors should file the relevant word and device marks, confirm ownership and chain of title, and secure appropriate domain names before broadly circulating franchise material.

Trademark protection should also extend to important variations, relevant classes and, where international expansion is contemplated, key overseas markets. A franchise network built around an inadequately protected brand can create expensive disputes later.

3. Promising Unrealistic Returns

Statements about revenue, profitability, break-even periods or investment payback should be supported by reliable data and clearly stated assumptions.

Optimistic WhatsApp messages, presentations and verbal assurances can later become evidence in a dispute involving alleged misrepresentation, unfair trade practices or misleading commercial claims. Financial projections should therefore be subject to a controlled approval process, with clear distinctions between historical performance, projections and assumptions.

4. Using a Generic Franchise Agreement

A restaurant, school, clinic and logistics business do not carry the same operational or regulatory risks. A standard template may provide a starting point, but the final agreement must reflect the particular business model.

It should address issues such as fees and royalties, territory, licences, supply arrangements, technology, data flows, marketing, quality control, intellectual property and exit procedures. For Indian franchisors expanding overseas, the agreement must also account for local laws, foreign investment rules, taxation and dispute-resolution requirements.

5. Selecting Franchisees Only on the Basis of Available Capital

Capital is necessary but not sufficient. A financially strong franchisee may still be unsuitable if they lack the operational ability, commitment or integrity required to protect the brand.

Franchisors should assess the prospective franchisee's business experience, reputation, management involvement, litigation history, funding sources, related businesses, local market knowledge and ability to follow the system. References and appropriate background checks can be as important as financial capacity.

6. Granting Exclusivity Without Performance Conditions

Territorial exclusivity can be commercially attractive, but granting it without measurable performance obligations can leave a franchisor with an underperforming franchisee blocking an entire market.

Exclusivity should be linked to opening deadlines, minimum development commitments, sales or quality benchmarks and appropriate cure procedures. The agreement should also explain when and how exclusivity can be reduced or withdrawn if agreed performance standards are not met.

7. Treating the Operations Manual as an Afterthought

The franchise agreement establishes the legal framework; the operations manual explains how the business is actually expected to function.

If the manual is incomplete or outdated, the franchisor may struggle to train franchisees consistently or establish that an operational breach has occurred. The manual should cover procedures such as staffing, customer service, procurement, technology, branding, health and safety, quality control and reporting.

It should also be capable of being updated in a controlled manner as the business evolves.

8. Exercising Control Inconsistently

Brand standards are essential to franchising, but franchisors must understand the distinction between protecting the system and running the franchisee's business.

Where the model is intended to operate through independent franchisees, excessive involvement in day-to-day employment and business decisions can create unnecessary legal and commercial risks. The actual relationship must be consistent with the contractual structure. An agreement describing the parties as independent contractors cannot, by itself, resolve problems created by conduct that suggests otherwise.

9. Ignoring Competition and Consumer Protection Rules

Franchise arrangements can raise competition and consumer-law concerns. Mandatory pricing, disproportionate non-compete restrictions, restrictions on online sales, tying arrangements and exclusive sourcing requirements should be reviewed carefully.

Consumer complaints, refunds, advertising claims, product safety and customer data also require network-wide protocols. A problem at one outlet can quickly become a reputational problem for the entire franchise system.

Franchisors should therefore establish clear compliance procedures rather than leaving each franchisee to interpret regulatory requirements independently.

10. Failing to Plan Termination and Transition

Termination is an operational event, not merely a legal one. Franchise documentation should clearly address what happens when the relationship ends.

This may include de-identification and removal of branding, inventory, customer communications, digital accounts, confidential information, employee-related issues, deposits, equipment, pending orders and outstanding payments. Depending on the business, the franchisor may also require buy-back, step-in or transition rights.

A poorly managed exit can damage customer relationships and leave confidential information, intellectual property and digital assets outside the franchisor's control.

A Better Franchise Discipline

Indian franchisors can reduce these risks by establishing a structured franchise approval process before accepting new partners. This could include a franchise approval committee, documented due diligence, a standard disclosure pack, a controlled earnings-claim process, a deviation register and an annual review of the franchise agreement and operations manual.

The franchisor should also monitor the network after signing the agreement. Regular audits, training, compliance reviews and performance assessments can identify problems before they become disputes.

Most importantly, expansion should be driven by the quality of the franchise network and the franchisor's ability to support it, rather than simply by the number of signed franchise agreements.

Practical Takeaway

Disciplined partner selection, transparent selling and a properly documented operating system can prevent more franchise disputes than aggressive contract drafting alone. For Indian businesses considering rapid domestic or international expansion, legal preparation should therefore begin before the first franchise agreement reaches the negotiating table.

Dr. Sunil Ambalavellil is the Global Executive Chairman of Kaden Boriss, an international law firm specialising in franchise and business agreements. A seasoned legal adviser, he has advised and supported the international growth of numerous global brands, helping them navigate the legal complexities of cross-border expansion.

Many separating couples in the UAE assume that once a marriage breaks down, going to court is the only route forward. That is not necessarily the case. In many situations, spouses can reach agreement on finances, children’s arrangements or property without contesting every issue before a judge.

But there is a significant gap between an understanding two people have reached and a settlement that will stand up if the relationship deteriorates further. Text messages, verbal promises or even a document signed by both spouses are not automatically the same as a legally enforceable settlement. Before relying on any agreement, it is important to understand what can genuinely be settled privately, what still requires formal recognition and what happens if one party later refuses to comply.

The Legal Framework: Two Regimes

Family settlements in the UAE sit within different personal-status frameworks. For Muslim couples, personal-status matters are governed by Federal Decree-Law No. 41 of 2024 on the Issuance of the Personal Status Law, which came into effect on 15 April 2025 and replaced the previous framework. The law covers matters including marriage, divorce, custody and alimony.

Non-Muslim residents may instead fall under the civil personal-status regime established by Federal Decree-Law No. 41 of 2022, while Abu Dhabi has its own personal-status law for non-Muslim foreigners. The federal civil regime covers matters including divorce and child custody and allows eligible non-Muslim residents certain options regarding the applicable law.

Which framework applies can shape everything that follows, from how maintenance and custody are dealt with to how a settlement is formalised. Identifying the applicable regime is therefore the first step in any negotiation.

What Can Spouses Agree on Privately?

Couples commonly try to reach an understanding on maintenance and financial support, children’s living arrangements and schooling, custody and visitation, children’s travel, housing costs, and the division of property and debts.

