Saudi Arabia Introduces New Franchising Regulations

A set of franchising regulations that outline specific requirements that apply to both franchisors and franchisees and covers key aspects of franchise arrangements. The main objectives of these regulations are to govern the relationship between a franchisor and franchisee; obligate the franchisor to disclose requirements for a franchise agreement; protect franchisee(s) in the event of a breach of contract; encourage transparency, and support the Kingdom’s franchise sector.   Alternate dispute resolution methods, such as arbitration, mediation, and conciliation are supported, and participants are free to select their means of dispute resolution. 

U.S. franchisors interested in entering the Saudi market are encouraged to consult with an attorney familiar with Saudi law before establishing, changing, or terminating a franchise agreement.  Violators are subject to fines of 500,000 SAR (approximately $133,300 USD).

U.S. Franchisors are encouraged to explore the Saudi market as the Kingdom opens its doors to greater foreign business. Please contact Commercial Specialist Anwar.shaqhan@trade.gov to discuss the Saudi franchise sector and the opportunities supported by these new franchising regulations.