RIYADH — The Ministry of Commerce emphasized the importance of complying with the regulations and provisions of the Commercial Franchise Law and its executive regulations when granting or exercising a franchise. The ministry warned against six major violations that a franchisor or franchisee may commit while conducting franchise activities.These violations include failing to register the franchise agreement and disclosure document with the ministry within 90 days of the agreement’s signing; failing to provide the franchisee with the disclosure document at least 14 days before the agreement’s conclusion or the date of any payment, whichever is earlier; and failing to register any amendment to the franchise agreement, whether involving a change to either party or its duration, with the ministry within 90 days of its execution. The violations also include failing to request the cancellation of the franchise agreement’s registration within 90 days of its expiry or termination, or following the issuance of a court ruling invalidating or terminating the agreement; and offering or granting a franchise before commencing franchise operations for a period of one year by two individuals or entities.Selling to at least two different franchisees, offering or granting a sub-franchise, and operating a franchise business in the Kingdom for at least one year are prohibited.The ministry clarified that it receives reports electronically regarding violations stipulated in the regulations and their executive rules through its website.
