Article 23 of the Saudi Franchise Law
المادة 23 من نظام الامتياز التجاري · الفصل الحادي عشر: أحكام ختامية
Any 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.
Official text (Arabic)
This article has not been amended since the law was issued.
يعد باطلاً كل اتفاق يتنازل أو يتخلى بموجبه صاحب الامتياز عن أي من حقوقه المنصوص عليها في النظام, إلا إذا كان هذا الاتفاق ضمن تسوية نهائية يتفق عليها مع مانح الامتياز أو مصرحاً به وفقاً للنظام.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 23 explained in plain English
This article protects the rights the Law gives the franchisee from being emptied of content through waiver clauses in the contract.
The rule: Any agreement under which the franchisee waives or gives up any of his rights provided for in the Law is void.
The two exceptions: A waiver is valid in only two cases:
- If the agreement is part of a final settlement that the franchisee agrees with the franchisor; or
- If the waiver is permitted under the Law.
The article itself does not specify the cases in which waiver is permitted, so for each right one should refer to the article that sets it to know whether it allows an agreement to the contrary.
The provision protects the franchisee specifically, since the text speaks of his waiver of his own rights.
It is preceded by Article 22, which ends the trademark use agreement when the franchise ends, and followed by Article 24, which punishes violation of the provisions of the Law or the Regulations with a fine of no more than SAR 500,000. Anyone asked to sign a waiver or settlement clause is best advised to consult a lawyer who specializes in commercial cases to know whether the waiver is permissible.
Practical example
A franchisor put a clause in his contract saying that the franchisee "waives any legal right to compensation". Ahmed signed the contract without noticing. Under this article, this clause is void to the extent it waives his rights provided for in the Law, unless it is part of a final settlement or is permitted under the Law.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 23 of the Saudi Franchise Law
Is a clause in the contract waiving my rights under the Franchise Law valid?
Any agreement under which the franchisee waives any of his rights provided for in the Law is void, except as part of a final settlement with the franchisor or where permitted under the Law.
When may a franchisee waive his rights?
If the agreement is part of a final settlement that he agrees with the franchisor, or if it is permitted under the Law.
More articles on The Franchise Agreement and Its Terms
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.