A hotel management agreement, a restaurant operating deal or a retail franchise in Kuwait is never one contract: it is a stack of premises rights, brand permissions, licenses and consumer-facing duties. The premises sit under the Lease Law, Decree-Law No. 35 of 1978, amended most recently by Decree No. 95 of 2024, which made notarized leases directly enforceable. The operating business needs a license under Law No. 111 of 2013 on the licensing of commercial establishments. The brand relationship is shaped by the Commercial Code, Decree-Law No. 68 of 1980, and the Commercial Agencies Law No. 13 of 2016, because Kuwait has no standalone franchise statute. And every customer-facing promise is policed by Consumer Protection Law No. 39 of 2014, enforced through the Ministry of Commerce and Industry and the National Committee for Consumer Protection. This article sets out the framework we apply when we review hospitality and retail agreements in Kuwait.
The regulatory map: premises, license, brand and consumer law
Four regimes run through every Kuwait hospitality or retail agreement. The Lease Law governs the premises: how the lease is evidenced, how rent disputes are heard, and how eviction works. Law No. 111 of 2013 governs the commercial establishment license, without which a shop, restaurant or hotel cannot lawfully operate. The Commercial Code and Law No. 13 of 2016 govern agency and distribution relationships, which is the legal family a franchise or brand license falls into when disputes arise. Consumer Protection Law No. 39 of 2014 governs what the business owes customers: correct information, displayed prices, Arabic invoices, returns and recalls.
A review that reads only the operating agreement misses most of the risk. The same factual promise, such as who sets prices or who answers a guest complaint, can be governed by the management contract, the lease, the agency registration and consumer law at once. Our review maps each obligation to the instrument that controls it, then checks whether the contract's allocation matches what the law allows the parties to agree.
Business premises licensing under Law No. 111 of 2013
Law No. 111 of 2013 on regulating the licenses of commercial establishments is the gatekeeper for opening a shop, restaurant, cafe or hotel outlet in Kuwait. It was published in the Official Gazette on 16 June 2013, took effect on 16 September 2013, and repealed the older Law No. 32 of 1969. Operating a commercial establishment without the required license, or outside the licensed activity, exposes the operator to closure and penalties, and amendments to the licensed activity or premises need approval before they are implemented.
For the agreement, licensing has two drafting consequences. First, the contract should state which party holds the establishment license for the site and which party is responsible for keeping it current, because a brand standard that requires an unlicensed activity is unenforceable in practice. Second, conditions tied to opening should be drafted against the actual licensing path: the license, the municipality and civil defense approvals, and any sector permits for food service or accommodation, each with a named owner and a long-stop date.
The lease: Decree-Law No. 35 of 1978 and the 2024 amendments
Premises for hotels, restaurants and shops in Kuwait are held under leases governed by Decree-Law No. 35 of 1978 on real estate lease, amended several times, most significantly by Decree No. 95 of 2024 issued on 15 September 2024. The 2024 amendments introduced Article 11 bis, which requires lease contracts to be in writing and signed by landlord and tenant, to state the rent and its due date, and to be notarized and stamped with the writ of execution formula. A notarized lease carrying that stamp becomes directly enforceable for the rent it records: collection of rent arrears can proceed through execution without a preliminary court case to establish the debt.
The same decree revised Article 26 on appeals in lease disputes, routing appeals of judgments of the rental divisions to the Court of First Instance sitting in its appellate capacity, a change intended to speed the heavy volume of rent cases. For a hospitality or retail operator, the practical points are these: insist on a written, notarized lease with the execution formula; check that the permitted use in the lease matches the licensed activity; and understand that the same instrument that speeds collection of rent arrears for the landlord also speeds enforcement against the operator if rent is missed.
Agency, distribution and franchise: the brand relationship
Kuwait has no law dedicated to franchising. Franchise and brand arrangements are governed by the general rules of the Commercial Code, Decree-Law No. 68 of 1980, and, where the arrangement amounts to a commercial agency, by Law No. 13 of 2016 on commercial agencies. The Commercial Code regulates commercial agencies in Articles 260 to 296, including the contract agency under which an agent undertakes commercial activities in a defined area. Kuwaiti law does not sharply distinguish a franchise from an agency, so the same deal can be argued under both frameworks when it breaks down.
Registration choices carry consequences. A registered commercial agency brings statutory protections to the local agent, including restrictions on termination and non-renewal, which is why international brands often structure Kuwait arrangements deliberately and take advice before any registration is made. The agreement should state whether the parties intend a registered agency, a distributorship, a license or a management relationship, who may register what, and what happens to registrations on termination. Leaving this vague invites the stronger local default rules to fill the gap.
