Opening a Restaurant in the United Arab Emirates

Legal Process of Opening and Running a Restaurant in the United States and How it Compares From Opening a Restaurant in the United Arab Emirates.

ENVIRONMENTAL FRAMEWORK

Overview of the Hospitality Industry of Los Angeles

Sector Size and Growth

Annual Revenue and Employment

Competition

Opportunity

Overview of Dubai Restaurant Industry

LEGAL AND REGULATOY PROCESS OF OPENING A RESTAURANT IN THE UNITED STATES OF AMERICA

Documentation and Legal Filing

Reserve Company Name

Apply For Federal Identification Number (EIN)

Register To Collect State Sales Tax

Register as an Employer with the Unemployment Insurance Division at the State Labor Department

Arrange For Workers' Compensation and Disability Insurance

Arrange For Publication and Submit Certificate and Affidavits of Publication

Zoning Laws

Negotiating Commercial Lease

Restaurant Corporate Structure

License and Permits

Business License

Food Service Establishment Permit

3.5.3. Alcohol Beverage License 18

3.5.4. Food Safety Permit 18

3.6. Food Safety Regulation 19

3.7. Insurance 19

3.8. Domestic Laws that Apply to Business 20

3.8.1. Consumer Credit Protection Act 20

3.8.2. Employee Polygraph Protection Act 20

3.8.3. Fair Labor Standards Act (FLSA) 20

3.8.4. Fair Labor Standards Act (FLSA) / Child Labor 20

3.8.5. Immigration and Nationality Act 21

3.8.6. Occupational Safety and Health (OSH) Act 21

3.8.7. Uniformed Services Employment and Reemployment Rights Act 21

3.8.8. Whistleblower Protections Provisions 21

4.1. Employment and Labor Laws 22

4.1.1. Immigration Laws 22

4.1.2. Federal Youth Employment Provisions 22

4.2. Food Safety Laws 22

4.3. No Smoking Laws 23

4.4. Wage Laws 23

4.4.1. Minimum Wage 23

4.4.2. Food Credit 23

4.4.3. Tips 24

4.4.4. Overtime 24

4.5. Taxes 24

4.6. Hiring Employees 24

4.7. Supplier Contracts 25

5. POTENTIAL EXIT STRATEGIES 25

5.1. Franchising 25

5.2. Other Strategies 25

6. LEGAL AND REGULATORY PROCESS OF OPENING A RESTAURANT IN UAE 26

6.1. Documents and Legal Filing 26

6.2. Zoning Laws 30

6.3. Negotiating Commercial Lease 30

6.4. Restaurant Corporate Structure 30

6.5. License and Permits 31

6.6. Food Safety Regulations 32

6.7. Insurance 32

6.8. Local Laws Applying to the Business 33

7. OPERATING A RESTAURANT WITHIN THE LAW WITHIN THE UAE 33

7.1. Adhering to Islamic and Middle Eastern Laws 33

7.2. Employment and Labor Laws 34

7.3. Food Safety Laws 35

7.4. No Smoking Laws 35

7.5. Wage Laws 35

7.6. Taxes 36

7.7. Initiating Employee Contracts 37

7.8. Supplier Contracts 37

8. POTENTIAL EXIT STRATEGIES 38

8.1. Franchising Laws 38

8.2. Other Strategies 38

References 39

Abstract

The business world, in the present era, is dominated by mass globalization. The organizations and businesses can prosper on the basis of economic interdependence. It is, therefore, necessary for the entrepreneurs to have an insight into the laws, regulations and principles that govern the initiation and operations of the businesses in various locations, so that they might flourish in the global markets.

This paper, therefore, aims at highlighting the legal process of opening and running a restaurant in the United States and how it compares from opening a restaurant in the United Arab Emirates. The paper will highlight the differences that exist between these processes by discussing each of these processes in detail.

The Legal Process Of Opening And Running A Restaurant In The United States And How It Compares From Opening A Restaurant In The United Arab Emirates.

1. INTRODUCTION

The business world, in the present era, is dominated by mass globalization. The organizations and businesses can prosper on the basis of economic interdependence. It is, therefore, necessary for the entrepreneurs to have an insight into the laws, regulations and principles that govern the initiation and operations of the businesses in various locations, so that they might flourish in the global markets.

