Article 18 of the Saudi Franchise Law

This article protects the franchisee from arbitrary early termination. The rule is that the franchisor may not terminate the agreement before its term ends without the franchisee's written consent, unless there is a lawful ground.

The ground is lawful in the following cases:

1. The franchisee breaches his essential obligations under the agreement and does not remedy the breach within a period of no more than 14 days from the date the franchisor gives him written notice.
2. The franchisee is liquidated or dissolved, or assigns the franchise business or its benefit to his creditors, or disposes of its assets to others.
3. The franchisee abandons the business or voluntarily stops it for more than 90 consecutive days.
4. The franchisee repeatedly fails to comply with the provisions of the agreement or any other agreement with the franchisor or his group concerning the franchise, despite being notified in writing.
5. The franchisee's carrying out of the business endangers public health and safety.
6. The franchisee loses any of the licenses needed to carry out his business.
7. The franchisee commits material violations of laws in force in the Kingdom that harm the reputation of the franchise business.
8. The franchisee commits an act of commercial fraud in carrying out the business.
9. The franchisee infringes the franchisor's intellectual property rights during the term of the agreement.
10. Any other case the agreement says is a lawful ground for termination.

This article is matched by Article 17, which gives the franchisee the right to terminate where the franchisor materially breaches disclosure or registration. It is followed by Article 19, which allows the franchisee to claim compensation for damage resulting from the franchisor's material breach of disclosure or registration without terminating the agreement. Anyone who received a termination notice he considers unlawful is best advised to consult a lawyer who specializes in commercial cases.