{"id":115910,"date":"2025-10-09T13:37:36","date_gmt":"2025-10-09T13:37:36","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&p=115910"},"modified":"2025-10-13T13:57:31","modified_gmt":"2025-10-13T13:57:31","slug":"saudi-arabia-franchise-licensing","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/saudi-arabia-franchise-licensing\/","title":{"rendered":"Saudi Arabia: Franchise & Licensing"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-115910","comparative_guide","type-comparative_guide","status-publish","hentry","guides-franchise-licensing","jurisdictions-saudi-arabia"],"acf":[],"appp":{"post_list":{"below_title":"
Sharif Akkad Law Firm (MAK)<\/span><\/span><\/div>"},"post_detail":{"above_title":"
Sharif Akkad Law Firm (MAK)<\/span><\/span><\/div>","below_title":"This country specific Q&A provides an overview of Franchise & Licensing laws and regulations applicable in Saudi Arabia<\/span>
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Here is a brief introduction to the legal framework governing franchising in the Kingdom of Saudi Arabia, prepared for the Legal 500 Franchise & Licensing Country Comparative Legal Guide:<\/small><\/p>\n

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  1. The Kingdom of Saudi Arabia (hereafter referred as \u201cKSA<\/strong>\u201d) is widely known for its vast oil reserves and historically oil-driven economy. In recent years, the government of KSA launched Vision 2030<\/em><\/strong>, which has become a catalyst for economic diversification aimed at broadening income sources, reducing reliance on oil and gas revenues, attracting foreign investment, and boosting non-oil sectors. For these purposes, the legal environment, and e-government legal services in KSA have undergone major reforms, including the issuance of multiple new regulations and laws. Examples of the changes in the legal landscape include the introduction of a comprehensive and modern Saudi Bankruptcy Law in 2018, which established the Bankruptcy Commission and provided a framework for financial restructuring that allows debtors to resolve financial difficulties and resume their activities while safeguarding creditors’ rights. Additionally, a new comprehensive Civil Code (Civil Transactions Law) was issued, containing over 700 articles. In mid-2022, a new modern Companies Law was introduced, emphasizing corporate governance, encouraging foreign investment, regulating mergers and acquisitions (M&A) and non-profit organizations. Additionally, ongoing amendments to the Saudi Labor Law aim to further protect foreign employees\u2019 rights, including provisions such as the transfer of sponsorship.<\/small><\/li>\n
  2. Further to be above, the legal reform in KSA has also included the issuance of the Saudi Franchise Law (Regulation) under Royal Decree No. (M\/22) dated 9-2-1441 Hijri<\/em> corresponding to 8-10-2019 Gregorian calendar (herein referred to as the “Franchise Law”), along with its Implementing Rules issued by Ministerial Order No. (591) dated 18-9-1441 Hijri<\/em> corresponding to 22-5-2020 Gregorian calendar(herein referred to as the “Implementing Rules<\/em>“). Collectively, the Franchise Law and the Implementing Rules are referred to as the “SFL.”<\/small><\/li>\n
  3. The SFL is a modern, comprehensive, and specialized franchise law that aligns with international franchising standards and practices. It is unique within the Gulf Cooperation Council (GCC) and Arab countries, where in most jurisdictions franchising is still primarily regulated under commercial agency laws. However, the role of specialized franchise committees and associations, comprising entrepreneurs, franchisors, franchisees, and legal specialists, is essential in this regard. Additionally, the Small and Medium Enterprises General Authority known as “Monsha’at<\/em>” in cooperation with the Ministry<\/em> of Commerce (herein referred to as the “Ministry”), has established the Franchise Center, which is tasked, among other functions, with developing the franchise industry in KSA. In practice, the Franchise Center plays a significant and ongoing role in promoting and supporting the success of franchising in KSA.<\/small><\/li>\n
  4. It is worth mentioning that prior to the issuance of the SFL, franchising was governed by the provisions of the Commercial Agencies Law and its Implementing Regulations, as per the Ministerial Order No. (1012) dated 20-3-1992 Gregorian calendar.<\/small><\/li>\n
  5. This document is based on the laws and regulations of KSA, particularly the SFL, as of 30-9–2025 Gregorian calendar. These laws are subject to change, and therefore, the accuracy of the information herein cannot be guaranteed at all times. This document does not constitute legal advice or opinion.<\/small><\/li>\n
  6. It should be noted that we have been honoured to be part of the team involved in drafting, reviewing, and editing the SFL. One of the primary objectives and philosophy in drafting the SFL was to state imperative and mandatory provisions, binding on both franchisors and franchisees that cannot be waived or altered by agreement between the parties. Examples include the requirements to provide and register the FDD and the registration of franchise agreements. The intent behind these mandatory provisions is to protect the franchise industry as a whole and to practically minimize disputes between the parties by setting minimum rights that safeguard both the franchisee and franchisor, as well as the franchise business. On the other hand, many provisions and articles of the SFL are non-imperative and non-mandatory, allowing the franchisor and franchisee the flexibility to agree in accordance with their own terms to suit their specific needs, which., clearly demonstrating that the Franchise Law is designed to balance practicality with legal certainty.<\/small><\/li>\n
  7. Pursuant to Article 14 of the Implementing Rules, the Ministry may issue model forms for the franchise agreements. We are proud that Monsha\u2019at<\/em> entrusted our Firm with the important task of preparing the model form for the franchise agreement in KSA. Our Firm took great care to draft a practical and balanced model forms for the franchise agreement that effectively regulates the franchise legal relationship while providing fair protection for both parties. The said model forms of the franchise agreements are only for guidance and not obligatory. It is strongly advised that a franchise agreement be carefully and thoroughly prepared and reviewed by a specialised Saudi lawyer to ensure compliance with the new SFL, which contains detailed articles and specialised provisions, as well as other applicable laws in KSA.<\/small><\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\r\n\t\t\t
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      Is there a legal definition of a franchise and, if so, what is it?<\/h3>\r\n\t\t\t\t\t\t