This paper, therefore, aims at highlighting the legal process of opening and running a restaurant in the United States and how it compares from opening a restaurant in the United Arab Emirates. The paper will highlight the differences that exist between these processes by discussing each of these processes in detail.

2. ENVIRONMENTAL FRAMEWORK

2.1. Overview of the Hospitality Industry of Los Angeles

The accommodation and food service sector of Los Angeles consists of all the enterprises that provide the consumers with lodging services and prepare meals, snacks and beverages for immediate consumption purposes. This sector consists of both accommodation and food services firms. This is because both of these activities are generally combined at a single establishment or enterprise.

2.1.1. Sector Size and Growth

The hospitality industry of the Los Angeles is one of the fastest growing industries of Los Angeles. The current is estimated to be $22,000,000. The growth of the sector reached its peak in the year 2007. The growth, however, slumped after 2007. This downturn in growth can be attributable to the financial crunch. In the year 2009, the sector started growing once again. Furthermore, in the year 2013, the growth rate of the accommodation and food service sector of Los Angeles was equal to the growth rate of the gross domestic product of the United States of America. (Staff Members of the Los Angeles Research Group, LLC, 2014; Shiftgig, Inc., 2013)

(Staff Members of the Los Angeles Research Group, LLC, 2014)

The graph above shows the relationship of the growth rate of the accommodation and food service sector of Los Angeles with the growth rate of the gross domestic product of the United States of America. (Staff Members of the Los Angeles Research Group, LLC, 2014)

2.1.2. Annual Revenue and Employment

The accommodation and food service sector of Los Angeles recorded an annual revenue of 340.7 billion dollars in the year 2013. The accommodation and food service sector of Los Angeles had an EBITDA of 92.7 million dollars. The industry employed a total of 1226 million people and provided wages of around 43.8 million dollars. (Staff Members of the Los Angeles Research Group, LLC, 2014)

There has been a constant increase in the employment rate of the sector. The industry is regarded as the third largest industry, in terms of employment gains. (Staff Members of the Los Angeles County Economic Development Corporation, 2013) The industry is expected to an annual average employment rate of 423.4. There has been a constant increase in the employment rate of the accommodation and food service sector of Los Angeles. (Kleinhenz, Ritter-Martinez & Guerra, 2013) The variations in this employment rate is depicted by the graph below:

(Kleinhenz, Ritter-Martinez & Guerra, 2013)

2.1.3. Competition

There has been an evident increase in the competition that exists in the accommodation and food service sector of Los Angeles. The hoteliers are concerned about the enhanced managerial, leadership and strategical skills that are required to sustain and grow the business in this sector. The basic reason behind this increase in competition is the enhancement of the choices that are available to the consumers. (Staff Members of the Los Angeles Research Group, LLC, 2014)

In addition to that, there has been an evident increase in the demands and expectations of the consumers. This pressurizes the businesses to perform in the best possible so as to attain and maintain a loyal and appropriate customer base in the highly competitive market. Apart from that, effective competition also exists in relation to recruitment and retention of effective workforce in the accommodation and food service sector of Los Angeles, this is because the sector is growing consistently and the requirement for highly skilled workforce is also increasing with this growth. (Staff Members of the Los Angeles Research Group, LLC, 2014)

2.1.4. Opportunity

As the accommodation and food service sector of Los Angeles consists of a number of sub-sectors, therefore, a number of opportunities exist in this sector for the entrepreneurs. The consistent growth and favorable financial condition of the sector provide the entrepreneurs with extensive opportunities to initiate and operate progressive business in the sector. In addition to that, the consistent increase in demand also makes this sector a favorable location for the initiation of a business. (Staff Members of the Los Angeles Research Group, LLC, 2014)

2.2. Overview of Dubai Restaurant Industry

Tourism has become a growing sector in almost every economy. Tourists also require food and accommodation which has given rise to the restaurant industry. The restaurant industry is one of the most rapidly growing industry in UAE. Dubai, being the key tourism earner of UAE, also has many restaurants and hotels operating in order to provide food and accommodation to the plethora of tourists coming in every year. As the tourism industry is expanding every year, so is the restaurant industry. (The Dubai Department Of Tourism And Commerce Marketing, 2014)