Many of these matters can, in principle, be negotiated. However, UAE family law does not necessarily treat every agreement as final simply because both spouses have signed it. Matters concerning children remain subject to the authority of the competent court or authority, which may consider whether an arrangement serves the child’s best interests. Parents cannot simply contract away a child’s legal rights, and terms that appear fair to both spouses today may still require formal recognition to carry lasting legal weight.

Maintenance and Financial Obligations

Financial support obligations under UAE law are assessed according to relevant circumstances, including the claimant’s needs, the paying spouse’s financial capacity, the circumstances of the marriage and the needs of any children, rather than through a single universal formula.

Couples negotiating maintenance privately should be precise about the amount and frequency of payments, which expenses — such as education, medical costs and housing — are included, and what happens if either party’s financial circumstances change.

Vague wording such as “reasonable expenses” or “as required” can become a source of future disputes because the parties have never agreed what those expressions mean in practice. The appropriate arrangement will depend on the family’s circumstances and the applicable legal framework, which is why generic templates can prove inadequate.

Child Custody, Visitation and Travel

Children’s arrangements deserve particular care because vague terms tend to become contentious at the worst possible moments: a school holiday, an overseas trip or a change in a parent’s working schedule. A workable arrangement should typically cover where the child will live, the visiting parent’s schedule, including holidays, decision-making on schooling and healthcare, communication arrangements and travel requirements.

International travel and relocation can raise legal considerations beyond an ordinary private agreement and should not be treated as a simple contractual matter. Even where parents currently agree, the terms should be sufficiently specific to minimise the scope for future disagreement while remaining subject to the court’s authority to consider the child’s best interests.

Property, Debts and Other Financial Matters

Beyond ongoing maintenance, separating couples will generally need to identify jointly owned property, personal assets, outstanding loans and bank liabilities, vehicles, business interests and any payments still owed between them.

UAE law does not impose an automatic 50/50 division of marital assets in every case. Each spouse generally retains assets legally belonging to them, while the treatment of jointly owned assets and financial claims depends on the applicable legal framework and the circumstances of the case. This makes it important to record clearly who is responsible for each asset or liability rather than leaving matters to be “sorted out later”.

Informal Agreement vs Formal Settlement

There is a meaningful difference between an informal understanding — such as messages, a verbal agreement or a self-drafted signed document — and a settlement properly formalised through the appropriate legal process.

Signing a document does not, by itself, guarantee that its terms will be recognised or enforced. Depending on the nature of the dispute, the applicable personal-status regime and whether proceedings are already before a court, different routes may exist for giving a settlement legal effect. What works for one couple will not necessarily be suitable for another.

When Can a Settlement Become Legally Enforceable?

Enforceability depends on more than mutual agreement. It can turn on how the settlement is drafted, whether it has gone through an appropriate formalisation process — such as being recorded through the relevant family guidance and reconciliation process, approved by a court, or otherwise properly documented — and whether its terms address the issues in a manner the relevant authority will recognise.

Under the current Personal Status Law, where parties reach an agreement through the Family Guidance and Reconciliation Centre, the settlement may be recorded in an official report and, once approved by the supervising judge, can have the force of an enforceable instrument, subject to the law.

A private document that has never gone through an appropriate formal process may carry considerably less weight than one that has been reviewed and recorded correctly. Before relying on any settlement, particularly where it concerns ongoing obligations such as maintenance or custody, parties should verify its actual legal status rather than assuming that a signature is sufficient.

Common Drafting Mistakes

Settlements that later collapse into disputes often share the same weaknesses: vague language instead of specific figures and dates, no clear payment schedule, unclear responsibility for existing debts, custody terms that say nothing about holidays or travel, no provision for changed circumstances, an assumption that a private signature alone is binding, or the use of a generic or foreign template without adapting it to UAE law.

Each gap may appear minor when the agreement is signed. Once trust between the parties has broken down, however, even a small ambiguity can become the basis of a much larger dispute.

What Happens If One Party Breaches the Agreement?

If a spouse stops paying maintenance, refuses agreed visitation or otherwise departs from what was settled, the available response depends heavily on what the settlement says and how it was formalised.

The first step is to establish exactly what was agreed, whether the agreement has legal force and what remedies — including further negotiation, formal proceedings or enforcement measures — are realistically available. A settlement that was never properly formalised may leave the parties with fewer and more complicated options.

When Court Intervention May Still Be Necessary

Settlement is not the right or achievable path in every case. Court involvement may be necessary where there is serious disagreement over children, disputes concerning relocation or international travel, significant financial conflict, non-compliance with an existing enforceable arrangement, or concerns that consent was not genuine.

Settlement and litigation are not necessarily mutually exclusive. Negotiations may take place before or alongside formal proceedings, and a carefully prepared settlement can significantly narrow the issues that ultimately need to be decided by a judge.

Conclusion

A family settlement is not simply about reaching an agreement. It is about ensuring that the agreement is legally sound, sufficiently specific to minimise future disputes and capable of achieving what both parties actually intend.

Whether a custody arrangement will hold up, what happens if a spouse stops paying, and whether an agreement needs to be formally recognised before it can be relied upon are precisely the issues worth resolving with appropriate legal advice before signing, rather than after a dispute has arisen.

Our family law team advises couples on negotiating, drafting, reviewing, formalising and enforcing family settlements in the UAE. If you are considering a settlement, or already have one in place and are uncertain about its legal status, a case-specific review can help prevent a difficult situation from becoming a more complicated one.

The trademark is the legal anchor of a franchise network. If ownership is uncertain, clearance is incomplete or protection is too narrow, every new outlet can increase the cost and complexity of a future dispute. Before granting the first franchise, the franchisor should establish a clear intellectual-property ownership and protection strategy.

Audit Ownership Before Filing

The first step is to establish exactly who owns the intellectual property that makes up the brand. Identify the owner of the brand name, logo, packaging, slogans, menus, product names, domain names, software, promotional material and other distinctive brand assets. Founders, employees, designers, advertising agencies and group companies may each have contributed to the development of these assets.

Written assignments should be obtained wherever necessary, particularly where third parties have created logos, artwork, software or marketing content. The intended franchisor should ideally own the core IP or have a clearly documented intra-group licence giving it the necessary rights to license the brand to franchisees.

This ownership audit can prevent a common problem: a franchisor discovering only after expansion that an important element of the brand is legally owned by a founder, designer or related company.

Search Before Investing in the Brand

A trademark should be cleared before substantial money is spent on premises, signage, advertising, packaging and franchise recruitment.

Conduct searches for identical and confusingly similar marks, including phonetic variants, spelling variations, translations and relevant company and domain names. The search should cover the core class as well as related classes where consumers might reasonably assume a connection.

