Article 1 of the Saudi Franchise Law

This article is the definitions article. It explains what is meant by the words used in the rest of the articles of the Law, unless the context of a particular article requires another meaning.

The most important things it defines:

• Franchise: A person (the franchisor) grants another person (the franchisee) the right to carry out certain business for his own account, tied to a trademark or trade name that the franchisor owns or is licensed to use. This includes passing on technical expertise and know-how and setting the way of operating, in return for financial or non-financial consideration. The amounts the franchisee pays for goods or services are not counted as part of this consideration.
• Franchisor and franchisee: Each may be a natural person or a company. The master franchisee is treated as a franchisor in its relationship with the sub-franchisee, and the sub-franchisee is treated as a franchisee in its relationship with it.
• Franchise business model: The way of managing the business set by the franchisor, including how the trademark tied to that business is presented, which the franchisee must comply with.
• Control: The ability to influence the decisions of another person directly or indirectly, by owning more than half of the capital, or more than half of the voting rights, or the right to appoint a majority of the board of directors, the board of managers or the executive body, or the right to manage.
• Group: Every person controlled by the franchisor, or who controls the franchisor, or who is, together with the franchisor, subject to the control of a third person.
• Disclosure document: A document that discloses the main rights, duties and material risks of a franchise opportunity.

It also makes clear that "the Ministry" is the Ministry of Commerce and Investment, and "the Regulations" are the Implementing Regulations of the Law. These definitions are directly connected to Article 2, which makes disclosure and transparency among the aims of the Law.