The restaurant industry of UAE is humungous in size. In the first half of 2011, the hotel rooms were fifty four thousand two hundred and twenty one and the amount increased to eighty four thousand five hundred and thirty four in 2013. The industry attracts more and more investors each year. These investors then start new projects which amplify the size of the industry and then attract more investors. Plenty of new structures including buildings, malls and even artificial islands are formed in order to expand and support the tourism and restaurant industry. Multifarious investor groups have announced new projects related to the industry. (The Dubai Department Of Tourism And Commerce Marketing, 2014)

As the industry gets crammed up with investors and businesses, the competition normally increases. Similarly, the restaurant industry of Dubai is also getting competitive. The investors have to think of new and innovative ideas to attract the tourists and locals to their restaurants. The result of this competition is that the new restaurants are coming up with innovative ideas and in order to compete with them, the older restaurants are engaging in renovations and refurbishments. (Arabian Business Publishing Ltd., 2014)

This has improved the condition of overall restaurant industry and ever increasing revenues are reaped every year. This increased revenue attracts more investors and the cycle then continues. The competition in the industry has made it a difficult place to operate in and some restaurants even fail to cope up with the pace of innovation. Therefore, in order to operate in the restaurant industry of Dubai, being competitive is necessary. (Arabian Business Publishing Ltd., 2014)

Apart from the competition inside the restaurant industry, Dubai also faces competition from other cities such as mecca, medina, Riyadh, Kuwait and other cities located in the gulf countries. Dubai has diversified its source of income to a great extent. It is now the most rapidly growing city in terms of tourists and restaurants. (Arabian Business Publishing Ltd., 2014)

As more and more investors enter the industry, they begin new projects and these new projects attract tourists. The hospitality industry of Dubai, incorporating the restaurant and accommodation industry, grew by more than five hundred percent in the last decade. The industry reaped a revenue of 4.5 billion U.S. dollars in 2011. The amount is expected to increase to 7.5 billion U.S. dollars in 2016. The soaring revenues of the industry are indicators of the success and potential of this industry. (The Dubai Department Of Tourism And Commerce Marketing, 2014)

Due to the dynamic growth of the hospitality industry in Dubai, there are many opportunities for investors and employment seekers. Increasing tourism demands more and more restaurants and hotels to provide accommodation and dining services to the tourists. In addition, the locals also visit the restaurants as a part of their dining out routine. Therefore, it is a heaven for investors who can start new projects and experiment new ideas in these projects. (Arabian Business Publishing Ltd., 2014)

As the new projects will begin, staff pertaining to construction, logistics, transportation, management and a host of other fields will be needed. Therefore, employment opportunities will be created as well. All of these opportunities make Dubai a land of scope where new businesses start at a rapid rate. In 2012, new business density was 1.38 which was the fourth highest in the Middle East and North African region. Tourism is one of the major causes of the beginning of these businesses. As tourism is an expanding industry which gives good returns, the investors are interested in investing in tourism. (The World Bank Group, 2014)

3. LEGAL AND REGULATOY PROCESS OF OPENING A RESTAURANT IN THE UNITED STATES OF AMERICA

3.1. Documentation and Legal Filing

3.1.1. Reserve Company Name

According to the Section 205 of the New York State Limited Liability Company Law the founders of the business, limited liability Company, are required to register the name of the business with the New York State Department of State, Division of Corporations. This registration is to be done before the owners issue the articles of organization for their company. According to the Section 204(a) of the New York State Limited Liability Company Law, the words Limited Liability Company or the abbreviation LLC must accompany the name of the company. In addition to that, it has also been indicated by the Section 204(b) of the New York State Limited Liability Company Law, that the Division of Corporations shall reject the name of the company if it cannot be distinguished from the names that already exist on the files of the Division of Corporations. (The World Bank Group, 2014)

Apart from that, the Section 203 of the New York Limited Liability Company Law require the founders of the company to file the articles of organization with the New York State Department of State, Division of Corporations. The founders can obtain the forms from a local supply store. Apart from that, these forms can also be download from the official website of the department. The processing time for the application is seven days. (The World Bank Group, 2014)

