In Saudi Arabia, franchising is regulated by the Commercial Agencies Law promulgated by Royal Decree No. 11 dated 20/2/1382H (corresponding to July 22^nd, 1962) and its Implementing Regulations ("Commercial Agencies Law"). The Commercial Agencies Law currently only provides general rules that apply to agency, distribution and franchising.

 

According to the Commercial Agencies Law only Saudi nationals or 100% Saudi owned companies can act as commercial agents. The law also requires that the members of board of directors, managers and authorised signatories be Saudi nationals.

 

There are no franchise disclosure laws in Saudi Arabia.

 

Franchise agreements must be registered in Saudi Arabia before any party undertakes franchising activity.   The franchisee is required to register the franchise agreement with the Saudi Arabian Ministry of Commerce within six (6) months of executing the agreement.  Failure to register the agreement does not invalidate the agreement or affect its enforceability per-se, however, the franchisee will be subject to a financial penalty.  The franchise must be granted by the franchisor directly (i.e. the entity owning rights to the brand) in order to be registerable.  A franchise granted by a master franchisee or third party sub-franchisor cannot be registered; however, in this case a resolution can be found by the registration of a trademark license agreement issued by the franchisor to the franchisee.

 

The Ministry of Commerce provides a model franchise agreement, but the parties are not required to follow model agreement and may negotiate their own franchise agreement should they wish. However, any agreement must be in Arabic in order to be registered.

 

 

The franchisor’s trademark(s) must be registered before the franchise can be granted.