{"id":114144,"date":"2025-10-09T13:37:34","date_gmt":"2025-10-09T13:37:34","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=114144"},"modified":"2025-10-09T13:37:34","modified_gmt":"2025-10-09T13:37:34","slug":"egypt-franchise-licensing","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/egypt-franchise-licensing\/","title":{"rendered":"Egypt: Franchise &amp; Licensing"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-114144","comparative_guide","type-comparative_guide","status-publish","hentry","guides-franchise-licensing","jurisdictions-egypt"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Rizkana &amp; Partners<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2020\/07\/rizkana-logo.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Rizkana &amp; Partners<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2020\/07\/rizkana-logo.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Franchise &amp; Licensing laws and regulations applicable in Egypt<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a legal definition of a franchise and, if so, what is it?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no legal definition of a franchise under Egyptian law.<\/p>\n<p>However, according to the Egyptian Franchise Development Association (\u201c<strong>EFDA<\/strong>\u201d) &#8211; a non-governmental and a non-profit organisation representing and serving the franchise industry in Egypt &#8211; a franchise is defined as \u201c<em>a method of distributing products and services. At least two levels of people are involved in the franchise system:<\/em><\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li><em>the <strong>franchisor<\/strong>, who lends their trademark or trade name and a business system; and<\/em><\/li>\n<li><em>the <strong>franchisee<\/strong>, who pays a royalty and often an initial fee for the right to do business under the franchisor\u2019s name and system.<\/em><\/li>\n<\/ol>\n<p><em>Technically, the contract binding the two parties is the \u201cfranchise\u201d, but that term is often used to mean the actual business that the franchisee operates.\u201d<sup>1<\/sup><\/em><\/p>\n<p>Traditionally, a franchise is defined by certain characteristics: the existence and transfer of know-how, the provision of distinctive signs, and the provision of assistance.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">1<\/sup> <a href=\"https:\/\/www.efda.org.eg\/index.php\/about-franchising\"><span style=\"font-size: 12px\"> https:\/\/www.efda.org.eg\/index.php\/about-franchising<\/span><\/a><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any requirements that must be met prior to the offer and\/or sale of a franchise? If so, please describe and include any potential consequences for failing to comply.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Even though there is currently a franchise law in the drafting phase, under Egyptian law, there is currently\u00a0no legislation dedicated to franchising. However, the franchising activity is subject to a combination of general legal principles and sectoral regulations, through a combination of general contract principles under the Egyptian Civil Code No. 131 of 1948, provisions of the Egyptian Commercial Code No. 17 of 1999 \u2014 particularly those concerning transfer of technology contracts \u2014 and intellectual property regulations. Where the franchise arrangement involves the transfer of know-how or technical assistance, it may be classified as a transfer of technology contract under the Commercial Code, which mandates that such agreements be in writing and include specific disclosures regarding risks, technical documentation, and training obligations. Failure to comply with these expectations may result in contractual liability, including rescission or damages for misrepresentation, and in some cases, the invalidity of the agreement. Further, any misleading conduct may expose them to civil liability under general liability principles.<\/p>\n<p>Additionally, EFDA\u00a0provides a non-binding, but widely respected, framework for ethical franchising practices. Franchisors are expected to provide prospective franchisees with a comprehensive written disclosure document at least 14 days before entering into any binding agreement. This document should include material information such as the franchisor\u2019s business history, financial standing, investment requirements, legal rights to intellectual property, and details of the franchise system including training and support. Additionally, franchisors who breach the EFDA Code of Ethics may face reputational harm and expulsion from EFDA.<\/p>\n<p>Although all the above requirements are not codified in a franchising-specific statute, they represent a de facto regulatory framework that franchisors operating in Egypt are strongly advised to observe.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any registration requirements for franchisors and\/or franchisees? If so, please describe them and include any potential consequences for failing to comply. Is there an obligation to update existing registrations? If so, please describe.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Please refer to our response to question 2 above. There are no general franchise registration requirements in Egypt, and franchisors as well as franchisees are not obligated to register their agreements with a central authority.<\/p>\n<p>However, should the agreement be classified as a transfer of technology contract, registration with the relevant authority \u2014 such as the Information Technology Industry Development Agency (\u201c<strong>ITIDA<\/strong>\u201d) or the Ministry of Trade and Industry \u2014 is mandatory.<\/p>\n<p>Failure to register a qualifying transfer of technology contract may render it unenforceable before Egyptian courts. Consequently, there is no legal requirement to update such registration unless there is a substantial modification to the contractual terms.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any disclosure requirements (franchise specific or in general)? If so, please describe them (i.e. when and how must disclosure be made, is there a prescribed format, must it be in the local language, do they apply to sales to sub-franchisees) and include any potential consequences for failing to comply. Is there an obligation to update and\/or repeat disclosure (for example in the event that the parties enter into an amendment to the franchise agreement or on renewal)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Egyptian law does not impose any specific statutory disclosure requirements exclusively for franchising.