3.1.2. Apply For Federal Identification Number (EIN)

The organization is then required to apply for federal identification number (EIN). This is used for employer and tax purposes by the organization. The founders are required to file IRS Form SS-4. This form can be obtained from the Internal Revenue Service of the United States of America. The founders can also apply online, the application submitted through this medium is processed immediately, through telephone, the application submitted through this medium is processed immediately, or by fax, for this medium the application requires 4 days to get processed. If the founders apply for federal identification number online, then they are not required to file the IRS Form SS-4. (The World Bank Group, 2014)

3.1.3. Register To Collect State Sales Tax

The businesses that are indulged in any of the following activities are required to register themselves as a vendor of sales tax. Furthermore, these businesses are also required to obtain Certificate of Authority. (The World Bank Group, 2014)

a. The business is indulged in the sales of any kind of tangible property.

b. The business renders services that are taxable in nature.

c. The business operates a hotel, motel restaurant or any other entity that is indulged in the sales of food and drinks. (The World Bank Group, 2014)

The businesses can either go for online registration, through the official website of New York State Department of Taxation and Finance, or they must file Form DTF-17 to get registered. Once the business gets registered it is mandatory for it file its quarterly sales and deploy tax returns, irrespective of the fact that whether it has been initiated or rendered any operations. (The World Bank Group, 2014)

3.1.4. Register as an Employer with the Unemployment Insurance Division at the State Labor Department

In order to initiate a business, the founders of the business must register themselves as employers by filing Form NYS-100. This enables the New York State Department of Labor to determine that whether the organization can be rendered liable under the New York State Unemployment Insurance Law. If the organization is considered to be liable then it is provided with unemployment insurance returns, wage reporting and quarterly combined withholding, by the Department of Labor, for the recording of the wages that it has paid to its employees. In order to register, the founders of the business must first obtain the federal identification number. (The World Bank Group, 2014)

3.1.5. Arrange For Workers' Compensation and Disability Insurance

It is necessary for a limited liability company to attain and maintain an insurance in relation to compensation and disability of the workers. The businesses can go for buying insurance policies for the compensation and disability benefits of the employees from some private insurance company, or these policies can be obtained from the New York State insurance funds. The federal identification number acts as the identity of the business in the communication process that takes place between the Workers' Compensation Board. The organization shall also provide its EIN to the insurance carrier of the organization while it goes for attaining and maintaining a workers' compensation disability coverage insurance policies. (The World Bank Group, 2014)

3.1.6. Arrange For Publication and Submit Certificate and Affidavits of Publication

It has been indicated by section 206 of the New York State Limited Liability Company Law that the limited liability company must publish a copy of its articles of organization in two newspapers. This shall be done within 120 days from the date when the articles of organization are deemed effective. The organization can also go for publishing a notice of its formation once a week. This is to be done for six successive weeks. It is necessary that the selected newspaper must be designated by the county clerk of the county in which the primary office of the organization is located, in accordance with the articles of organization. (The World Bank Group, 2014)

After the organization has published either the articles of organization or the notice of publication, it would be provided by the affidavit of publication. The organization is then required to submit a certificate of publication along with the affidavit of publication with the New York Department of State, Division of Corporations. The charges associated with the filing of certificate of publication are $75. (The World Bank Group, 2014)

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3.2. Zoning Laws

Zoning can be regarded as a function of local government and it is used for planning purposes. Zoning may restrict the variety of manners in which a particular land can be used. In order to initiate a restaurant business in the United States of America, the founders would be required to collaborate with the relevant government, which in this case would be Department of City Planning, to ensure that the district selected by the organization has been zoned by the government to issue restaurant permits. In addition to that, after the selection of the location, the founders must collaborate with the concerned authorities to ensure that the location is zoned for the type of restaurants the founders aim at opening. (UpCounsel, 2014)

3.3. Negotiating Commercial Lease

Negotiating Commercial Lease can be a very complicated process and hence the founders shall seek the services of an attorney or a realtor who has the skills to review the documents effectively and provide the founders with effective advice. The first step in the negotiation of the commercial lease is the development of the terms of lease. The founders have to critically think about the type of lease to be acquired, the expenses associated with the lease and other relevant areas under this step. (The U.S. Small Business Administration, 2014)

