Commerce Ministry urges compliance with franchise regulations, warns of six common violations

The Ministry of Commerce has emphasized the importance of complying with the Franchise Law and its executive regulations when granting or operating a franchise, underscoring the need to adhere to legal requirements to avoid violations.

The ministry warned of six common violations in franchise activities, most notably the failure to register the franchise agreement and disclosure document with the ministry within 90 days of signing the agreement.

Other violations include not providing the franchisee with the disclosure document at least 14 days before signing the agreement or making any payment, whichever comes first, and failing to register amendments to the franchise agreement—such as changes to either party or the contract duration—within 90 days of the modification.

The ministry also noted violations such as not requesting the cancellation of a franchise agreement registration within 90 days of its expiration, judicial annulment, or termination. Additional breaches include offering or granting a franchise before the franchisor has operated the business for at least one year through two different persons or sales outlets, and offering or granting a sub-franchise before the business has been operated in Saudi Arabia for at least one year.

Electronic reporting

The ministry stated that reports of violations specified in the law and its executive regulations can be submitted electronically via its official website: Click here.