Brand standards, prices and the limits of control
Hotel and retail agreements typically give the brand owner control over standards: design, service levels, suppliers, pricing systems and customer data. Two legal limits matter in Kuwait. First, the operator remains the licensed establishment and the employer, so standards must be implemented through the operator's own organization and cannot simply bypass local duties. Second, consumer law constrains the commercial freedom of the outlet: Law No. 39 of 2014 applies to the goods and services offered to consumers regardless of what the brand manual says.
Article 13 of the Consumer Protection Law requires the supplier to display the price of each good clearly and directly, and requires the service provider to state the price of the service. Temporary discounts and special offers on goods displayed to the public may not be run without a license from the Ministry of Commerce and Industry, and advertising such offers without that license, or in a misleading way, is prohibited. A brand promotion calendar therefore needs a Kuwait licensing step before a sale event goes live, and the agreement should assign that step to a named party with enough lead time.
Consumer information, labeling and Arabic invoices
Law No. 39 of 2014 sets hard formatting rules for what reaches the customer. Article 12 requires the producer or importer to place on goods, in Arabic, the data required by approved Kuwaiti or Gulf standard specifications, including the product's specifications, production and expiry dates, components and properties, risks, and usage warnings, in a clear legible form. Article 15 requires the supplier to give the consumer a written invoice in Arabic, at a minimum, evidencing the transaction and including the date, the price, the specifications, origin, nature and quantity of the product.
Article 19 adds an identity duty: all correspondence, documents and instruments the supplier issues in dealing with the consumer, including electronic documents, must carry the data identifying the supplier, particularly its registration in the register for its activity and its trademark if any. For a hotel or retailer, these duties land on menus, receipts, booking confirmations, invoices and marketing. The operating agreement should say who maintains Arabic labeling and invoice templates, because the outlet bears the exposure when the brand's global templates fall short.
Returns, defects, spare parts and recalls
Consumer rights under Law No. 39 of 2014 cannot be contracted away. Article 9 confirms the consumer's rights to health and safety, to quality, to correct information and to fair settlement including compensation for misleading practices, defective goods or unsatisfactory services. Article 11 voids any term in a contract or document with a consumer that exempts the supplier from its obligations or diminishes the consumer's statutory rights. Article 10 gives the consumer fourteen days from receiving a good to exchange it or return it for a refund without extra cost, provided the good is in its purchase condition, with joint liability of supplier and provider, subject to exceptions such as perishables.
Defects trigger escalating duties. Article 14 obliges the supplier to take back, refund, replace or repair a good that proves defective or non-conforming, within the declared warranty period or customary period. Article 16 requires the supplier to notify the National Committee for Consumer Protection within seven days of discovering a defect, and immediately where the defect threatens health or safety, announcing the stop and recall of the product through all possible media and warning consumers. Article 17 requires after-sales service, maintenance and genuine spare parts. A retail agreement should align its returns desk, recall protocol and supplier flow-downs with these duties.
Complaints, enforcement and penalties
Enforcement sits with the Ministry of Commerce and Industry and the National Committee for Consumer Protection established under Law No. 39 of 2014. Article 6 gives the Committee competence to receive and investigate consumer complaints, refer matters to the competent authorities and bring or intervene in cases touching consumer interests. Article 7 gives the Committee's technical secretariat staff designated by the Minister judicial police status, including the right to inspect books, documents and data at any government or non-government entity as needed to examine cases. Article 4 makes the Committee's decisions challengeable directly before the competent administrative court, on an expedited basis.
The penalty exposure is personal as well as corporate. Article 27 punishes breaches of the supplier obligation articles, Articles 12 to 19, with a fine of up to twenty thousand Kuwaiti dinars and imprisonment of up to two years, or either penalty, doubled on repeat within five years, and the person responsible for the actual management of an offending legal person faces the same penalties where knowledge is proven. Article 28 punishes breaches of Articles 20 and 21 with up to six months' imprisonment and a fine of up to five thousand dinars, or either penalty. The agreement should name who receives inspections, who answers the Committee, and how the parties share information during an investigation.
Staffing, escalation and who answers the customer
In a hotel or retail operation, the operator employs the staff and holds the license, while the brand supplies standards and systems. Kuwaiti practice makes this division concrete: front-line staff need escalation cards with response times, authorization limits and safe record handling, and the contract's responsibility matrix should match what staff can actually see and correct. A reservation lost in the brand's system, a disputed card charge, or a complaint about a third-party vendor in the outlet each needs a named responder.
Consumer complaints have a legal clock because of the Committee's investigative powers under Article 7 and the seven-day defect notification duty in Article 16 of Law No. 39 of 2014. The agreement should set internal escalation faster than the statutory clocks, define who decides on refunds within the Article 10 fourteen-day window, and record how complaint data flows between the operator and the brand without breaching data protection duties.