3.4. Restaurant Corporate Structure

The next step is the selection of a business structure. Even though the founders are provided with a number of choices, but the Limited Liability Structure is most feasible in this case. This is because this structure protects the personal property of the owner from the liabilities that might be incurred by the business. In addition to that, a limited liability company also provides the owners with tax benefits. Even though, a corporation also limits the liability of the owner but it is more complex to form and does not provide tax benefits. (The U.S. Small Business Administration, 2014)

3.5. License and Permits

3.5.1. Business License

In order to start a restaurant, the founders are first required to obtain a business license. This license provides the founders with an authority to operate a restaurant business within their selected jurisdiction. (Scott, 2014)

3.5.2. Food Service Establishment Permit

The founders are required to obtain a food service establishment permit. This permit ensures that the restaurant complies with all the requirements in relation to the preparation, storage, protection and sanitation of the food. (Scott, 2014)

3.5.3. Alcohol Beverage License

The state and county government requires the founders to obtain the alcohol beverage or liquor license if they aim at serving alcohol in their restaurant. There are various types of alcohol beverage or liquor license. The type of license obtained determines the kind of alcohol that could be sold by the organization and the areas in which it can sell alcohol. (Scott, 2014)

3.5.4. Food Safety Permit

The founders of the business are required to obtain a food safety permit from the local environmental health department. This permit ensures that the organization has fulfilled all the food safety requirements of the federal, state and county governments. (The U.S. Small Business Administration, 2014)

3.6. Food Safety Regulation

The founders are required to obtain a local environment health department, also called the food safety permit, in order to ensure the safety of food that is sold by them. Furthermore, the environment health specialists also visit the restaurant twice or once a year, in the United States of America, to ensure that the restaurant is complying with the food safety standards and regulations. (Multnomah County, 2014)

3.7. Insurance

The restaurants may be required to confront a number of vulnerabilities include law suits, medical expenses and injuries. It is, therefore, required that the organization goes for the following insurance policies:

Property insurance

General liability insurance

Liquor liability insurance

Workers compensation insurance

These insurances provide the organization with a shield against a number of vulnerabilities. If the organization does not obtain a liquor liability insurance then the restaurant is liable for all the crimes in which the customer indulges after getting drunk. (The U.S. Small Business Administration, 2014)

3.8. Domestic Laws that Apply to Business

3.8.1. Consumer Credit Protection Act

This act restricts the employers from discharging the employees because the wages of the employees have been garnished for a particular debt. In addition to that, it also puts a limit to the amount of wages that could be garnished for any one week. (U.S. Department of Labor, 2014)

3.8.2. Employee Polygraph Protection Act

This law restricts the employers from deploying lie detector tests in relation to the employees. The act allows the employers to deploy polygraph tests in particular situations only. (U.S. Department of Labor, 2014)

3.8.3. Fair Labor Standards Act (FLSA)

This act prescribes the rate of wages and the amount of overtime pay for most of the private and public businesses. This act is administered by the Wage and Hour Division. (U.S. Department of Labor, 2014)

3.8.4. Fair Labor Standards Act (FLSA) / Child Labor

This act is administered by the Wage and Hour Division and limits the hours for which children under the age of 16 can work. Furthermore, this act also restricts the employers from hiring children under 18 at jobs that are identified as very dangerous. (U.S. Department of Labor, 2014)

3.8.5. Immigration and Nationality Act

These laws ensure that the employment of the foreign nationals, either permanent or temporary shall not adversely affect the employment opportunities of the citizens of the United States of America. (U.S. Department of Labor, 2014)

3.8.6. Occupational Safety and Health (OSH) Act

This act has been administered by the Occupational Safety and Health Administration (OSHA). This act sets out the standards and conditions in relation to the health and safety of the employees. The organizations that are covered by this act are required to ensure that the health and safety of the workers is protected in an appropriate manner during the course of employment. In case of any mishap, this act holds the organization liable to compensate the worker for the injuries caused. (U.S. Department of Labor, 2014)

3.8.7. Uniformed Services Employment and Reemployment Rights Act

This act indicates that certain citizens who joined the armed services of the United States of America have a right to get reemployed by the employer with whom they were working before they joined the armed services. (U.S. Department of Labor, 2014)

