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Franchise License Agreement for Saudi Arabia

Franchise License Agreement Template for Saudi Arabia

A comprehensive legal agreement governed by Saudi Arabian law that establishes and regulates the relationship between a franchisor and franchisee. This document grants the franchisee the right to operate under the franchisor's business system and brand, while ensuring compliance with both the Saudi Commercial Franchising Law of 2020 and Sharia principles. It details operational requirements, financial obligations, quality standards, intellectual property usage, and territory rights, incorporating specific Saudi Arabian regulatory requirements including mandatory disclosures and local commercial practices.

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What is a Franchise License Agreement?

The Franchise License Agreement is a crucial document used when a business (franchisor) wishes to expand its operations through franchising in Saudi Arabia by granting another party (franchisee) the right to operate under its business system and brand. This agreement must comply with the Saudi Commercial Franchising Law of 2020, other relevant commercial regulations, and Sharia principles. It includes comprehensive provisions covering initial and ongoing fees, operational standards, training requirements, territorial rights, intellectual property usage, and quality control measures. The document is particularly important in the Saudi Arabian context as it must address specific local requirements such as mandatory disclosures, commercial agency considerations, and local business practices while ensuring all financial arrangements are Sharia-compliant.

What sections should be included in a Franchise License Agreement?

1. Parties: Identification of franchisor and franchisee, including full legal names, registration details, and addresses

2. Background: Context of the agreement, brief description of the franchise system, and business concept

3. Definitions: Detailed definitions of key terms used throughout the agreement

4. Grant of Franchise: Scope of franchise rights, territory, and exclusivity provisions

5. Term and Renewal: Duration of the agreement and conditions for renewal

6. Fees and Payments: Initial franchise fee, ongoing royalties, marketing contributions, and payment terms

7. Franchisor Obligations: Support, training, and assistance to be provided by the franchisor

8. Franchisee Obligations: Operational requirements, compliance with system standards, and reporting obligations

9. Intellectual Property Rights: Usage of trademarks, trade secrets, and other IP assets

10. Quality Control: Standards, specifications, and monitoring procedures

11. Marketing and Advertising: Marketing requirements, approvals, and fund management

12. Confidentiality: Protection of confidential information and trade secrets

13. Non-Competition: Restrictions during and after the term of the agreement

14. Transfer and Assignment: Conditions for transfer of franchise rights

15. Termination: Grounds for termination and procedures

16. Post-Termination Obligations: Duties and restrictions after agreement ends

17. Dispute Resolution: Procedures for resolving disputes, including Sharia-compliant arbitration

18. Governing Law: Application of Saudi law and Sharia principles

19. General Provisions: Standard legal provisions including force majeure, notices, and amendments

What sections are optional to include in a Franchise License Agreement?

1. Multi-Unit Development: Used when granting rights to develop multiple franchise units

2. E-commerce Rights: Include when online sales are part of the franchise system

3. International Operations: Required for cross-border franchise operations

4. Sub-Franchising Rights: Include when franchisee has right to grant sub-franchises

5. Equipment Leasing: Include when franchisor provides equipment to franchisee

6. Property and Premises: Required when agreement includes specific location requirements

7. Insurance Requirements: Detailed insurance obligations beyond standard requirements

8. Supply Chain Requirements: Include when specific supplier relationships are mandatory

9. Training Program Details: Detailed training requirements beyond basic provisions

10. Data Protection: Include detailed data protection provisions when handling sensitive customer data

What schedules should be included in a Franchise License Agreement?

1. Operations Manual Summary: Key provisions and requirements from the operations manual

2. Brand Standards: Detailed specifications for use of trademarks and brand elements

3. Initial Fee Schedule: Breakdown of initial fees and payment structure

4. Training Program Outline: Detailed description of initial and ongoing training requirements

5. Equipment and Inventory Specifications: Required equipment, inventory, and suppliers list

6. Territory Map and Description: Detailed definition of the granted territory

7. Required Insurance Coverage: Specific insurance types and coverage amounts

8. Initial Disclosure Document: Franchise disclosure document as required by Saudi law

9. Performance Targets: Minimum performance requirements and metrics

10. Approved Suppliers List: List of approved suppliers and purchasing requirements

11. Marketing Guidelines: Detailed marketing and advertising requirements

12. Standard Forms: Templates for required reports and documentation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Saudi Arabia

Publisher

Ƶ

Document Type

License Agreement

Sector

IP

Cost

Free to use
Relevant legal definitions




















































Clauses









































Relevant Industries

Food & Beverage

Retail

Hospitality

Education & Training

Healthcare Services

Automotive Services

Beauty & Wellness

Fashion & Apparel

Professional Services

Technology Services

Real Estate Services

Entertainment & Recreation

Fitness & Sports

Relevant Teams

Legal

Operations

Commercial

Business Development

Compliance

Finance

Training & Development

Brand Management

Franchise Development

International Expansion

Risk Management

Relevant Roles

Chief Executive Officer

Chief Legal Officer

Chief Operating Officer

Franchise Development Director

Legal Counsel

Commercial Director

Operations Manager

Business Development Manager

Franchise Manager

Compliance Officer

Brand Manager

Training Manager

Finance Director

Contract Manager

Regional Director

Expansion Manager

Industries










Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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