Article 19 of the Saudi Franchise Law

This article gives the franchisee the option of claiming compensation while continuing the agreement.

When does this right arise?

• When the franchisor makes a material breach;
• of his obligations relating to disclosure or registration;
• as the Law and the Implementing Regulations set them out.

What does the franchisee have? The right to claim compensation for any damage that affects him, without terminating the franchise agreement. That is, he is not forced to end the relationship to obtain compensation, but can keep his business and claim redress for the damage.

The article does not state how the compensation is calculated or its amount; the matter is tied to the actual damage suffered by the franchisee. The breach must also be material.

Its relationship to the neighboring articles:

• It is preceded by Article 18, which prevents the franchisor from terminating the agreement before its term ends without the franchisee's written consent except for a lawful ground.
• It is followed by Article 20, which deals with other cases, including the franchisor's terminating the agreement in breach of Article 18, since it requires him to repurchase the physical assets used exclusively in the franchise within 60 days of the franchisee's request, and to compensate him for establishment and operating losses and any other damage.

To assess and prove damage in a particular case, it is advisable to consult a lawyer who specializes in commercial cases or compensation cases.