3.8.8. Whistleblower Protections Provisions

Most of the employee protection acts indicate that adequate protection shall be provided to the employees who are whistleblowers or who complain about the practices of the employers that are against the law. The whistleblower protection is enforced by the Occupational Safety and Health Administration in almost all the laws. (U.S. Department of Labor, 2014)

4. OPERATING A RESTAURANT WITHIN LAW IN THE UNITED SATES OF AMERICA

4.1. Employment and Labor Laws

4.1.1. Immigration Laws

The organizations have to abide by the immigration laws of the United States of America in order to verify that the immigrant under consideration is eligible for employment. In addition that, these laws also provide guidelines in relation to the working hours, compensations and benefits of the foreign citizens. (United States Department of Labor, 2014)

4.1.2. Federal Youth Employment Provisions

All the individuals under the age of 18 are subjected to the federal youth employment provisions. These provisions have been formulated by the division of labor of the United States of America to ensure that the youth is provided with safe and appropriate working environment. All the restaurants have to abide by these provisions while developing work hours and occupational standards for employees who are under the age of 18. (Staff Members of U.S. Department of Labor Employment Standards Administration Wage and Hour Division, 2014)

4.2. Food Safety Laws

The U.S. Food and Drug Administration has issued a number of labelling laws in order to ensure that the consumers are well aware of the food that they are consuming. The U.S. Food and Drug Administration, therefore, requires the restaurants to mention various variables, including calorie count and vitamin count, in their menus, so that the consumers might be aware of the components of the food. (The U.S. Food and Drug Administration, 2014)

4.3. No Smoking Laws

In a number of states of the United States of America including, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida and Hawaii, the restaurants are required to be 100% smoke free zones. The founders of the restaurants, therefore, are required to maintain internal regulations that strictly prohibit smoking within the restaurant and develop it as a smoke free zone. (Smoke-Free Housing & Travel, LLC, 2014)

4.4. Wage Laws

The full time and part time employees in the United States of America are entitled to attain a certain standard of wages. These standards are listed below:

4.4.1. Minimum Wage

The minimum wage standard, according to the department of labor of the United States of America, for non-exempt workers is $7.25 per hour. (The U.S. Small Business Administration, 2014)

4.4.2. Food Credit

The employees are allowed to take credit for food that is provided at cost. This credit can be deduction from the wages of employees. But if the employer aims at providing the employees with a discount at menu prices then this cannot be deducted as credit from their wages. (The U.S. Small Business Administration, 2014)

4.4.3. Tips

If an employee earn tips up to $30 then such an employee is regarded as a tipped employee. The law allows the employer to credit some of the amount on tips received. But this law may vary from county to county. (The U.S. Small Business Administration, 2014)

4.4.4. Overtime

If the employers require the employees to work more than 40 hours then the employer is liable to pay one and one half of the regular wages to the employees. (The U.S. Small Business Administration, 2014)

4.5. Taxes

The restaurants are liable to pay a certain percentage of sales tax to the government. This tax is included in the costs of the meals that the restaurant serves. The percentage of sales tax may vary from state to state. Furthermore, the restaurants are also liable to pay property tax, as the organizations generally own a number of buildings and lands and hence are liable to pay property tax. In addition to that, these businesses charge room tax, luxury tax, city tax and occupancy tax on their consumers. This tax adds up to 25% of the total bill of the consumers. (Internal Revenue Service, 2014)

4.6. Hiring Employees

The employees are to be hired by the employers on a full time or part time basis. These have, however, not been differentiated by Fair Labor Standards Act (FLSA). Either the employee is part time or full time, does not alter the implementation Fair Labor Standards Act (FLSA), service contract act, wages and compensation, fringe benefits requirements and Davis-Bacon and Related Acts. (U.S. Department of Labor, 2014)

4.7. Supplier Contracts

The restaurant requires a number of equipment to prepare food. The organization, therefore, enters into merchandise contracts to ensure timely and effective availability of the necessary equipment. In addition to that, the restaurant also requires effective delivery of raw materials. So in order to ensure timely delivery of raw material the organization indulges into food and raw material contracts with various suppliers. (Phillips, 2014)