A company-name approval or domain-name registration is not the same as trademark clearance. Nor does the absence of an identical mark necessarily mean that the proposed brand is safe to use.

The search should also consider existing businesses operating in adjacent sectors and jurisdictions in which the franchisor intends to expand. Identifying a conflict at the beginning is considerably cheaper than rebranding a network after multiple franchisees have invested in the original identity.

File the Right Applications

Protection should be tailored to the actual business model and its planned development. Where appropriate, protect the word mark separately from important logos and other distinctive elements. Select classes based on both current and reasonably foreseeable goods and services, rather than simply the headline business of the outlet.

For example, a restaurant franchise may require protection not only for restaurant services but also for packaged foods, beverages, retail services, delivery platforms, merchandise or other commercially significant activities, depending on its business model.

In India, the Trade Marks Registry administers the Trade Marks Act, 1999 and the Trade Marks Rules, 2017. Trademark registration is generally valid for 10 years from the application date and can be renewed for successive 10-year periods.

Indian businesses planning international expansion can also consider the Madrid System for seeking trademark protection in designated overseas markets. The appropriate filing strategy should, however, be determined by the territories, business model and expansion timetable involved.

Protect the Brand Before Announcing Expansion

Timing matters in franchising. A franchisor that publicly announces an international expansion strategy before filing in the relevant jurisdictions may expose itself to unnecessary risk.

Applications should ideally be filed before franchisees are recruited, territories are publicly announced or extensive marketing begins. This is particularly important where the franchisor intends to enter jurisdictions with different trademark rules or where third-party filings could create complications.

The expansion timetable should therefore be coordinated with the IP filing timetable rather than treating trademark protection as an administrative exercise to be completed after the commercial deal is agreed.

Use Pending Marks Accurately

Filing a trademark application does not mean that the mark has already been registered. Franchise agreements, brochures, websites and other promotional material should accurately describe the status of the mark. The ® symbol should not be used for an unregistered mark in a jurisdiction where registration has not been obtained.

This distinction is particularly important in cross-border franchising, where a mark may be registered in one country but remain pending or unregistered in another.

Build the Trademark Licence Into the Franchise Agreement

The franchise agreement should clearly identify the trademarks and other IP being licensed and define how they may be used.

Key provisions should address the licensed marks, territory, permitted products and services, sales channels, presentation standards, quality controls, approval procedures, ownership of goodwill and responsibility for reporting suspected infringement.

The agreement should also restrict the franchisee from altering the marks, registering identical or confusingly similar marks, claiming ownership of the brand, or granting unauthorised sub-licences.

Online assets should not be overlooked. The agreement should address domains, social-media accounts, marketplace profiles, mobile applications and other digital identifiers associated with the franchise brand.

Turn Quality Control Into an Operational Process

Trademark protection is not only about registration. A franchisor must also maintain control over how the mark is used throughout the network.

Brand guidelines should establish approved logos, colours, fonts, packaging, signage, advertising formats and digital presentation. Franchisees should be required to obtain approval for significant departures from those standards.

The franchisor should maintain evidence of authorised use, including approval records, audit reports, dated photographs, invoices, advertising specimens and outlet lists.

These records can become valuable evidence in renewal, enforcement or ownership disputes and help demonstrate that the franchisor actively manages its brand.

Monitor for Infringement

Registration alone does not guarantee that infringement will be detected. A practical monitoring programme should cover trademark registers, competitor activity, marketplaces, app stores, domain names and social-media platforms. Unauthorised franchise-style businesses or counterfeit products may appear online before the franchisor becomes aware of them.

The franchise network itself can also become an early-warning system. Franchisees should have a clear obligation to report suspected infringement and should know whom to contact when a third party appears to be misusing the brand.

International Expansion Requires Territorial Protection

An Indian trademark registration does not automatically protect the brand in the UAE, the UK, the US or other overseas markets.

International expansion should therefore trigger a territorial IP review. Protection should be considered in each significant target market before the franchise is launched there.

For the UAE and other markets where Arabic is commercially relevant, the franchisor should consider whether Arabic transliterations or versions of the brand require separate protection or create additional risks.

Ownership should also be coordinated across jurisdictions. The structure should be consistent with the franchisor's licensing arrangements, enforcement strategy, royalty arrangements and wider tax and corporate structure.

Do Not Overlook Non-trademark IP

A franchise brand rarely depends on trademarks alone. Trade secrets, confidential operating manuals, recipes, business methods, software, copyright-protected material, domain names and proprietary customer or operational data may also form part of the franchise system.

These assets should be identified and protected through appropriate ownership provisions, confidentiality obligations, access controls and contractual restrictions. The franchise agreement should make clear what happens to these assets when the relationship ends.

Plan for Enforcement and Exit

The franchise agreement should establish what happens when a franchisee breaches the brand-protection provisions or the relationship terminates.

On termination, the franchisee should normally be required to stop using the trademarks, remove signage and branded material, cease representing itself as part of the network and deal appropriately with digital assets. The agreement should also address the return or destruction of confidential manuals and other proprietary material, subject to any applicable sell-off period or legal requirements.

Digital de-branding deserves particular attention. Social-media accounts, domains, delivery-platform listings and online business profiles can continue to generate confusion even after a physical outlet has closed.

The agreement should provide appropriate enforcement mechanisms, including rights to seek urgent relief where legally available. The precise remedies will, however, depend on the governing law and jurisdiction.

Practical Takeaway

Protect the brand before you franchise it. File early, conduct proper clearance searches, secure ownership, choose the right classes and territories, and build quality control into the day-to-day franchise system.

A trademark registration is the foundation, not the finished structure. The strongest franchise IP strategy combines registration with ownership discipline, contractual controls, active monitoring and a clear plan for enforcement and de-branding.

Dr. Sunil Ambalavellil is the Global Executive Chairman of Kaden Boriss, an international law firm specialising in franchise and business agreements. A seasoned legal adviser, he has advised and supported the international growth of numerous global brands, helping them navigate the legal complexities of cross-border expansion.

Under a master franchise arrangement, the brand owner grants a master franchisee rights over a country or substantial territory. The master franchisee will commonly develop its own outlets and may also grant unit franchises to sub-franchisees.

The master franchisee therefore performs many of the functions normally undertaken by the franchisor, including recruiting franchisees, supporting local disclosure requirements, providing training, monitoring operations and enforcing brand standards. The commercial model will typically involve the sharing of initial franchise fees and continuing royalties between the brand owner and master franchisee.