\u00a0However, disclosure obligations arise through a combination of general contract principles under the Civil Code, provisions of the Commercial Code (particularly where the franchise agreement qualifies as a transfer of technology contract), and the self-regulatory framework established by the EFDA as provided above. While there is no prescribed statutory format or language requirement, it is customary for such disclosures to be made in Arabic or accompanied by an Arabic translation to ensure enforceability and clarity. These disclosure obligations extend to sub-franchisees and apply equally in master franchise arrangements. In cases where the franchise agreement involves transfer of technology, non-compliance with disclosure requirements may render the contract void under the Commercial Code.<\/p>\n<p>The supplier of technology shall be obligated to provide the importer of technology with all necessary information related to the transferred technology, whether during the negotiation phase or within the contract itself. This includes a clear explanation of the nature of the technology, its intended use, any associated risks, limitations, or legal restrictions (such as licensing or patent constraints), and the technical documentation required for its application. The supplier must also disclose any conditions or obligations related to training, support, or operational implementation. The purpose of this disclosure is to ensure that the importer of technology enters into the agreement with full awareness of the technical and legal implications of the contract.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If the franchisee intends to use a special purpose vehicle (SPV) to operate each franchised outlet, is it sufficient to make disclosure to the SPVs\u2019 parent company or must disclosure be made to each individual SPV franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>According to Egyptian law, each entity is classified as a separate legal entity. Based on this, it is appropriate for disclosure to be provided to each entity individually rather than solely to the parent company. This approach ensures that both the parent company and the SPV receive necessary information about the material terms of the franchise arrangement, which can help prevent misunderstandings or legal complications in the future.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What actions can a franchisee take in the event of mis-selling by the franchisor? Would these still be available if there was a disclaimer in the franchise agreement, disclosure document or sales material?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Civil Code requires that contracts be performed in good faith<sup>2<\/sup>, obligating franchisors to act honestly and transparently. While franchise agreements, and related documents, may include disclaimers, these do not eliminate liability for fraud or gross negligence and are not considered as a waiver from the franchisee to exercise their rights in the event of mis-selling by the franchisor. Any clause that seeks to exempt a party from such liability will be considered void.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">2<\/sup> <span style=\"font-size: 12px\"> Article 148 of the Egyptian Civil Code No. 131 of 1948, \u201c<em>1- A contract must be performed in accordance with its terms and in compliance with the requirements of good faith.<\/em>\u201d<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Would it be legal to issue a franchise agreement on a non-negotiable, \u201ctake it or leave it\u201d, basis?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under Egyptian law, contracts of adhesion \u2014 standard form agreements offered on a non-negotiable, \u201ctake it or leave it\u201d basis \u2014 are legally valid and enforceable, provided they meet the general requirements of contract formation under the Civil Code.<\/p>\n<p>However, the enforceability of adhesion contracts is subject to judicial scrutiny, especially where there is a significant imbalance in bargaining power or where the terms are unfair, oppressive, or contrary to public policy<sup>3<\/sup>. Egyptian courts may intervene to invalidate or modify specific clauses if they are found to violate the principle of good faith or if they attempt to exclude liability for fraud or gross negligence, which is expressly prohibited.<\/p>\n<p>In practice, while franchisors and other commercial entities may use standard form contracts, they are advised to ensure that the terms are clear, transparent, and not excessively one-sided, particularly when dealing with smaller or less sophisticated counterparties.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">3<\/sup> <span style=\"font-size: 12px\"> Article 149 of the Egyptian Civil Code No. 131 of 1948, \u201c<em>When a contract of adhesion contains oppressive provisions, the Judge may modify these provisions or relieve the adhering party of the obligation to adhere to them in accordance with the principles of equity. Any agreement to the contrary is void<\/em><em>.<\/em>\u201d<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are trademarks, know-how, trade secrets and copyright protected in your country?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Egyptian Protection of Intellectual Property Rights Law No. 82 of 2002 \u2013 supplemented with the Commercial Code \u2013 provides a comprehensive legal framework for the protection of trademark, know-how, trade secrets, and copyright. This legislation aligns with Egypt\u2019s international obligations, and is administered by the\u00a0Egyptian Patent Office, the\u00a0Trademarks Department, and other relevant authorities. It is important to note that recently it has been established the Egyptian Intellectual Property Authority to organize all IP matters in a method that meets the State commitments under international treaties.<\/p>\n<p>Trademarks protection is granted upon registration with the\u00a0Egyptian Trademarks Office and confers exclusive rights to use the mark in connection with specified goods or services. Trademark protection lasts for\u00a010 years, renewable indefinitely. Infringement may result in\u00a0civil remedies\u00a0(injunctions and\/or damages) and\u00a0criminal penalties\u00a0under the Protection of Intellectual Property Rights Law.<\/p>\n<p>With respect to the protection of trade secrets and know-how, the Commercial Code regulates transfer of technology<sup>4<\/sup> contracts frequently incorporated into franchise relationships. For instance, both parties are required to maintain confidentiality over technology and improvements exchanged under the contract, with liability for damages resulting from unauthorised disclosure, including during pre-contractual negotiations. Unauthorised disclosure or use may give rise to contractual liability and civil claims, especially where the know-how is transferred under a formal agreement governed by the Commercial Code.