Supply chain, stock and payment records
Retail and food operations live on supply continuity. The agreement should identify approved suppliers, substitution rights when a supplier fails, quality checks on receipt, and reconciliation of stock between the parties' systems. Where the brand mandates suppliers, the contract should address what happens when a mandated supplier cannot serve Kuwait, because the operator remains answerable to consumers and inspectors for what is on the shelf or the plate.
Payment flows need the same precision. Card settlement, refunds to the original payment method, deposit handling for bookings and vouchers, and the audit trail for each are operational matters with consumer-law consequences: Article 15's Arabic invoice duty applies to the transaction evidence, and Article 10's refund right requires the money to move without extra cost to the consumer. The reconciliation cadence and the records each party must produce should be scheduled, with access rights that survive a dispute.
Renovation, termination and handover
Endings in this sector are operational events. Renovation or termination leaves open bookings, unredeemed vouchers, stock, employees, supplier accounts and customer data. The agreement should specify notices, inventory reconciliation, when brand use must stop, how open bookings are honored or refunded, who tells customers, and who answers later complaints. The 2024 lease amendments raise the stakes on timing: a notarized lease with the execution formula under Article 11 bis of the Lease Law allows rapid enforcement, so exit milestones should be realistic about how quickly possession disputes can move.
A workable handover clause covers a joint inventory, reconciliation of open orders and vouchers, export of booking and customer data with deletion evidence, and a defined period during which the departing operator can still access records to answer complaints, balanced against the brand's interest in stopping unauthorized use of its marks. Where the relationship was registered as a commercial agency, deregistration steps and any compensation arguments under Law No. 13 of 2016 should be addressed expressly rather than left to default rules.
When we review a Kuwait hospitality or retail agreement
When we review a hotel or retail agreement for Kuwait, we start from the site: the lease under Decree-Law No. 35 of 1978 as amended by Decree No. 95 of 2024, the establishment license under Law No. 111 of 2013, and whether the permitted use matches the planned activity. We then map the brand relationship against the Commercial Code's agency rules in Articles 260 to 296 and Law No. 13 of 2016, checking what has been or will be registered. We test the customer-facing terms against Consumer Protection Law No. 39 of 2014: displayed prices and licensed promotions under Article 13, Arabic invoices under Article 15, the fourteen-day return right under Article 10, recall duties under Article 16, and the penalty exposure under Articles 27 and 28. We finish with the operational schedules: staffing and escalation, supply and payment records, renovation and handover. The result is a written report identifying the clauses that must change before signature.
See also: our Kuwait M&A due diligence guide and our Kuwait compliance and regulatory guide, plus our commercial and corporate practice.
Frequently asked questions
Is there a franchise law in Kuwait?
No. Franchise arrangements are governed by the Commercial Code, Decree-Law No. 68 of 1980, and, where they amount to a commercial agency, by Law No. 13 of 2016. The structure and any agency registration should be planned before signing, because registered agencies carry statutory protections.
What changed in the Kuwait Lease Law in 2024?
Decree No. 95 of 2024 added Article 11 bis to Decree-Law No. 35 of 1978, requiring written leases signed by both parties, stating rent and due date, and notarized with the writ of execution formula, making them directly enforceable. It also revised Article 26 on appeals of rental judgments.
Do retail promotions need government approval?
Yes. Article 13 of Law No. 39 of 2014 prohibits temporary discounts or special offers on goods displayed to the public without a license from the Ministry of Commerce and Industry, and bans misleading advertising of such offers.
What return rights do consumers have?
Article 10 of Law No. 39 of 2014 gives the consumer fourteen days from receipt to exchange a good or return it for a refund without extra cost, provided it is in its purchase condition, subject to exceptions such as perishable goods.
Must invoices and labels be in Arabic?
Yes. Article 12 requires Arabic labeling data on goods, and Article 15 requires a written invoice in Arabic at minimum, with the date, price, specifications, origin, nature and quantity of the product.
What are the penalties for breaching consumer law?
Article 27 of Law No. 39 of 2014 sets a fine of up to twenty thousand dinars and imprisonment of up to two years, or either penalty, for breaches of Articles 12 to 19, doubled for repeat offenses, with personal exposure for responsible managers. Article 28 adds penalties for breaches of Articles 20 and 21.
Who is responsible for a guest complaint in a branded hotel?
Operationally, the licensed operator answers the guest, and the agreement should assign response times and authority. Legally, the outlet faces the consumer and the National Committee for Consumer Protection, so the contract's internal allocation does not remove the operator's statutory duties.
How do we start a review of a hospitality or retail agreement for Kuwait?
Collect the draft agreement, the lease, the license position and the brand standards manual, then contact our office in Kuwait through the contact page. We will confirm scope, timeline and the documents we need before starting.