The principal attraction is speed. A capable master franchisee can bring local capital, market knowledge, relationships and franchise-sales infrastructure, allowing a brand to enter and scale a market without building a substantial local organisation from scratch.

The trade-off is dependency. The brand owner may become heavily reliant on one intermediary and may have limited direct contractual control over sub-franchisees. Poor franchisee selection, inadequate training or weak enforcement at master-franchise level can therefore damage the brand across an entire territory.

Before appointing a master franchisee, the brand owner should undertake enhanced due diligence on its financial strength, operating history, litigation record, franchise recruitment capabilities, existing portfolio and reputation in the target market.

Area-development Model

Under an area-development arrangement, the developer receives the right to open a specified number of outlets within a defined territory and according to an agreed development schedule. Unlike a master franchisee, the area developer ordinarily cannot sub-franchise those rights.

The structure is consequently simpler: there is one principal operating counterparty, and the developer owns and operates the outlets itself. This can give the brand owner greater visibility over operations and more direct control over customer experience, staffing, site selection and compliance.

The disadvantage is that growth can be slower and more capital-intensive. The area developer must fund and operate the outlets itself, rather than leveraging third-party franchisees to finance expansion.

For a brand entering an unfamiliar market, however, this additional control can be valuable. It allows the franchisor to test the market, refine its operating model and assess the developer's performance before committing to a broader franchise structure.

The Development Schedule is the Commercial Engine

The development schedule should be treated as one of the most important provisions in either model. It should specify the number of outlets to be opened, territory, milestones, approved formats, site criteria, opening deadlines, development standards and consequences of delay.

Avoid granting broad, perpetual exclusivity from day one. A more balanced approach is to allow territorial rights to vest progressively as the developer or master franchisee achieves agreed milestones.

For example, rights to a larger territory could become available after the opening of a specified number of outlets, while failure to meet subsequent targets could result in a reduction of exclusivity rather than the automatic termination of otherwise successful outlets.

The agreement should also include appropriate cure periods. Delays caused by planning approvals, regulatory restrictions, force majeure events or other matters outside the developer's reasonable control should not necessarily trigger the same consequences as a failure caused by inadequate funding or lack of genuine development effort.

Economics and Control

Master franchise economics commonly include an initial territory fee, together with an agreed allocation of initial franchise fees and continuing royalties generated by sub-franchisees. The agreement should clearly identify who bears the cost of local recruitment, training, marketing, operational support, compliance and enforcement.

Area developers generally pay the applicable fees and royalties for each outlet they establish, although the commercial arrangement may include volume-based incentives or reduced fees for achieving specified development targets.

The financial model should not be considered in isolation. Control rights should broadly correspond with the economic exposure of the brand owner.

In a master franchise arrangement, the brand owner should ordinarily retain approval rights over the local franchise agreement, disclosure materials, key sub-franchisees, significant settlements and material departures from the brand's standard operating model.

It should also receive meaningful network-level data and, where legally enforceable, appropriate audit, inspection, step-in and direct covenant rights. The ability to intervene when serious brand, compliance or financial risks emerge can be critical in a multi-layered franchise network.

IP, Data and Digital Assets

Intellectual property requires particular attention in cross-border structures. The master franchisee should not register trademarks, domain names or other brand assets in its own name merely for administrative convenience unless robust contractual protections, powers of attorney and assignment mechanisms are in place.

The agreement should establish who owns local registrations, marketing content, customer-facing digital assets and improvements to the franchise system. It should also address what happens to those assets when the relationship ends.

Data ownership and access should be mapped separately. Customer data, franchisee information, employee information and marketing databases may be subject to different legal requirements in the relevant jurisdiction. The parties should therefore establish clearly who collects, controls, processes and can continue to use the data.

Termination and the Franchise Network

Termination becomes more complicated when a master franchisee has created a network of sub-franchisees.

A master agreement should therefore deal with the consequences of termination from the outset. Possible mechanisms include assignment of sub-franchise agreements to the brand owner, appointment of a replacement master franchisee, conversion of sub-franchisees into direct franchise relationships, temporary step-in rights or an orderly wind-down.

The brand owner should also consider what happens to leases, staff, suppliers, customer databases, social-media accounts, websites, domain names and local intellectual property registrations.

A termination clause that ends the master relationship but says nothing about the underlying franchise network can leave the brand with a serious operational and legal problem.

Which Model Should a Brand Choose?

A master franchise model may be appropriate where the territory requires substantial local franchise-sales infrastructure and the prospective partner has demonstrated experience in multi-unit operations, franchise recruitment and sub-franchise management.

An area-development model may be preferable where the partner has sufficient capital to own and operate the outlets and the brand wants a simpler structure with greater direct operational control.

There is also a useful middle ground. For a new international market, a brand could begin with a staged area-development arrangement and provide an option for the developer to earn broader master franchise rights after achieving defined performance milestones.

This approach can reduce initial dependency while giving a successful partner a credible pathway to greater territorial rights.

Do Not Confuse Territory With Guaranteed Exclusivity

One of the most common commercial mistakes is treating a territory as an unconditional promise that the brand will not operate or appoint anyone else within that area.

Territorial rights should instead be linked to what the partner is actually required to deliver. The agreement should distinguish between development rights, exclusivity and protection against competing channels.

This is particularly important in markets where the brand may later want to sell through e-commerce, delivery platforms, travel retail, institutional customers or other channels that do not fit neatly within a traditional geographical territory.

Practical Takeaway

Use staged territorial rights, measurable development milestones and clearly defined control mechanisms rather than granting irreversible exclusivity on day one.

The choice between master franchising and area development is ultimately a choice between different combinations of speed, capital, control and dependency. A well-structured agreement should not merely allocate territory; it should establish how that territory is earned, monitored, protected and, if necessary, taken back.

For international expansion, the strongest structure is rarely the one that promises the fastest growth on paper. It is the one that allows the brand to scale while retaining sufficient control to protect its reputation, intellectual property and long-term commercial value.

Dr. Sunil Ambalavellil is the Global Executive Chairman of Kaden Boriss, an international law firm specialising in franchise and business agreements. A seasoned legal adviser, he has advised and supported the international growth of numerous global brands, helping them navigate the legal complexities of cross-border expansion.

Corporate restructuring involves changing the legal, ownership, financial or organisational structure of a business to respond to commercial, financial or strategic requirements. In the UAE, this may include a merger, acquisition, share transfer, conversion of a company's legal form, increase or reduction of share capital, transfer of assets or reorganisation of companies within a corporate group.

However, restructuring is not simply a commercial decision. Depending on the proposed transaction, it can trigger requirements under the UAE Commercial Companies Law, applicable licensing and regulatory frameworks, competition legislation, beneficial ownership rules and, where financial distress is involved, the UAE Financial and Bankruptcy Law.