<\/p>\n<p>The Protection of Intellectual Property Rights Law also governs copyright through protecting literary, artistic, and scientific works. Protection arises automatically upon creation and does not require registration, although voluntary registration is available. The duration of protection lasts for the\u00a0life of the author plus 50 years. Copyright holders enjoy exclusive rights to reproduce, distribute, perform, and adapt their works. Infringement may lead to\u00a0civil and criminal sanctions, including fines and imprisonment.<\/p>\n<p>Further to the above, contracts and franchise agreements serve as a main mechanism for safeguarding the franchisor\u2019s intellectual property rights. Pursuant to the Civil Code, contracts bind the parties and must be executed in good faith. Consequently, such agreements commonly include detailed provisions regarding the ownership and use of trademarks, copyrights, and trade secrets.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">4<\/sup> <span style=\"font-size: 12px\"> Article 73 of the Egyptian Commercial Law no. 17 of 1999, \u201cA Technology Transfer Agreement is a contract under which the technology supplier undertakes, in consideration of payment, to transfer technical knowledge to the technology recipient for the purpose of applying it in a specific technical method for the production or development of a particular product, the assembly or operation of machinery or equipment, or the provision of services. The mere sale, purchase, lease, or rental of goods shall not constitute a transfer of technology, nor shall the sale or licensing of trademarks or trade names, unless such transactions are included as part of a Technology Transfer Agreement or are directly connected therewith.\u201d<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any franchise specific laws governing the ongoing relationship between franchisor and franchisee? If so, please describe them, including any terms that are required to be included within the franchise agreement.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Currently, there are no franchise-specific laws regulating ongoing relationships. Nevertheless, as mentioned previously, legislation addressing these matters is presently under discussion and development.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any aspects of competition law that apply to the franchise transaction (i.e. is it permissible to prohibit online sales, insist on exclusive supply or fix retail prices)? If applicable, provide an overview of the relevant competition laws.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While franchise agreements in Egypt are not governed by a dedicated franchise law, they must comply with the fundamental principles set out in the Civil Code and the Commercial Code, as mentioned above. Moreover, franchise arrangements are also subject to the provisions of the Egyptian Competition Law No. 3 of 2005 which applies to all businesses and individuals operating within Egypt. The Competition Law prohibits agreements and practices that restrict, prevent, or harm competition<sup>5<\/sup> in the market<sup>6<\/sup>, and thus directly impacts the terms and enforcement of franchise agreements.<\/p>\n<p>Accordingly, any anti-competitive practices embedded in a franchise agreement may constitute violations of the Competition Law. The Competition Law imposes a broad prohibition against conduct aimed at restricting competition and subjects entities holding a dominant<sup>7<\/sup> market position to enhanced scrutiny and stricter obligations.<\/p>\n<p>Therefore, franchise agreements should carefully avoid including clauses that may raise competition concerns, such as resale price maintenance (imposing fixed or minimum resale prices), exclusive distribution arrangements that unduly restrict market access or limit competition, most-favoured-nation (MFN) clauses that inhibit competitive pricing or terms, single branding or bundling obligations that reduce consumer choice or foreclose competing products, restrictions on passive sales that limit a franchisee\u2019s ability to sell outside a designated territory.<\/p>\n<p>Such provisions risk being deemed unlawful if they significantly hinder market competition or negatively impact on consumer welfare. It is therefore essential for franchisors and franchisees to structure their agreements to promote fair competition while protecting legitimate business interests.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">5<\/sup> <span style=\"font-size: 12px\"> Article 6 of the Egyptian Competition Law no. 3 of 2005, \u201c<em>Agreements or contracts between competing persons in any relevant market are prohibited if they are intended to cause any of the following: a) Increasing, decreasing or fixing prices of sale or purchase of products subject matter of dealings. b) Dividing product markets or allocating them on grounds of geographic areas, distribution centers, type of customers, goods, seasons or time periods. c) Coordinating with regard to proceeding or refraining from participating in tenders, auctions, negotiations and other calls for procurement. d) Restricting the production, distribution or marketing operations, or limiting the distribution of services in terms of kind or volume or applying restrictions or conditions for their availability.<\/em>\u201d; Article 7 of the Egyptian Competition Law no. 3 of 2005, \u201c<em>Agreements or contracts between a person and any of its suppliers or clients are prohibited if they are intended to restrict competition.\u201d<\/em><\/span><\/p>\n<p><sup style=\"font-size: 9px\">6<\/sup> <span style=\"font-size: 12px\"> Article 3 of the Egyptian Competition Law no. 3 of 2005, \u201c<em>In applying this Law, the \u2018relevant market\u2019 is comprised of two elements: (a) the relevant product market \u2014 products that are practical and objective substitutes for each other; and (b) the relevant geographic market \u2014 the geographic area where competitive conditions are homogeneous, taking into account market entry opportunities, in accordance with criteria set by the Executive Regulations.<\/em>\u201d<\/span><\/p>\n<p><sup style=\"font-size: 9px\">7<\/sup> <span style=\"font-size: 12px\"> Article 4 of the Egyptian Competition Law no. 3 of 2005, \u201c<em>A person is considered dominant in a relevant market if they hold over 25% of that market, enabling them to effectively influence prices or supply without restraint from competitors. The Authority shall determine dominance in line with the Executive Regulations.<\/em>\u201d<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are in-term and post-term non-compete and non-solicitation clauses enforceable and are there any limitations on the franchisor's ability to impose and enforce them?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In-term non-compete and non-solicitation clauses are generally enforceable and widely accepted under Egyptian law. These clauses are commonly included in franchise agreements and are considered reasonable during the term of the contract, as they serve to protect the franchisor\u2019s legitimate business interests. Since the parties are actively engaged in the contractual relationship, such restrictions are less likely to be challenged and are typically easier to enforce.