In an effort to facilitate and promote investment in the country, the Saudi Council of Ministers approved the Franchising Law on October 8, 2019. The Law was published in the Official Gazette on October 25, 2019 and is expected to enter into force on April 25, 2020.
The Ministry of Commerce and Investment will be administering the Law and issuing the Implementing Regulations that will clarify the Law’s provisions. Once in effect, the Law will apply to all franchising arrangements that will be implemented in Saudi Arabia.
Under the old practice, franchising arrangements were treated as a commercial agency and were governed by the Commercial Agencies Law.
The Franchising Law, which is in line with international standards, reflects Saudi Arabia’s high aspirations as a country that welcomes foreign investments. A healthy balance between the latter and local development is bound to be beneficial for the country’s own growth. The proper application and enforcement of IP laws should help Saudi Arabia become more of an innovative hub in the Middle East and lead to this required healthy financial balance.