Saudi Arabia is a kingdom that is teeming with possibilities for enterprising companies looking for new opportunities when it comes to commercial franchising. Here are a few reasons why these franchising opportunities exist, why they are so exciting, and how you can take advantage of them with the right kind of help.
Franchise Expansion Example: Abu Dhabi Bank and Jeddah Branch
The recent news that the Abu Dhabi Bank is expanding to Jeddah is just one example of how the commercial banking business is picking up in the kingdom of Saudi Arabia. They recently got a license from the Saudi Arabian Monetary Authority, or SAMA to start this franchising back in March. The license allowed FAB to operate three franchises in the kingdom.
They operate in 5 different countries.
In fact, FAB is now operating on three different continents, just expanding its business in Saudi Arabia recently. This is just one example of how the Kingdom is opening up and how those who take advantage can reap considerable rewards with the right help with getting licenses and navigating the new laws.
E-commerce Law Begins in Saudi Arabia
Those who seek to franchise through a digital approach need to consider both the new franchise and the new e-commerce laws. The e-commerce law, in particular, will govern anyone who provides services or goods to those who can access them in the KSA. This is an example of KSA opening up commerce to anyone in the world to offer goods and services to the citizens of KSA, but it’s also an opportunity for those going into commercial franchising in the area.
After all, plenty of goods and services need to be applied locally, even if they are purchased digitally. An example would be anything related to shipping or the transportation of people. The new law dictates that service provides a need to show consumers online terms and conditions as part of an electronic contract. The provider will also need to disclose details about their operations, about taxes, other fees, total price disclosure, and other information.
The KSA is interested in protecting consumers while opening up this market, which will surely include commercial franchises operating locally. This includes allowing the consumer to cancel orders if the provider has delivery delays of more than 15 days, for example.
An Impressive Market for Franchises
Recent studies have concluded that there are nearly 13 million e-commerce users in Saudi Arabia, which over 6 million more coming by 2022. These 19 million users will use over 480 dollars a day by that time. This is a huge opportunity for franchises to take advantage of, with the right representation.
New Franchise Law
One of the reasons for the recent interest in commercial franchise opportunities in the Kingdom of Saudi Arabia is due to the new franchise law that people brought to attention starting in October of 2019. This law will take effect on April 22 of 2020. It will apply to any franchise that operates in the Kingdom at all, either in part or fully. The Law is M/22 of 1441h (2019).
The law defines how the franchisee and franchisor are to interact inside the Kingdom of Saudi Arabia for one thing. The law creates a new registration and disclosure regime that will regulate franchise relationships with the Kingdom.
There are commercial provisions in the law that restrict franchise interactions, but there are also opt-out clauses that allow franchisees to interact with the franchisor however they want. This is essential to the growth of commerce and it will help encourage the growth of commercial franchises in the Kingdom, leading to a potential boom and substantive opportunities for growth for anyone who seeks to take advantage of the new law.
There’s a 180-day period as a window before the effective date of the new law, which is an excellent time for parties interested in franchising to review the law with their attorneys to potentially plan their next steps when it comes to commercial franchise expansion into the country. Or, a company doesn’t have the representation they want or don’t have attorneys that they think are up to the task, it’s also a good time to get new representation with experts who understand the law, its implications, and how it can be used fully with potential ventures going forward.
In other words, this is the perfect time to find new attorneys that can help you navigate what is happening in Saudi Arabia since it’s a natural window before the law fully takes effect. After all, planning these things can take time, and that’s what you have a little bit of at the moment.
Getting Started with HMCO
The key to taking advantage of these laws and the other recent news in Australia is to go with a trusted set of attorneys such as HMCO. Hammad & Al-Mehdar are experts in areas of Saudi Arabian law including starting franchises.
Given the intricacies of the law, it’s going to be a dangerous thing to try going it alone, even if you have attorneys if those attorneys have no expertise in this specific area of practice. Making a mistake when it comes to the law in the KSA is often a fatal error for your business and your dreams of expansion in the future.
Not only are there two major laws that affect commercial franchising coming into effect in recent days or in the near future, but the interaction between the e-commerce and commercial franchise laws are going to be important to understand as well.
For more information on starting a franchise in the KSA soon, and staying within both of these laws as well as any other law that is in effect or may go in to effect in the future, make sure you don’t hesitate to go ahead and contact us today.
The faster you contact us about your intentions, the more quickly we can make sure that your venture has the best chance of success within the KSA as possible.