<\/p>\n<p>By contrast, post-term non-compete and non-solicitation clauses, while not prohibited, are subject to stricter judicial scrutiny. For these clauses to be enforceable, they must be clearly defined and reasonable in terms of duration, geographic scope, and subject matter. Egyptian courts aim to balance the protection of commercial interests with an individual\u2019s right to work and economic freedom. In practice, post-term restrictions are more likely to be upheld if they are limited in duration \u2014 typically not exceeding 1 year \u2014 depending on the nature of the business and the individual\u2019s role.<\/p>\n<p>It is also worth noting that Egyptian courts are generally more inclined to enforce in-term non-solicitation clauses rather than post-term non-compete clauses, as the former are seen as less restrictive and more directly related to the protection of client relationships and business goodwill.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there an obligation (express or implied) to deal in good faith in franchise relationships?  If so, what practical effects does this have on the relationship between franchisor and franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, the Civil Code imposes a general obligation of good faith in the performance and enforcement of contracts.<\/p>\n<p>In practice, this means that both parties must act honestly, transparently, and reasonably during negotiations and performance and any attempts to deceive, withhold critical information, or terminate abusively can lead to liability or contract invalidation. Further, kindly refer to our answer in question 2 above.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any employment or labour law considerations that are relevant to the franchise relationship? Is there a risk that the staff of the franchisee could be deemed to be the employees of the franchisor? What steps can be taken to mitigate this risk?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Since the franchisee operates as an independent legal entity and is solely responsible for managing its own employees, including recruitment and termination, the Egyptian Labour Law No. 12 of 2003 does not directly apply to the franchise agreement itself. However, the franchisee is required to comply fully with the provisions of the Labour Law, and the franchisor must take care to avoid certain actions that could give rise to joint employer liability under Egyptian legal principles.<\/p>\n<p>If the franchisor becomes overly involved in or exercises control over the franchisee\u2019s human resources decisions \u2014 such as hiring, firing, payroll, or day-to-day supervision \u2014 there is a heightened risk that the franchisor could be deemed a de facto employer of the franchisee\u2019s employees. In such cases, the franchisor may be held jointly liable in the event of employment-related claims. Conversely, where the franchisor refrains from involvement in human resources decisions and does not directly manage or supervise the franchisee\u2019s employees, this risk is significantly reduced.<\/p>\n<p>In situations where the franchisor provides training to the franchisee\u2019s employees to ensure adherence to brand standards, the training should be delivered either by the franchisee or through a third party, or it should be clearly documented as having been provided at the franchisee\u2019s request, in order to preserve the independent nature of the employment relationship.<\/p>\n<p>To further safeguard against potential liability, the franchise agreement should expressly state that compliance with Labour Law is the sole responsibility of the franchisee. It should also include an indemnification clause requiring the franchisee to hold the franchisor harmless from any claims, liabilities, or penalties arising from the franchisee\u2019s breach of the Labour Law obligations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a risk that a franchisee could be deemed to be the commercial agent of the franchisor? What steps can be taken to mitigate this risk?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Egypt, there is a legal risk that a franchisee may be deemed a commercial agent<sup>8<\/sup>\u00a0of the franchisor if the franchise relationship is not clearly structured and properly documented, particularly under the provisions of the Commercial Code and Commercial Agency Law No. 120 of 1982.<\/p>\n<p>Although franchise and commercial agency relationships are legally and economically distinct, a mischaracterised or loosely drafted franchise agreement may be reclassified as an agency agreement \u2014 especially where the franchisee is granted authority to act on behalf of the franchisor, bind the franchisor in commercial dealings, operate within an exclusive territory under significant control, or act as the sole local operator of a foreign franchisor\u2019s brand. These factors align more closely with the legal definition of a commercial agent under Egyptian law.<\/p>\n<p>To mitigate this risk, it is essential that the franchise agreement expressly defines the relationship as one between independent and separate legal entities, with no authority granted to the franchisee to act on behalf of or legally bind the franchisor. The agreement should also avoid terminology such as \u201c<em>exclusive representative<\/em>\u201d and refrain from granting the franchisee excessive control over pricing, marketing, or customer relationships. Additionally, it is advisable to include a comprehensive indemnification clause to protect the franchisor against liability arising from any unauthorised representations or conduct by the franchisee that could give rise to agency-related claims.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">8<\/sup> <span style=\"font-size: 12px\"> Article 1 of the Egyptian Commercial Agency Law No. 120 of 1982, &#8220;<em>Commercial Agent: Any natural or legal person who, on a regular basis and without being bound by an employment contract or a service lease contract, submits offers or concludes purchase, sale, lease, or service contracts in the name and on behalf of producers, traders, or distributors, or in their own name but on behalf of any of these parties.<\/em>&#8220;<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws and regulations that affect the nature and payment of royalties to a foreign franchisor and\/or how much interest can be charged? Are there any requirements for payments in connection with the franchise agreement to be made in the local currency?