The legal requirements will also depend on whether the business is incorporated on the UAE mainland, in a particular free zone or within a financial free zone such as the DIFC or ADGM. Businesses should therefore identify the legal framework applicable to the entity before proceeding with any restructuring.

What Are the Main Legal Frameworks?

The starting point for most UAE companies is Federal Decree-Law No. 32 of 2021 on Commercial Companies. The law contains provisions dealing with conversion, merger, division and acquisition of companies. It permits a company, subject to the applicable requirements, to convert from one legal form to another while retaining its legal personality. The conversion must be registered with the competent authority.

A merger can similarly involve the consolidation of companies, with the relevant rights and obligations passing to the surviving or newly established entity. The Commercial Companies Law sets out specific procedures for mergers, including requirements relating to the merger agreement, valuation, shareholder approval and registration.

The legal framework becomes more complex where the restructuring involves a regulated activity. A financial services business, for example, may require approvals from its sector-specific regulator in addition to the corporate approvals required for the restructuring itself. Similarly, the procedures for changing shareholders, directors, managers, activities or capital can differ between mainland companies and individual free zones.

Businesses should therefore not assume that a restructuring procedure applicable to one UAE entity will automatically apply to another. The company's legal form, place of incorporation, licensed activities and regulatory status should all be considered at the outset.

Competition law may also become relevant where restructuring involves a merger or acquisition. Federal Decree-Law No. 36 of 2023 on the Regulation of Competition regulates economic concentrations and provides a framework for assessing transactions that may affect competition in the UAE. This means that a qualifying acquisition or merger may require competition-related assessment or notification in addition to the corporate approvals.

Where the company is experiencing financial distress, a conventional corporate restructuring must also be distinguished from formal financial restructuring under Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy. The legislation provides mechanisms intended to enable a debtor to continue its business and address its debts through measures including preventive settlement and restructuring plans. This law does not extend to entities established in the DIFC or the ADGM, which operate their own standalone insolvency regimes under their respective legislation. A company restructuring in either of those centres should therefore assess its position under the applicable DIFC or ADGM insolvency framework instead.

What Corporate and Legal Approvals Should Be Considered?

One of the most important aspects of a restructuring is determining which approvals are required before the transaction can take effect. Depending on the proposed transaction, this may involve approvals from the board of directors or managers, shareholders or partners, the General Assembly and the relevant licensing or regulatory authority.

The company's constitutional documents should be reviewed alongside the Commercial Companies Law. The Memorandum of Association (MOA) and Articles of Association (AOA) may contain specific provisions concerning voting thresholds, transfer restrictions, pre-emption rights, management powers or other matters that affect the proposed restructuring.

This is particularly important where a restructuring changes the company's ownership. A proposed share transfer, for example, should not be treated merely as a private agreement between the seller and purchaser. The parties must consider the company's constitutional documents, applicable statutory requirements and the procedures of the relevant licensing authority for recording the transfer.

A capital restructuring requires similar consideration. Increasing the company's capital may involve issuing additional shares and changing existing ownership percentages. Depending on the circumstances, this can result in dilution for existing shareholders. A reduction of capital can raise separate considerations involving shareholders and creditors.

The legal documentation should also correspond with the corporate approvals. Depending on the transaction, this may include shareholder resolutions, board resolutions, amended constitutional documents, share purchase agreements, merger agreements, asset transfer agreements, powers of attorney and regulatory application forms.

The transaction should only be treated as complete once the required registrations and filings have been completed. A restructuring that has been commercially agreed but not properly registered may leave the company's official records inconsistent with its actual ownership or corporate structure.

What Should Businesses Review Before and After a Restructuring?

Due diligence is a critical part of any restructuring, particularly where the transaction involves the acquisition, merger or transfer of an existing business.

The review should ordinarily cover the company's incorporation documents, trade licence, shareholder records, beneficial ownership information and corporate registers. It should also examine material commercial contracts, financing arrangements, security interests, litigation, intellectual property, employment matters and regulatory compliance.

Contracts require particular attention. A change in ownership or control may trigger contractual notification or consent requirements. Similarly, transferring a business, asset or contractual right may require an assignment or novation rather than simply being included in the restructuring documentation.

Financing documents should also be reviewed for restrictions relating to changes in control, ownership or corporate structure. Banks and other creditors may have rights that need to be addressed before the restructuring is completed.

Employment matters should not be overlooked. Where a restructuring involves the transfer of a business, merger of entities or movement of employees between group companies, the parties should assess the relevant employment, immigration and sponsorship implications.

Intellectual property should also be reviewed. This includes determining whether trademarks, domain names, licences and other intellectual property rights are registered in the name of the entity being restructured and whether any transfer or recordal is required.

Following completion, the company should ensure that all corporate and regulatory records accurately reflect the new structure. This can include updating the trade licence, commercial register, MOA, AOA, shareholder register, authorised signatory records and banking information.

Beneficial ownership compliance is particularly important. Cabinet Resolution No. 109 of 2023 requires legal persons within its scope to maintain and update their Real Beneficiary Register. Where a change occurs, the relevant information must generally be updated within 15 days of the legal person being informed of the change. The Resolution also requires information concerning a change in beneficial ownership to be addressed when ownership is transferred.

A restructuring can also create significant risks for directors and managers. They should ensure that the transaction is properly authorised and that decisions are taken within the scope of their powers. Article 84 of the Commercial Companies Law provides that a manager of a limited liability company may be held personally liable to the company, its partners and third parties for fraudulent acts, misuse of powers, violations of the law or the company's constitutional documents, and gross errors in management. Article 162 confirms that any provision purporting to limit this liability is void.

Where a company is financially distressed, additional caution is required. A restructuring designed to preserve the business should not improperly prejudice creditors or result in transactions that could create liability for the company or its management. In appropriate circumstances, the Financial and Bankruptcy Law provides formal mechanisms for dealing with financial distress and restructuring debts.

Conclusion

Corporate restructuring in the UAE should be approached as a legal and regulatory exercise as well as a commercial one. The first step is to identify the restructuring mechanism and determine which legislation and regulatory framework applies to the company.

Businesses should then obtain the necessary corporate approvals, conduct appropriate legal due diligence, review contractual and financing arrangements, assess regulatory requirements and prepare the necessary transaction documents. Once the restructuring is completed, the company's licences, corporate registers, constitutional documents and beneficial ownership information should be updated to reflect the new structure.

