In force
Saudi Franchise Law
نظام الامتياز التجاري
The Franchise Law of Saudi Arabia, issued in 1441 AH. This page presents the official Arabic text of each article with plain-English explanations.
- Articles
- 27
- In force
- 27
- Amended
- 0
- Issued
- 9/2/1441 AH
Issued by: مرسوم ملكي رقم م / 22 بتاريخ 9 / 2 / 1441 هـ · قرار مجلس الوزراء رقم 122 بتاريخ 9 / 2 / 1441 هـ
Each article shows the official Arabic text, which is the only legally binding version, followed by our plain-English explanation.
Browse Franchise Law by topic
General Provisions and Scope of the Franchise Law6 articlesConditions for Granting a Franchise1 articleRegistering the Franchise Agreement and Disclosure Document3 articlesObligations of Franchisor and Franchisee3 articlesThe Franchise Agreement and Its Terms2 articlesAssigning the Franchise Agreement3 articlesRenewing the Franchise Agreement1 articleTerminating the Franchise Agreement4 articlesFranchise Compensation3 articlesFranchise Violations and Dispute Settlement2 articles
Articles of the Saudi Franchise Law
الفصل الأول: أحكام عامةArticles 1–2
- Article 1The article defines the key terms of the Franchise Law, such as franchise, franchisor, franchisee, franchise agreement, business model, control, group and disclosure document.
- Article 2The article states the aims of the Franchise Law: encouraging franchising and regulating it transparently, protecting both parties, ensuring disclosure, and raising the quality of goods and services.
الفصل الثاني: نطاق تطبيق النظامArticles 3–4
- Article 3The article provides that the Franchise Law applies to every franchise agreement carried out inside the Kingdom.
- Article 4The article lists agreements and arrangements that are not franchise agreements for the Law's purposes, such as franchises by royal decree, commercial agencies, trademark licenses and wholly owned companies.
الفصل الثالث: شروط منح الامتيازArticles 5–5
الفصل الرابع: القيد والإفصاحArticles 6–7
- Article 6The article requires the franchise agreement and the disclosure document to be registered with the Ministry of Commerce, and leaves the registration procedures, documents and information to the Implementing Regulations.
- Article 7The franchisor must give the franchisee the disclosure document at least 14 days before the agreement or any payment, in Arabic, clear and accurate, including any financial performance information it provides.
الفصل الخامس: التزامات صاحب الامتياز ومانح الامتيازArticles 8–10
- Article 8The article sets the franchisor's obligations, unless otherwise agreed in writing, such as defining the rights and business model, training, supply, confidentiality and not competing within the territory.
- Article 9The article sets the franchisee's obligations, unless otherwise agreed in writing, such as obtaining the franchisor's approval for changes, providing data and allowing inspection of facilities.
- Article 10The article requires the franchisor and the franchisee to fulfil their obligations under the franchise agreement in good faith.
الفصل السادس: اتفاقية الامتيازArticles 11–12
- Article 11The franchise agreement must be written in Arabic and signed by both parties, and must include mandatory terms such as term, territory, consideration, training, dispute resolution and sub-franchising.
- Article 12The article refers to the Implementing Regulations the provisions on advertising and marketing activities connected with the franchise.
الفصل السابع: التنازل عن اتفاقية الامتيازArticles 13–14
- Article 13The franchisee must obtain the franchisor's approval before assigning the franchise or changing its controller, and the franchisor may not object or withdraw approval except in specified cases.
- Article 14The franchisor is treated as having consented to an assignment of the franchise or a change of controller if he does not respond in writing to the franchisee's written request, as the Implementing Regulations specify.
الفصل الثامن: تجديد اتفاقية الامتياز أو تمديدهاArticles 15–15
الفصل التاسع: إنهاء اتفاقية الامتياز أو انقضاؤهاArticles 16–18
- Article 16Unless otherwise agreed, the franchise agreement ends on an individual franchisee's death, loss of capacity, health impediment or insolvency liquidation, and on a company's liquidation or dissolution, but not on its conversion or merger.
- Article 17The franchisee may terminate the agreement by written notice, without compensating the franchisor, if the franchisor materially breaches the disclosure or registration obligations, within the set period.
- Article 18The franchisor may not terminate the agreement before its term ends without the franchisee's written consent unless there is a lawful ground, and the article lists the lawful grounds.
الفصل العاشر: التعويضArticles 19–21
- Article 19If the franchisor materially breaches his disclosure or registration obligations, the franchisee may claim compensation for any damage without terminating the franchise agreement.
- Article 20On wrongful termination, non-renewal without an acceptable reason or termination by the franchisee under Article 17, the franchisor must repurchase assets and compensate, and may claim compensation for wrongful termination by the franchisee.
- Article 21The article sets time limits after which compensation claims are not heard: three years from a wrongful termination, and one year from knowledge or three years from the breach, whichever is earlier.
الفصل الحادي عشر: أحكام ختاميةArticles 22–27
- Article 22The agreement to use any trademark or trade name connected with the franchise ends when the franchise is assigned, terminated, ends or is not renewed.
- Article 23Any agreement under which the franchisee waives his rights under the Law is void, unless it is part of a final settlement with the franchisor or is permitted under the Law.
- Article 24The article punishes violation of the Law or Regulations with a fine of up to SAR 500,000 imposed by a committee, with an appeal to the Board of Grievances and possible publication of the decision.
- Article 25The article allows agreeing to settle disputes arising from the franchise agreement or the Law's application by alternative means such as arbitration, mediation and conciliation.
- Article 26The Minister must issue the Regulations within 180 days of the Law's publication, and the article lists topics they must include, such as templates, disclosure requirements, fees and the competent body.
- Article 27The article provides that the Franchise Law takes effect 180 days after its publication in the Official Gazette and repeals every provision that conflicts with it.
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