MCI Concludes Surveying the Views & Opinions on Franchise Proposal

23 Mar 2017
​Under the patronage of His Excellency the Minister of Commerce and Investment Dr. Majid bin Abdullah Al Qassabi, a workshop on Franchise Proposal is held on Thursday 23,03.2017 at the Ministry's headquarters in Riyadh, to discuss the main issues and objectives of the said proposal.
Notably, MCI has organized this workshop since it is the final stage of reviewing the opinions of the public and private sectors on the abovementioned proposal.
The workshop reviewed the main objectives of the Franchise Proposal, including encouraging small and medium enterprises, creating a legal framework that regulates the relationship between the franchisee and the franchisor, enhancing trust and transparency among all relevant parties, creating business models with minimal risks, increasing the goods and services offered in the Kingdom, setting up the principle of contracting freedom, besides reviewing the best international practices in this field.
The discussion focused on the main topics of the Franchise Proposal, including Disclosure, Pre-conditions for granting Franchise, Franchise Agreement, Applicable Regulation of Franchise Agreement, together with the Spatial jurisdiction, Termination and Non-renewal of Franchise Agreement, Compensation and Termination, Contribution to Advertising and Marketing Activities.
The Disclosure topic witnessed long discussion on the most significant risks, rights and obligations related to franchise opportunities, as well as the Franchise Agreement Form and its Disclosure Document, also submitting a copy of the aforementioned documents to the possible franchisees, after the necessary approval, besides the franchisee obligation to follow the franchisor's work model and relevant instructions in details.
As far as the pre-conditions for granting franchise are concerned, it has been discussed that the franchisee may have a minimum experience for the operation of franchise. Also the franchisee should register the trademark used to define the franchise work model in the Kingdom.
Concerning the Franchise Agreement, the workshop discussed the issues that must be covered by the Franchise Agreement without obligation to any party (the principle of contracting freedom). The issue related to Applicable Regulation of Franchise Agreement, together with the Spatial jurisdiction, it has  been discussed that the Franchise Agreement to be subject to the Saudi Law, and any dispute to be referred to the competent courts in the Kingdom, and to allow the settlement of disputes amicably, such as conciliation, mediation and arbitration.
The workshop discussed as well the issue of terminating and non-renewal of the Franchise Agreement, including the reasons through which the franchisor has the right to terminate the agreement, while the topic of compensation and termination witnessed the discussion related to the commitment of compensating the franchisee for any loss incurred in the event that the franchisor fails to comply with the disclosure requirements, giving a period of prescription during which the franchisee shall file a claim for such compensation.
The workshop was attended by MCI senior officials, a number of specialists, businessmen, entrepreneurs, lawyers and a number of those interested.
Meanwhile, the Ministry of Commerce and Investment has previously called on those interested and the public to review the Franchise Proposal and to share their views and comments on the said proposal through the following link, click here.

Last Modified 26 Dec 2018