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Royalty payments are typically governed by the terms of the franchise agreement and are generally calculated as a percentage of gross sales or revenue, or alternatively as a fixed periodic fee. When paid to a foreign franchisor, royalties are usually remitted in foreign currency through a licensed Egyptian bank. Under the regulations of the Central Bank of Egypt (CBE), such payments are classified as invisible current account transactions.<\/p>\n<p>To facilitate these payments, the franchise agreement must be clearly documented and may be subject to review by Egyptian banks or regulatory authorities. Supporting documentation, including valid invoices and withholding tax certificates, may be required prior to approval of the transfer. Notably, royalties paid to a non-resident franchisor are subject to a 20% withholding tax in Egypt, unless a Double Taxation Treaty (DTT) between Egypt and the franchisor\u2019s country of residence provides for a reduced rate.<\/p>\n<p>With respect to interest, Egyptian law generally caps the annual rate at 4% for non-commercial (civil) obligations and 5% for commercial transactions. In commercial contexts, however, the parties are permitted to agree on a higher rate \u2014 a maximum of 7% \u2014 provided it is not excessive or contrary to public policy. Compound interest is generally unenforceable unless expressly agreed upon and applied within narrow legal limits.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to impose contractual penalties on franchisees for breaches of restrictive covenants etc.? If so, what requirements must be met in order for such penalties to be enforceable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Contractual penalties for breaches of restrictive covenants are generally permissible and enforceable under Egyptian law, provided they are clearly stipulated in the agreement and meet certain legal conditions. These penalties represent a pre-agreed estimate of compensation payable upon breach. However, Egyptian courts have the discretion to reduce or invalidate the agreed penalty if it is deemed excessive, disproportionate to the actual harm suffered, or if there has been partial performance of the underlying obligation.<\/p>\n<p>To mitigate the risk of judicial reduction or invalidation, restrictive covenants \u2014 such as non-compete, confidentiality, and non-solicitation clauses \u2014 should be narrowly drafted, reasonable in scope, duration, and geographic application, and clearly linked to the legitimate interests of the business. Further, the penalty amount should reflect a genuine pre-estimate of the likely harm, supported by a clear and reasonable rationale.<\/p>\n<p>For enforcement, the party seeking the penalty must prove both the existence of the agreed clause and the occurrence of a breach. It is also important to note that Egyptian courts do not automatically enforce penalty clauses governed by foreign law. Even where a foreign governing law clause is validly incorporated, Egyptian public policy considerations may override its application, particularly where the clause conflicts with mandatory provisions of Egyptian law or fundamental legal principles.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What tax considerations are relevant to franchisors and franchisees? Are franchise royalties subject to withholding tax?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are several key tax considerations that apply to both local and foreign franchisors and franchisees operating in Egypt.<\/p>\n<p><strong>1. Value Added Tax (VAT)<\/strong><\/p>\n<p>Franchise services and intellectual property licensing are considered taxable services in Egypt and are generally subject to VAT at a rate of 14%.<\/p>\n<p>When such services are provided by a foreign franchisor, they are treated as imported services. In this case, the Egyptian franchisee is required to apply the reverse charge mechanism, whereby it must calculate the applicable VAT on the value of the imported service, report and pay the VAT directly to the Egyptian Tax Authority (ETA), and if VAT-registered, claim the VAT paid as input tax (subject to compliance and deductibility conditions).<\/p>\n<p><strong>2. Corporate Income Tax (CIT)<\/strong><\/p>\n<p>Resident franchisors and franchisees are subject to corporate income tax at a rate of 22.5% on their net taxable profits.<\/p>\n<p>Franchisees may deduct royalty payments and franchise fees as legitimate business expenses, provided these payments are properly documented, contractually defined, and reflect arm\u2019s length pricing.<\/p>\n<p>Foreign franchisors are subject to taxation only on Egyptian-sourced income, unless they are found to have a permanent establishment<sup>9<\/sup>\u00a0in Egypt.<\/p>\n<p><strong>3. Permanent Establishment Risk<\/strong><\/p>\n<p>If a foreign franchisor exerts substantial control or ongoing management over the operations of an Egyptian franchisee \u2014 such as through local representatives, employees, or routine managerial decisions \u2014 it may constitute a permanent establishment. In such cases, the foreign franchisor becomes subject to full corporate income tax on its profits attributable to the permanent establishment in Egypt.<\/p>\n<p><strong>4. Stamp Tax<\/strong><\/p>\n<p>Certain documents and transactions \u2014 such as contracts for royalties, advertising, or licensing \u2014 may be subject to stamp tax under Egyptian law. Rates typically range between 0.1% and 0.3%, depending on the nature of the document or transaction.<\/p>\n<p><strong>5. Withholding Tax (WHT)<\/strong><\/p>\n<p>Under Egyptian Tax Law, royalty payments, technical assistance fees, and service fees paid by an Egyptian franchisee to a foreign franchisor are subject to a standard withholding tax rate of 20%. The Egyptian franchisee is obligated to withhold this tax at the time of payment and remit it to the Egyptian Tax Authority.<\/p>\n<p><strong>6. Double Taxation Treaties (DTTs)<\/strong><\/p>\n<p>Egypt has entered into double taxation treaties with numerous countries (including the United Kingdom, United States, France, and the UAE). These treaties may reduce or eliminate withholding tax on royalties and other cross-border payments.<\/p>\n<p>To benefit from treaty relief, the foreign franchisor must submit a valid tax residency certificate issued by its home tax authority, comply with procedural requirements as set out by the Egyptian Tax Authority, and apply for a withholding tax refund or exemption, depending on the applicable treaty provisions.<\/p>\n<p><strong>7. Recordkeeping and Compliance<\/strong><\/p>\n<p>The franchise agreement should clearly define the nature of all payments, the party responsible for any applicable taxes, and the need for the Egyptian franchisee to register for VAT if annual turnover exceeds EGP 500,000, withhold and remit taxes properly, and maintain documentation to support tax deductions and regulatory compliance.