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Establishing Agencies and Franchises in Qatar

Al Tamimi & Company


Sometimes the nature of a business will involve the sale of products or provision of services on behalf of another person (agency) or exclusively purchasing from another person and then on-selling (distributorship) or using the systems and names of another person (franchise).

 

Commercial agent

In Qatar, if you are a commercial agent with the ability to represent the person supplying you with products or services, you register such agency with the Ministry of Business and Trade.  Once an agency is registered, rights of exclusivity are granted over the products/services specified in the agency agreement as well as an entitlement at law to a commission of 5% of the value of goods imported.

Under the Commercial Agent’s Law if an agency agreement is terminated, the agent is entitled to recover compensation from his principal in connection with latter’s termination of the agency upon proof that the agent’s activities were instrumental in promoting the principal’s products or expanding his client base and (1) the agent was not compensated for his efforts and (2) the principal refused to continue the agency.

 

Distributors

If a person is not a commercial agent within the definition of the Commercial Agents’ Law or the agency is not registered, the agent may be considered to be a distributor within the meaning of the Commercial Code.  There is still a right to compensation upon termination but only if the distributor can prove that his activities have resulted in a remarkable success in promoting the products of the principal.

 

Franchises

Franchises involve a person (franchisee) using the systems and the trade names of another person (franchisor) under licence but having an independent enterprise without being able to represent the franchisor.  The franchisor receives money from the franchisee by way of a fixed fee or a royalty or a mixture of both as reward for providing a licence of the operations to the franchisee.  Many of the large international food chains are franchise operations.  There is no specific franchise law in Qatar, so if you are considering becoming a franchisor of an established organisation, it is very important for you to ensure that your franchise agreements give you as many rights as possible as the protections afforded to commercial agents and distributors will not be open to you. Consulting a lawyer is a good way to approach this situation.

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