The precise requirements will vary depending on the company's legal form, jurisdiction, industry and proposed restructuring. A transaction that is properly planned and documented from the outset can reduce the risk of regulatory non-compliance, shareholder disputes, contractual breaches and unintended liabilities.

Buying a franchise can offer a faster route into business ownership. An established brand, tested operating model, training and marketing support can reduce some of the risks associated with starting a business from scratch. But a recognised brand does not automatically mean a profitable or legally secure investment.

A franchise purchase combines a long-term contract, a capital investment and dependence on another party’s intellectual property, systems and commercial decisions. The prospective franchisee should therefore investigate the opportunity with the same discipline applied to an acquisition.

In India, there is no single franchise-specific disclosure statute of general application. This makes contractual due diligence, independent verification and careful documentation particularly important. The same principles are relevant to franchise investments in other jurisdictions, although the applicable disclosure and regulatory requirements may differ.

Misrepresentation and Incomplete Disclosure

One of the first questions should be whether the business opportunity has been presented accurately.

Revenue projections, claimed payback periods, outlet numbers, closure rates, pipeline locations, market-share claims and promises of “exclusive” territories should not be accepted at face value. Ask for documentary evidence supporting material representations and independently verify information wherever possible.

Prospective franchisees should preserve presentations, emails, WhatsApp messages, financial projections and other communications that influenced the investment decision. If a material representation later proves to be inaccurate, contemporaneous records can become important evidence.

A useful approach is to create a representation schedule identifying every significant promise or statement on which the investment decision depends.

Weak or Unclear Trademark Rights

The value of many franchises lies primarily in their brand. The buyer should therefore establish exactly what intellectual property rights the franchisor owns or is authorised to license.

Due diligence should cover:

• Trademark ownership and registration status;
• Relevant classes and territories;
• Pending applications and objections;
• Existing infringement or ownership disputes;
• Licences from third-party IP owners; and
• Rights relating to logos, designs, software, content and domain names.

A pending trademark application may be commercially acceptable in some circumstances, but the associated risk should be understood. Particular caution is warranted where the business depends heavily on a founder’s personal name, third-party content or intellectual property that has not been formally assigned to the franchisor.

Unsustainable Franchise Economics

A franchise can have strong sales and still produce poor returns for the franchisee.

Prepare a realistic downside financial model rather than relying solely on the franchisor’s projections. Factor in rent, salaries, utilities, insurance, delivery-platform commissions, wastage, taxes, marketing contributions, technology charges, maintenance, refurbishment and working capital.

Ask for financial performance data from comparable mature outlets, rather than relying only on system-wide averages. Distinguish between gross sales and net revenue, and between earnings before interest, taxes, depreciation and amortisation (EBITDA) and the actual cash available to the franchise owner.

The model should also test scenarios involving slower sales, higher rent, wage increases, supply disruptions and delayed break-even.

Territory and Channel Conflict

“Exclusive territory” can be misleading if the agreement does not define what exclusivity actually covers.

The franchise agreement should address physical territory as well as protected customers and sales channels. Consider whether the franchisor can operate or authorise:

• E-commerce sales;
• Mobile applications and websites;
• Delivery platforms;
• Cloud kitchens;
• Airports and travel locations;
• Supermarkets and institutional accounts;
• Pop-up stores and kiosks; or
• New business formats.

A franchisee may believe it has a protected territory only to discover that the franchisor can sell directly into the same market through another channel.

Unbalanced Term, Renewal and Termination Rights

The duration of the franchise should be considered against the time required to recover the initial investment.

Review renewal conditions, renewal fees, mandatory refurbishment, performance targets, unilateral amendments to operating manuals, transfer restrictions, personal guarantees, cross-default provisions and termination rights.

Particular attention should be paid to cure periods. A franchisee should understand how much time it has to remedy a contractual breach before termination becomes possible.

Calculate the stranded investment if the franchise ends prematurely. Equipment, fit-out costs, deposits, training expenses and prepaid fees may not be recoverable.

Post-termination restrictions, including non-compete, confidentiality, de-branding and customer-solicitation provisions, should also be assessed for their commercial and legal impact.

Supply and Pricing Dependency

Mandatory purchasing arrangements can materially affect profitability.

Identify all approved or compulsory suppliers and examine whether they are affiliated with the franchisor. Review supplier pricing, rebates, commissions, minimum purchase requirements, delivery charges, substitution rights and procedures for shortages or quality failures.

A franchise with a relatively low royalty may nevertheless be expensive if the franchisee is required to purchase products or services at inflated prices.

The agreement should also make clear who bears responsibility when compulsory supplies are unavailable, defective or delayed.

Site Selection and Lease Risks

A franchisor’s site approval should not replace the franchisee’s own commercial assessment.

The franchise term and property lease should be broadly aligned. Otherwise, the franchisee could remain liable under one arrangement after losing the benefit of the other.

Before signing, consider rent commencement, fit-out periods, landlord approvals, signage restrictions, opening delays, permitted use, renewal options and exit rights.

The parties should also clarify whether the franchisor has any step-in, lease-assignment or direct-control rights over the premises following default or termination.

Regulatory, Consumer and Employment Exposure

The franchisee generally operates the local business and may therefore carry significant legal and regulatory responsibilities.

Depending on the business, these may include trade and operating licences, employment obligations, tax filings, consumer protection, product liability, health and safety, advertising standards, sector-specific approvals and data-protection compliance.

The franchise agreement should clearly allocate responsibilities between the franchisor and franchisee. Statements such as “the franchisor will provide compliance support” are not enough unless the scope of that support is documented.

Data, Technology and Digital Dependence

Modern franchises increasingly depend on technology. The franchisee may rely on the franchisor for point-of-sale systems, customer databases, websites, delivery accounts, social-media pages, loyalty programmes and cloud-based software.

The agreement should clarify who owns the data, who can access it, where it is stored and what happens when the franchise ends.

The franchisee should also understand its own obligations regarding privacy, cybersecurity, customer consent and legally required record retention. Access to critical systems should not disappear overnight merely because a contractual relationship has ended.

Dispute Resolution and Enforcement

A dispute clause that looks acceptable on paper may be commercially difficult to use in practice.

Review the governing law, jurisdiction, arbitration seat, language, procedural rules, legal costs and availability of interim relief. For a small or single-unit franchisee, having to pursue a dispute in another country can make enforcement disproportionately expensive.

Also examine whether the franchisor can call upon personal guarantees, security deposits, bank guarantees or letters of credit before the underlying dispute is finally determined.

Change-of-Control and Assignment Restrictions

An issue often overlooked by first-time franchise buyers is the ability to sell the business. Review whether the franchisee can transfer the franchise, introduce an investor, change ownership or sell the outlet. Franchisors commonly retain approval rights, and transfer fees or new franchise requirements may apply.