<\/p>\n<p>It is important to note that tax structuring should be handled with professional input to avoid permanent establishment risks, ensure deductibility of cross-border payments, and benefit from available treaty protections. All arrangements must also comply with public policy principles under Egyptian law.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">9<\/sup> <span style=\"font-size: 12px\"> Article 4 of the Egyptian Income Tax Law no. 91 of 2005, \u201c<em>For the purposes of this Law, a &#8220;permanent establishment&#8221; means any fixed place of business through which all or part of the business of a non-resident person in Egypt is carried out<\/em>\u201d.<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is e-commerce regulated and does this have any specific implications on the relationship between franchisor and franchisee?  For example, can franchisees be prohibited or restricted in any way from using e-commerce in their franchise businesses?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>E-commerce in Egypt is regulated through a combination of legislation governing electronic transactions, consumer protection, taxation, and digital services. There is legal recognition to electronic signatures and electronic records which allow franchisors and franchisees to conclude franchise agreements and amendments remotely, provided that proper digital authentication measures are in place. However, it is important to note that most Egyptian authorities are yet to recognise electronic signatures.<\/p>\n<p>Further, there are specific obligations on businesses engaged in e-commerce which require that consumers receive comprehensive disclosures before concluding any online transaction. This includes clear information about the supplier\u2019s identity, product specifications, total pricing (including taxes and delivery fees), return and refund policies, and warranty terms. These requirements apply to both franchisors and franchisees offering goods or services online, and failure to comply may result in regulatory penalties or consumer claims.<\/p>\n<p>From a taxation perspective, foreign franchisors providing online support, software, or digital tools to Egyptian franchisees may be required to register for VAT under the Simplified Registration Regime (SRR). If not registered, the burden of applying the reverse charge mechanism falls on the Egyptian franchisee, who must self-account for VAT on imported e-services. This has direct implications for how royalty and service payments are taxed in digital franchising models.<\/p>\n<p>In addition, the Egyptian Anti-Cyber and Technologies Crime Law No. 175 of 2018 governs online activity and imposes strict obligations on platforms and businesses regarding data security, system integrity, and digital communications. If a franchise model includes digital portals, customer databases, or cloud services, both franchisors and franchisees must ensure compliance with cybersecurity and data protection standards. Unauthorised data processing or cyber incidents can result in criminal liability under this law.<\/p>\n<p>Franchisors and franchisees operating websites, mobile applications, or online advertising platforms in Egypt may also be subject to oversight by the Supreme Council for Media Regulation (\u201c<strong>SCMR<\/strong>\u201d) and the National Telecommunications Regulatory Authority (\u201c<strong>NTRA<\/strong>\u201d). Depending on the nature of the content and the type of interaction with consumers, media licensing or platform registration may be required.<\/p>\n<p>As such, franchise agreements clearly address digital operations, including responsibility for compliance with VAT, consumer protection laws, platform licensing, and data privacy requirements<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the applicable data protection laws and do they have any specific implications for the franchisor\/franchisee relationship?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While Egypt has enacted the Personal Data Protection Law no. 151 of 2020, which draws on many principles found in the EU\u2019s GDPR, its Executive Regulations have not yet been issued. As a result, while the core obligations of the law are in force, practical enforcement mechanisms and procedural details remain pending. However, data privacy is currently protected under other binding legal frameworks, including the Egyptian Constitution 2014 which guarantees the right to privacy and the confidentiality of personal data<sup>10<\/sup>, and Anti-Cyber and Technologies Crime Law which criminalises unauthorised access, interception, or misuse of electronic data and imposes data security obligations on entities handling digital information.<\/p>\n<p>The Personal Data Protection Law establishes a legal system for the collection, processing, storage, and transfer of personal data<sup>11<\/sup>. It grants data subjects several rights, including the right to be informed, the right to access, and the right to withdraw consent. The law also mandates that explicit consent be obtained before processing personal data and that a license from the Egyptian Personal Data Protection Centre be obtained for the cross-border transfer of data. However, the implementation of many of these provisions will depend on the issuance of the Executive Regulations, which is expected to detail compliance procedures, exceptions, and enforcement processes.<\/p>\n<p>In relation to franchising, it is essential that franchise agreements explicitly define the responsibilities of both franchisors and franchisees with respect to data protection compliance. This includes implementing appropriate data security measures, establishing clear procedures for data breach response, and ensuring lawful processing of customer and employee data. Where personal data is transferred between an Egyptian franchisee and a foreign franchisor, the parties must comply with cross-border data transfer requirements under Egyptian law, including obtaining the required license once the Executive Regulations is issued.<\/p>\n<p>While Egypt\u2019s data protection framework is still developing, franchisors and franchisees should proactively implement robust data protection policies and systems in anticipation of full enforcement. Aligning internal practices with GDPR standards is advisable, given the expected similarities between Egypt\u2019s law and international norms and may reduce compliance gaps once the Executive Regulations take effect.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">10<\/sup> <span style=\"font-size: 12px\"> Article 57 of the Egyptian Constitution 2014, \u201c<em>Private life is inviolable and protected from violation. Postal, telegraphic, electronic correspondence, telephone conversations, and other means of communication are also inviolable, and their confidentiality is guaranteed. They may not be confiscated, inspected, or monitored except by a motivated judicial order, for a limited period, and under the circumstances specified by law. The state is also committed to protecting citizens\u2019 right to use public communication means in all their forms, and it is not permitted to arbitrarily suspend, stop, or deprive citizens of these means. The law regulates this matter.