5. POTENTIAL EXIT STRATEGIES

5.1. Franchising

Under this strategy the operations of the business are leverages and the franchisee is given an opportunity to run the business operations. This provides the initial owner with a chance of exceled growth. The franchisee works as an independent worker and is not required to be accountable to the franchiser. The franchisee, however, is liable to pay the franchiser with the franchise fee. All the terms and conditions of franchising process are determined according to the Franchise Law of the United States of America. (Francorp, 2013)

5.2. Other Strategies

The other exit strategies include:

Selling the business to the third party. This would provide to owner with an amount equal to the net market value of the business. (Clarke, 2010)

Another strategy would be the friendly sell out of the business. Under this strategy the business is sold out to friends, family or employees. Even though it is a sale, but the terms of this sale are more flexible than that of the sales to third party. The organization, under this strategy, has more information about the buyer. But the problem with this strategy is that the owner cannot be completely objective about the terms of sale. (Clarke, 2010)

6. LEGAL AND REGULATORY PROCESS OF OPENING A RESTAURANT IN UAE

6.1. Documents and Legal Filing

Starting a restaurant in UAE has some legal requirements. Starting a business in Dubai requires a local partner as well. According to the law in the United Arab Emirates, a new foreign business must have a local partner with a share of fifty one percent in the business. Following the law, the new restaurant must have someone in United Arab Emirates as a partner. After the first phase, which is having a partner, the licensure processes can be commenced. (The World Bank Group, 2014)

The business will then be named. The name of the restaurant will be selected by the partners and the availability of the name will be checked before getting the business registered. The approval of name and identity of the partners can be obtained from the licensing section of the department of economic development. The entrepreneur must also get the approval of the department on the nature of business activities. The application to register the business can be submitted once the name, partners and business are approved. The total cost of approval and name reservation is three hundred and twenty Arab Emirates Dirhams. (The World Bank Group, 2014)

After the approval from the license section, the entrepreneur will have to get the memorandum of association notarized. The memorandum of association is a document defining the relationship between the restaurant and the outside world. During the process of notarization, the notary ensures the documents and the signatures of the partner as being legal. Usually the lawyer of the applicant takes the approval and then the applicant just needs to go to the notary to get the documents certified. The cost of notarization reaches a maximum of ten thousand Arab Emirates Dirhams. The cost of getting three copies of the memorandum of association is one four hundredth of the total capital. Further copies are available at five per copy Arab Emirates Dirhams. (The World Bank Group, 2014)

The next step is to get the trade license and commercial registration certificate from the department of economic development. In order to get the certificate, the applicant must submit the original copy of some documents to the trade license and commercial registration department. The documents include: (The World Bank Group, 2014)

The application form with the signature of the managers.

The memorandum of association. A copy of this document is also needed.

A letter from the department of economic development attesting the approval of the business name.

Another letter from the department of economic development approving the company.

Copies of passports of the partners. (The World Bank Group, 2014)

If the aforementioned documents are correct and approved by the commercial registration department, the name of the restaurant will be entered in the commercial register. The following documents are then given to the federal ministry of economics for publication: (The World Bank Group, 2014)

Copy of the notarized memorandum of association

Copy of the application of registry

Excerpt from the commercial register containing the name of the company (The World Bank Group, 2014)

The process of publication may take longer than a month but the time is not taken into account as the copy of the fee payment receipt is acceptable. After the publication, the ministry of the economics issues its letter of approval. (The World Bank Group, 2014)

The next step is the license. In order to get the trade license, a license application form is filled and submitted to the department of economic development. The license application can be filled after the notarization of the memorandum of association. The license application form must also have the signatures of the authorized signatory of the company. The form, which is in Arabic, is duplicated and filed with the DED. One copy of the form is then submitted to the ministry of economics. As in the commercial registration certificate, the trade license also requires some documents. These documents include: (The World Bank Group, 2014)

The form setting the name of the company in English and Arabic

The original lease of the company premises

The form from the Dubai municipality building department giving approval of the suitability of the premises. (The World Bank Group, 2014)

Towards the end of the process, the department of economic development hands over the original trade license and the certificate of registration. After that, the membership of Dubai chamber of commerce and industry is also issued for the restaurant. The procedure for filling the license form can also be completed online. (The World Bank Group, 2014)