These restrictions can significantly affect the eventual exit value of the business and should be considered before the initial investment is made.

What Should a Franchisee Put in the Due-Diligence File?

A prospective franchisee should aim to build a comprehensive evidence file before signing or paying a substantial non-refundable amount. The file should, where applicable, include:

• Corporate and ownership records of the franchisor;
• Trademark and other IP documentation;
• The proposed franchise agreement and operating manual;
• Complete details of initial and recurring fees;
• Financial projections and supporting assumptions;
• Outlet opening, closure and failure data;
• Audited financial statements where relevant;
• Litigation, insolvency and regulatory information;
• Supplier agreements and pricing arrangements;
• References from existing and former franchisees;
• Site, lease and landlord documentation;
• Required licences and regulatory approvals; and
• A written record of every material representation relied upon.

Speaking to existing and former franchisees can be particularly valuable. Ask not only about profitability, but also about franchisor support, supply problems, disputes, technology, renewal negotiations and the circumstances in which other franchisees left the network.

Do Not Confuse a Franchise Agreement with a Business Guarantee

A franchise agreement gives the franchisee contractual rights and obligations; it does not guarantee commercial success.

The franchisor may provide a recognised brand, systems, training and support, but market conditions, location, management quality, costs and local competition can still determine whether the outlet succeeds.

The buyer should therefore distinguish between what the franchisor is contractually obliged to provide and what it merely expects the franchisee to achieve.

Practical Takeaway

Buying a franchise should be approached as an investment requiring legal, financial, operational and commercial due diligence.

Do not rely exclusively on the brand, sales presentation or verbal assurances. Verify the franchisor’s representations, understand the economics, test the downside, examine the exit provisions and establish exactly what happens if the relationship breaks down.

Most importantly, obtain independent legal, financial and, where appropriate, technical advice before signing the franchise agreement or paying a non-refundable fee.

The objective of due diligence is not to eliminate every risk. It is to ensure that the franchisee understands those risks, prices them appropriately and enters the relationship with its eyes open.

Dr. Sunil Ambalavellil is the Global Executive Chairman of Kaden Boriss, an international law firm specialising in franchise and business agreements. A seasoned legal adviser, he has advised and supported the international growth of numerous global brands, helping them navigate the legal complexities of cross-border expansion.

 Selecting a franchisee is one of the most important decisions a franchisor makes. A franchisee does not simply invest capital; they become the face of the brand in a particular market and can directly influence customer experience, regulatory compliance and the reputation of the entire franchise network.

For that reason, franchisee selection should be treated as a structured due-diligence exercise rather than a sales process. The assessment should be evidence-based, documented and proportionate to the territory, investment and risks involved.

A strong candidate is not necessarily the person with the greatest financial resources. The franchisor should also consider operational capability, integrity, management experience, commitment and willingness to follow the franchise system.

Start with a Written Candidate Profile

Before accepting applications, establish clear selection criteria.

The candidate profile should address minimum net worth and liquid funds, relevant operating experience, owner involvement, geographic knowledge, proposed management team, reputation, business interests and potential conflicts.

For a master franchisee, the assessment should go further. Consider previous multi-unit or multi-market experience, local infrastructure, recruitment capability, access to supply chains and the ability to supervise and support sub-franchisees.

Written criteria also promote consistency and help reduce the risk of making decisions based on subjective impressions.

Stage One: Verify Identity, Ownership and Authority

The first stage is establishing exactly who is investing and who will operate the franchise.

Verify constitutional and incorporation documents, beneficial ownership, directors, authorised signatories, registered address and group structure. For individual applicants, verify identity and address through lawful procedures.

The franchisor should also confirm that the proposed contracting entity — not merely a related affiliate — controls the required funds and will hold the relevant business licences.

Where a nominee, special-purpose vehicle or third-party investor is involved, the commercial and legal relationship between the parties should be clearly documented.

Stage Two: Assess Financial Capacity

Financial strength should not be measured by net worth alone. A candidate may own substantial assets but have insufficient liquidity to fund the actual launch and early operating period.

Depending on the circumstances, request audited financial statements, management accounts, bank references, relevant tax records, debt schedules, contingent-liability information and appropriate proof of funds.

The financial assessment should consider whether the candidate can comfortably fund:

• Franchise and initial fees;
• Fit-out and equipment;
• Deposits and professional costs;
• Pre-opening expenses;
• Staff recruitment and training;
• Working capital; and
• A realistic downside period if sales take longer to develop.

The objective is to determine whether the franchisee can withstand an underperforming start without compromising employee payments, taxes, supplier obligations or other statutory liabilities.

Stage Three: Conduct Legal and Regulatory Due Diligence

Legal checks should be proportionate to the investment and jurisdiction.

Where lawfully available, review corporate records, insolvency indicators, material litigation, regulatory actions, tax disputes, intellectual-property conflicts and relevant disqualifications.

Background checks involving individuals should be carried out only with appropriate consent and in accordance with applicable privacy and data-protection requirements.

A candidate's previous disputes should not automatically result in rejection. The more important questions may be what happened, how it was resolved and whether it reveals a continuing risk to the franchise network.

Stage Four: Test Operational Capability

Financial capacity does not necessarily translate into operational ability.

Interview the person who will actually run the business rather than assessing only the investor or holding company. Examine recruitment plans, project-management skills, vendor relationships, technology readiness, customer-service standards and quality-control practices.

Ask practical questions: Who will manage the outlet every day? Who will replace that person if they leave? How quickly can staff be recruited? Who will oversee compliance? What happens if the opening is delayed?

Where possible, visit businesses already operated by the candidate and, with appropriate consent, obtain references from landlords, bankers, suppliers or other business contacts.

Stage Five: Assess Reputation and Cultural Fit

A franchisee's conduct can quickly become a franchisor's reputational problem. Assess how the candidate has historically dealt with employees, customers, suppliers and business partners. Publicly available media and social-media information may provide useful context, but adverse information should be verified and the candidate should have an opportunity to respond.

The franchisor should also assess whether the candidate is willing to follow system standards, participate in training, provide required data, accept reasonable audits and invest appropriately in local marketing.

A technically qualified candidate who consistently resists operational controls may present greater long-term risk than a less experienced candidate who demonstrates integrity, discipline and a willingness to learn.

Use a Structured Risk-Rating System

A simple red, amber and green risk-rating system can help the franchisor assess candidates consistently and identify potential concerns before approval.