<\/em>\u201d<\/span><\/p>\n<p><sup style=\"font-size: 9px\">11<\/sup> <span style=\"font-size: 12px\"> Article 1 of the Egyptian Personal Data Protection Law no. 151 of 2020, \u201c<em>Personal Data: Any data related to an identified or identifiable natural person, whether directly or indirectly, through linking such data with other data such as name, voice, image, identification number, online identifier, or any data that identifies the psychological, health, economic, cultural, or social identity.<\/em>\u201d<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the franchisor permitted to restrict the transfer of (a) the franchisee's rights and obligations under the franchise agreement or (b) the ownership interests in the franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under Egyptian law, a franchisor is generally permitted to restrict both the transfer of the franchisee\u2019s rights and obligations under the franchise agreement and the transfer of ownership interests in the franchisee. This is grounded in the principle of freedom of contract which allows parties to determine the terms of their agreements, provided they do not violate mandatory provisions of law or public order.<\/p>\n<p>Accordingly, it is common and enforceable for a franchise agreement to include a clause requiring the franchisor\u2019s prior written consent before the franchisee may transfer any of its rights or obligations under the agreement to a third party. This enables the franchisor to maintain control over who may operate under its brand.<\/p>\n<p>In addition, due to the legal significance of changes in ownership and control \u2014 particularly in limited liability companies (LLCs) and joint stock companies (JSCs) \u2014 the franchisor may validly include a change-of-control clause. This clause may require the franchisee to obtain the franchisor\u2019s prior written consent before transferring shares, quotas, or other ownership interests in the franchisee entity. Such provisions are especially relevant where the franchisor has approved the initial shareholders or partners and wishes to maintain oversight of any new controlling parties.<\/p>\n<p>Clauses requiring prior written consent to transfers of rights and obligations or changes in ownership are commonly used in commercial contracts, including franchise agreements, and are generally enforceable under Egyptian law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does a franchisee have a right to request a renewal on expiration of the initial term? In what circumstances can a franchisor refuse to renew a franchise agreement? If the franchise agreement is not renewed or it if it terminates or expires, is the franchisee entitled to compensation? If so, under what circumstances and how is the compensation payment calculated?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under contractual freedom, the franchisee may request a renewal, but the franchisor may refuse. The franchisee is not entitled to end-of-contract indemnity.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any mandatory termination rights which may override any contractual termination rights? Is there a minimum notice period that the parties must adhere to?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Commercial contracts typically include provisions regarding termination. In cases where a contract does not specify a termination clause, the Civil Code allows a party to terminate the contract and seek compensation if the other party fails to fulfil their obligations.<\/p>\n<p>An exception applies when both parties agree that termination rights are restricted and may only be exercised pursuant to a court order or arbitral award.<\/p>\n<p>There is currently no legislation governing the notice period when it is not specified in the contract. As such, if the contract does not mention a notice period, the non-defaulting party is required to provide the defaulting party with a \u2018reasonable\u2019 period to resolve the issue. The length of a \u2018reasonable\u2019 period may differ depending on the nature of the default to be remedied.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any intangible assets in the franchisee\u2019s business which the franchisee can claim ownership of on expiry or termination, e.g. customer data, local goodwill, etc.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Since there is no specific law in Egypt that directly regulates franchise agreements or clarifies the ownership of intangible assets when a franchise ends, these matters are normally governed by the terms of the franchise agreement itself.<\/p>\n<p>Typically, assets such as the brand name, trademarks, customer information, and business methods belong to the franchisor, especially if they were licensed to the franchisee during the term of the franchise agreement. Although the franchisee may build local goodwill which usually benefits the franchisor\u2019s brand unless the franchise agreement states otherwise.<\/p>\n<p>Under the Protection of Intellectual Property Rights Law, the registered trademark owner holds the exclusive right to use the trademark, reinforcing that once the franchise agreement terminates or expires, the franchisee cannot claim ownership or continued use of that trademark.<\/p>\n<p>Accordingly, unless the franchise agreement provides otherwise, in cases where the business assets are owned by the franchisee, they continue to be the property of the franchise even after the franchise agreement terminates or expires. Conversely, in the cases where the business assets are owned by the franchisor, those assets, similarly, remain the property of the franchisor even after the franchise agreement terminates or expires.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a national franchising association? Is membership required? If not, is membership commercially advisable? What are the additional obligations of the national franchising association?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Currently, there is no national franchising association responsible for regulating or overseeing franchise activities in Egypt. However, the EFDA, established in 2001, operates as a non-governmental, non-profit organisation dedicated to fostering entrepreneurship through franchising. Membership in EFDA is voluntary and as such is not a requirement to enter into franchise agreements since there is no legal obligation to join any association within this sector to date. As such, while no governmental body enforces mandatory membership, EFDA remains an active local NGO supporting the development of franchising in Egypt.