In Iran, can a franchisor block me from opening another shop after termination?

We need to see your contract with the franchisor.

Under Iranian law franchise agreements are governed by the general provisions of the Civil Code rather than a specific franchise statute, so the parties enjoy broad contractual freedom (Art. 10 Civil Code). A non-competition clause is therefore not per se void, but it will only be upheld if it is reasonable in scope, duration and geographic reach, is supported by adequate consideration, and does not contravene public order or the principle of “good faith” (Art. 20 Civil Code). Courts typically look for a legitimate business interest—such as protection of trade secrets, confidential know-how or goodwill that you received from the franchisor—and will strike down a clause that is overly broad (e.g., banning any “similar business” anywhere in Iran for two years) as an unlawful restraint of trade.

If you wish to contest the 2-year restriction, start by requesting the original contract and any amendment that contains the clause, then have a qualified Iranian commercial-law attorney review it for:

- Adequate consideration – Did the franchisor give you something of value (training, brand use, marketing support) in exchange for the restriction?
- Reasonable limits – Is the 2-year period and the geographic area proportional to the actual goodwill you acquired?
- Compliance with public policy – Does the clause attempt to lock you out of a market that you could legitimately serve without using the franchisor's confidential information?

If the clause appears overly restrictive, the lawyer can negotiate a narrower carve-out (e.g., limit the ban to the exact territory covered by the original franchise, shorten the duration to 12 months, or allow you to operate a business that does not use the franchisor's trademarks or trade secrets). Should negotiation fail, you can file a petition with the Tehran Commercial Court asking it to declare the clause unenforceable on the grounds of unreasonableness and lack of consideration. Because the statute of limitations for contractual claims in Iran is five years, you have ample time to act, but moving promptly will preserve leverage and avoid unnecessary delays.

Sincerely,
Ascendance International Organization

As a general answer, the franchisor cannot ask you for this, but to provide a more specific answer, it is necessary to review the details of the contract.