Opening a branch of a known brand, or letting others trade under yours, is franchising, governed by the Saudi Franchise Law of 1441H.
Who brings what
| Franchisor | Franchisee |
|---|---|
| Brand, operating system, know-how | Capital, site and daily operation |
| Training and ongoing support | Compliance with the franchisor's standards |
| Entry fee and periodic royalty | Operating profits |
The disclosure document
The franchisor must give a prospective franchisee a disclosure document a set period before signing, covering the franchisor, fees and expected costs, restrictions and performance data. Read it fully: false information has legal consequences.
Terms to watch
- Fees: entry fee, royalty, marketing fees.
- Territory: is it exclusive?
- Term and renewal.
- Supply: compulsory suppliers and prices.
- Termination: grounds, cure period, what happens after.
- Post-term non-compete.
- Disputes: commercial court or arbitration.
For franchisors
- Register your mark first. Read trademark registration.
- Prepare the operations manual and disclosure document, and register the franchise as required.
Signing or granting a franchise?
Usus Law Firm reviews disclosure documents and contracts as part of contract drafting and intellectual property, in Riyadh and Tabuk, and advises in English.
This article is general legal information and is not a substitute for advice on your specific case. Court proceedings in Saudi Arabia are in Arabic; the official Arabic text of each law prevails.
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