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are foreign franchisors treated differently to domestic franchisors? Does national law\/regulation impose any debt\/equity restrictions? Are there any restrictions on the capital structure of a company incorporated in your country with a foreign parent (thin capitalisation rules)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Foreign investors are treated equally to domestic investors in the context of franchise agreements. There are no legal or regulatory restrictions that impose different treatment based on the franchisor\u2019s nationality.<\/p>\n<p>Furthermore, Egyptian law does not impose any specific debt to equity ratio requirements or thin capitalisation rules on companies incorporated with foreign ownership. A company with a foreign parent may structure its capital freely, provided it complies with the general provisions of the Egyptian Companies Law No. 159 of 1981, as amended, and all applicable investment regulations.<\/p>\n<p>Under the Companies Law, the minimum capital requirements vary depending on the legal form of the company. Thus, each type of company is subject to different capital thresholds necessary for its valid incorporation and operation under the Companies Law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Must the franchise agreement be governed by local law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A franchise agreement is not required to be governed by Egyptian law. Pursuant the Civil Code, contracting parties are permitted to mutually select the governing law for their agreement, as the contract binds them with the force of law. Therefore, both franchisor and franchisee may opt for foreign law to govern their franchise arrangement.<\/p>\n<p>Nevertheless, it is essential to recognise that franchise agreements in Egypt can fall under the legal framework applicable to transfer of technology contracts, specifically as outlined in the Commercial Code which stipulates that Egyptian law must govern these contracts and that Egyptian courts must have jurisdiction over them.<\/p>\n<p>As such, while party autonomy allows the selection of a foreign governing law for a franchise agreement, Egyptian law will mandatorily apply to any provisions involving the transfer of technology pursuant to the compulsory requirements established under the Commercial Code.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What dispute resolution procedures are available to franchisors and franchisees? Are there any advantages to out of court procedures such as arbitration, in particular if the franchise agreement is subject to a foreign governing law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In accordance with Egyptian law, disputes between franchisors and franchisees may be resolved either through judicial proceedings before the Egyptian courts or by utilising alternative dispute resolution mechanisms, such as arbitration. In particular, when franchise agreements include transfer of technology provisions \u2014 such as the licensing of trademarks, know-how, or proprietary systems \u2014 the Commercial Code will be applicable. The Commercial Code explicitly states that disputes arising from transfer of technology contracts may be settled via the courts or through arbitration, contingent upon the parties\u2019 agreement in the contract, as long as it shall be governed by the Egyptian law.<\/p>\n<p>Accordingly, the parties have the autonomy to select arbitration as their preferred dispute resolution method, and this choice is legally recognised and enforceable under the Egyptian Arbitration Law No. 27 of 1994. Arbitration offers several advantages, including complete confidentiality for both parties, expedited proceedings compared to traditional court litigation, and international enforceability of arbitral awards. Since Egypt is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, arbitral decisions issued in other member countries are enforceable in Egypt, and those made in Egypt can be executed internationally in other signatory states. Consequently, arbitration serves as an effective and practical method for resolving disputes, particularly in cross-border franchise agreements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Must the franchise agreement and disclosure documents be in the local language?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no restrictions under Egyptian law regarding this matter. However, any document intended for submission to an Egyptian court or authority must either be executed in Arabic or officially translated to Arabic.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to sign the franchise agreement using an electronic signature (rather than a wet ink signature)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, it is legally possible to sign a franchise agreement in Egypt using an electronic signature. According to the Egyptian Electronic Signature Law No. 15 of 2004 and the Establishment of ITIDA, electronic signatures are recognised as valid and legally binding. That said, for the signature to be accepted, it must come from a certification provider licensed by ITIDA, and it has to be secure, verifiable, and clearly linked to the person who signed.<\/p>\n<p>In practical terms, most Egyptian authorities may not consistently acknowledge or process electronic signatures, especially within the context of official procedures. Consequently, utilising wet ink signatures remains the recommended approach in Egypt.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do you foresee any significant commercial or legal developments that might impact on franchise relationships over the next year or so?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>One of the most important legal changes that will affect franchise relationships in Egypt will be the introduction of the franchise law that is currently being discussed and drafted. However, at this time, the lack of a clear legal framework creates uncertainty for both franchisors and franchisees. Having a dedicated franchise law would help set clear rules, protect the rights of both parties, and bring more transparency to the sector.<\/p>\n<p>Additionally, the establishment of a national franchising association, where membership is mandatory, could further strengthen the industry. Such an organisation would help align all franchise stakeholders under a unified regulatory and ethical framework, encourage compliance with relevant laws, and promote best practices across the franchise community in Egypt.<\/p>\n<p>These steps would not only support the sustainable growth of the franchising sector but also increase investor confidence, both domestically and internationally.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">7557<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/114144","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=114144"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}