Article 25 of the Saudi Franchise Law
المادة 25 من نظام الامتياز التجاري · الفصل الحادي عشر: أحكام ختامية
The article allows agreeing to settle disputes arising from the franchise agreement or the Law's application by alternative means such as arbitration, mediation and conciliation.
Official text (Arabic)
This article has not been amended since the law was issued.
يجوز الاتفاق على تسوية المنازعات التي تنشأ عن اتفاقية الامتياز أو تطبيق النظام بوسائل بديلة, كالتحكيم والوساطة والتوفيق.
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 25 explained in plain English
This article opens the door to resolving disputes outside the traditional routes, since it permits agreement to settle disputes by alternative means.
Scope of disputes: The article covers two kinds:
- disputes arising from the franchise agreement;
- and disputes arising from the application of the Law.
The alternative means: The article gave examples, including: arbitration, mediation and conciliation. The words "such as arbitration" show that these are examples, not an exhaustive list.
The condition of agreement: The article says "agreement is permitted", meaning resorting to these means is optional and depends on the parties' agreement, and is not imposed on either of them without agreement.
This agreement can be a clause in the franchise agreement itself, or a later agreement after the dispute arises, since the article does not require any particular timing for the agreement.
The article does not state the procedures for arbitration or mediation or the body that handles them. It is preceded by Article 24, which sets the fine for violating the Law and the committee reviewing violations, and followed by Article 26 on issuing the Implementing Regulations. To draft a suitable arbitration or mediation clause, it is advisable to consult a lawyer who specializes in commercial cases.
Practical example
A dispute arose between a restaurant franchisor and a franchisee in Madinah over calculating technical support fees. Their agreement provided for resorting to mediation first, so they agreed on a mediator to try to reach a settlement, which this article permits.
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 25 of the Saudi Franchise Law
Is arbitration allowed in franchise disputes?
Yes. Agreement is permitted to settle disputes arising from the franchise agreement or the application of the Law by alternative means such as arbitration, mediation and conciliation.
Is arbitration mandatory in franchise contracts?
No. The article permits agreeing on alternative means, so resorting to them depends on the parties' agreement.
Are the alternative means limited to arbitration, mediation and conciliation?
The article mentions them as examples, with the words "such as arbitration, mediation and conciliation".
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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.