We are delighted to share our legal insights in the latest ICLG Franchise 2025 edition, where we cover franchising in Saudi Arabia. We offer a comprehensive overview of the regulatory and legal framework surrounding franchise operations in the Kingdom. This framework is governed by the Franchise Law, promulgated by Royal Decree No. M/22 in 2019, and its associated implementing regulations.
The Franchise Law defines franchising and establishes requirements for franchisors, including mandatory pre-sale disclosures, registration of franchise agreements, and the protection of intellectual property through the Saudi Authority on Intellectual Property (SAIP). The law also outlines compliance with competition regulations and lays down procedures for dispute resolution, often involving arbitration.
One key aspect of franchising in Saudi Arabia is the requirement for franchisors to have at least one year of operational experience before offering franchises. This ensures that franchisors have established a viable business model before expanding through franchising.
Franchisors must also register trademarks and any relevant intellectual property, while businesses must comply with foreign investment laws if they involve non-Saudi ownership.
Additionally, the Saudi market offers opportunities for establishing franchise businesses through various legal entities, most commonly limited liability companies (LLCs). The recent introduction of simplified joint-stock companies provides additional flexibility.
The legal environment is evolving to support the growing franchise market, reflecting Saudi Arabia’s broader efforts to diversify its economy under Vision 2030.
This guide also addresses the protection of franchisor interests, franchisee rights, and the importance of adhering to local laws, such as Sharia principles and labor laws. In addition, it discusses practical matters like competition law, real estate, and online trading, offering crucial insights for both local and international franchisors looking to enter the Saudi market.