The cost of registration of the company and entering the name of the company into the name board is eight hundred and thirty Arab emirates dirhams. The fee for the trade license is five percent of the value of the lease agreement. In addition to that, the waste fee is also charged ranging from one to three thousand Arab Emirates dirhams. Lastly the cost of membership of the Dubai Chamber of Commerce and Industry is twelve hundred Arab Emirates Dirhams. (The World Bank Group, 2014)

After getting the membership of the DCCI, the entrepreneur must visit the ministry of labor to apply for the establishment card. The entrepreneur can also send an authorized person. If the trade license is issued and the fees is paid, the establishment card will be issued the same day. (The World Bank Group, 2014)

The native workers must also be registered with the ministry of labor. To register the workers, the following documents must be submitted to the ministry of labor: (The World Bank Group, 2014)

Three copies of the employment contract

Employer's passport

Copy of trading license

Proof that the worker is a UAE native (The World Bank Group, 2014)

As per the law, the native workers must also be registered with the General Authority for Pension and Social Security. In order to do so, the salary certificates or the labor contracts of the native workers are to be submitted. (The World Bank Group, 2014)

6.2. Zoning Laws

The key feature of the zoning laws of the United Arab Emirates is the free trade zones it has developed. In these zones, the registration and other process remain the same but the businesses get incentives when they operate in these zones. The first incentive is that the restaurant owner will be allowed to have hundred percent foreign ownership. In addition to that, the restaurant will also be given tax holidays. Moreover, the restaurant will be relieved of the custom duties and import taxes. Furthermore, the restaurant will also face no restrictions in sending its profit back. There is, however, a drawback that the restaurant will only be able to operate in the zone it is established in. (Lawyers of Bryan Cave LLP, 2004)

6.3. Negotiating Commercial Lease

As the real estate is kept in the hands of UAE government, the land cannot be normally bought. The owner may enter into a deal with the applicant or the business owners but the land is normally not sold. Therefore, the lease agreement should be made with the owner according to the relevant law in the UAE. A deal is made keeping in mind the interests of both the parties and after completing the contract, the lease agreement is concluded. (Lawyers of Bryan Cave LLP, 2004)

6.4. Restaurant Corporate Structure

It is important to keep in mind the corporate structure of the business so that appropriate laws are applied. In this case, the restaurant will be a limited liability company. Previously, the capital limit for limited liability companies was three hundred thousand dirhams. The amount was then revised in 2009 and the lower limit was removed. The upper limit was then to be set by responsible authorities. The limited liability company cannot have one owner neither can it have more than fifty shareholders. In case of a restaurant, some specific qualifications are also needed as per the nature of the activities. (Latham & Watkins, 2011)

6.5. License and Permits

First of all, a food service establishment permit must be obtained from Dubai municipality food control department. The permit allows the restaurant to serve free or charged food to individuals. The application is to be submitted to the food control department with a fee of one thousand dirhams. (Lawyers of Bryan Cave LLP, 2004)

The UAE has strict laws regarding alcohol consumption. It does not allow the Muslims to buy or drink alcohol as per sharia laws. The non-Muslims should also be twenty one years or older. The restaurants also need a license to serve alcohol. The license application is filled and submitted to the Special Licensing Office. The application must be accompanied with one hundred and sixty dirhams fee.

In addition to the previous two licenses, the general business license is also required for the restaurant to operate. The license type required for a restaurant is commercial license. The department of economic development is assigned with the duty to issue licenses. (AHK UAE, 2009)

The food safety permit is issued after the inspection of the restaurant. The Food Control Department is in charge of inspecting and enforcing the safety laws and after the completion of the inspection, issuing the permit. (Food Control Department, 2013)

6.6. Food Safety Regulations

A permit must also be obtained from the Department of Environment, Health and Safety. This department is related to the environmental health of the UAE. A permit must be obtained which attests the restaurant as working according to the environmental laws of UAE.

In addition to that, the Food and Health Department also conducts inspections of the businesses that deal with food. The purpose of the inspections is to ensure the health of the populace. The inspections also lead to the implementation of HACCP system which monitors the potential risks to the health of people. (Food Control Department, 2013)