Article 21 of the Saudi Franchise Law

This article sets deadlines within which compensation claims must be filed, failing which they are not heard.

1- Compensation for wrongful termination by the franchisor: A compensation claim resulting from the franchisor's terminating the agreement in breach of Article 18 is not heard after three years from the date of termination. Article 18 prevents the franchisor from terminating the agreement before its term ends without the franchisee's written consent except for a lawful ground, such as not remedying a material breach within 14 days of written notice, or voluntary stopping for more than 90 consecutive days.

2- Compensation for breach of obligations: A compensation claim resulting from the franchisor's or the franchisee's breach of their obligations under the Law or the agreement is not heard after one year from the date the non-breaching party learned of the breach, or three years from the date it occurred, whichever is earlier. This paragraph covers both parties.

3- No conflict with other laws: Filing any claim under this Law does not prevent the franchisor or the franchisee from claiming any right he has under another law.

In practice, this means that anyone who suffers harm must act quickly, especially in the case of breach, where the period may be only one year from knowledge.

It is preceded by Article 20, which sets the franchisor's obligations to repurchase assets and compensate in cases of termination or non-renewal, and followed by Article 22 on the ending of the trademark use agreement. To calculate the period precisely in a particular case, it is advisable to consult a lawyer who specializes in commercial cases without delay.