Key areas may include:

• Ownership transparency;
• Financial capacity and leverage;
• Litigation and regulatory history;
• Relevant sector experience;
• Operational capability;
• Time and management commitment;
• Reputation;
• Conflicts of interest; and
• Development capability.

Potential red flags include unexplained urgency, opaque sources of funds, refusal to provide documents, excessive dependence on debt, requests to use an unrelated contracting entity and resistance to reasonable controls before signing.

One red flag may not be decisive, but several unexplained concerns should trigger enhanced due diligence or rejection.

Contractual Safeguards Are Not a Substitute for Selection

A franchisor can use contractual protections such as personal or parent guarantees, performance security, staged territory rights, conditions precedent, site-specific approvals, milestone-based exclusivity and enhanced reporting.

These measures can reduce exposure, but they cannot compensate for a franchisee who lacks the capability, integrity or commitment to operate the business.

The best protection is therefore selecting the right franchisee before the agreement is signed.

Keep the Process Fair and Documented

A franchisor should apply consistent selection criteria and maintain a clear record of the information considered and the reasons for the decision.

Only information reasonably necessary for the assessment should be collected. Protected personal characteristics and irrelevant private information should not form part of the decision-making process.

Due diligence should also be refreshed at appropriate stages, particularly before renewals, major ownership changes, transfers, additional territory grants or significant expansion.

A Practical Franchisee Due-Diligence Checklist

Before approval, the franchisor should be able to answer five fundamental questions:

Who is the candidate? Verify identity, ownership, authority and beneficial ownership.

Can they fund the business? Assess liquidity, debt and the ability to withstand a realistic downside scenario.

Can they operate it? Examine management capability, systems, staffing and relevant experience.

Can they protect the brand? Assess reputation, compliance culture and willingness to follow the franchise system.

Can the relationship withstand growth? Consider whether the candidate has the resources and infrastructure required for additional outlets or territories.

Practical Takeaway

Good franchisee selection is risk management before the contract begins. A staged, consent-based and documented due-diligence process helps the franchisor identify financial, legal, operational and reputational risks before granting franchise rights.

The goal is not to find a perfect candidate. It is to establish, using reliable evidence, that the proposed franchisee has the financial capacity, operational ability, integrity and commitment required to represent the brand successfully.

Dr. Sunil Ambalavellil is the Global Executive Chairman of Kaden Boriss, an international law firm specialising in franchise and business agreements. A seasoned legal adviser, he has advised and supported the international growth of numerous global brands, helping them navigate the legal complexities of cross-border expansion.

Ask most tenants what happens if they fall behind on rent and you will get one of two answers: the law will provide a fairer payment plan, or a landlord who refuses to negotiate is breaking the rules. Both assumptions are wrong. Here is what Dubai’s tenancy law and the UAE Civil Code actually provide, and where a tenant facing genuine financial difficulty may still have room to negotiate.

Rent Payment Schedules Are a Matter of Contract, Not Statutory Right

Most Dubai tenancies operate through post-dated cheques, divided into one, two, four, six or twelve payments, with the arrangement agreed before the lease is signed. Once it is recorded in the Ejari-registered contract, that is the agreed payment schedule. A tenant’s ability to pay monthly rather than annually is something negotiated at the beginning of the tenancy. It is not a right granted by Law No. (26) of 2007.

So, when financial hardship strikes six months into a twelve-month lease, there is no provision in the law that allows a tenant to demand a switch to monthly payments. Reaching such an arrangement requires the landlord’s agreement, and that agreement should be recorded in writing before either party relies upon it.

Landlords Are Not Legally Required to Grant a Payment Plan

Nothing in Dubai’s tenancy law requires a landlord to restructure rent payments because a tenant is experiencing financial difficulty. Refusing a revised schedule does not, by itself, place the landlord in breach of the law. The original contract continues to determine what is owed and when payment is due.

That said, many landlords may agree to some flexibility. Finding a replacement tenant can cost more than accommodating a short delay from an otherwise reliable tenant, and landlords understand this. However, tenants should view such flexibility as goodwill, not an entitlement. Clients on both sides of these disputes often assume the other party has a legal obligation that does not actually exist, and correcting that assumption can be important before negotiations begin.

The Hardship Doctrine Offers a Narrow Route, Not a Guarantee

There is a hardship concept in UAE law, although it is easy to overstate its scope. Article 224 of the new Civil Code, Federal Decree-Law No. (25) of 2025, which took effect on 1 June 2026, allows a court to reduce an obligation, or in certain circumstances unwind a contract, where an unforeseen and exceptional public event makes performance sufficiently onerous to threaten serious loss. It replaced Article 249 of the former 1985 Civil Code, which allowed only a reduction and not rescission. Anyone dealing with a lease signed before 1 June 2026 remains subject to the older, narrower provision.

The threshold is high in either case. A pay cut or job loss, on its own, is unlikely to meet it, and a judge determines the outcome. A tenant cannot rely on hardship as a basis for simply withholding rent. The provision is worth knowing about, but it should not form the foundation of a strategy without careful legal assessment.

What Happens if Rent Goes Unpaid

Article 25(1)(a) of Law No. (26) of 2007, as amended, gives a landlord grounds to seek eviction during the tenancy when rent remains unpaid for thirty days after formal written notice. For non-payment, that is the relevant route to mid-term eviction, and the landlord cannot proceed before the required notice has been served.

Those thirty days exist for a reason. A missed payment does not automatically bring a tenancy to an end, and it should not be treated as though it does. The notice period gives a tenant a genuine opportunity to settle the outstanding amount, begin discussions with the landlord or determine the best course of action before the dispute escalates.

What Tenants in Financial Difficulty Can Actually Do

Speed helps more than anything else. A tenant who sees financial trouble coming should inform the landlord in writing before the payment falls due, ideally with a specific proposed schedule rather than a general request for patience. If the landlord agrees to change the payment terms, the arrangement should be documented and, where appropriate, reflected in an updated Ejari record so that it can be relied upon later if necessary.

If no agreement is reached and a formal notice to pay has already been served, the tenant’s remaining recourse may involve the Rental Disputes Settlement Centre, where the circumstances of the case, including any genuine hardship and payment history, may be relevant. None of this replaces legal advice once a formal notice has been received. Thirty days can pass faster than it sounds.

Rent difficulties rarely look the same twice, but the legal position remains broadly consistent. A payment plan is negotiated, not automatically owed, and the principal protection available to a tenant comes from the applicable notice period and, in rare cases, the courts — not from an assumption that the law will intervene on their behalf. Tenants who act early and put arrangements in writing generally have far more room to negotiate than those who wait for the system to act for them.