Franchisor Franchisee Agreement Template for Saudi Arabia

The Franchisor Franchisee Agreement is a crucial document used when establishing a franchise business relationship in Saudi Arabia. It became particularly significant following the implementation of Saudi Arabia's dedicated Commercial Franchising Law in 2020, which introduced specific requirements for franchise operations. This agreement is essential for businesses looking to expand through franchising in the Saudi market, providing a comprehensive framework for the relationship between the franchise owner (franchisor) and the operator (franchisee). The document must comply with both Saudi commercial regulations and Sharia law principles, making it unique compared to franchise agreements in other jurisdictions. It covers all aspects of the franchise relationship, including initial setup, ongoing operations, quality control, brand standards, and termination procedures, while incorporating specific local requirements such as pre-contract disclosure, registration with relevant authorities, and compliance with local commercial practices.

1. Parties: Identification of the franchisor and franchisee with full legal names and addresses

2. Background: Context of the agreement, brief description of the franchise system, and acknowledgment of franchisor's ownership of the system

3. Definitions: Comprehensive definitions of terms used throughout the agreement

4. Grant of Franchise: Specific rights being granted, territory definitions, 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's Obligations: Training, support, operations manual, ongoing assistance, and other franchisor commitments

8. Franchisee's Obligations: Operational requirements, compliance with standards, reporting obligations, and performance criteria

9. Intellectual Property: Usage rights and restrictions for trademarks, trade secrets, and other IP

10. Training and Support: Initial and ongoing training requirements, technical support provisions

11. Quality Control: Standards maintenance, inspection rights, and compliance requirements

12. Marketing and Advertising: Marketing requirements, advertising fund contributions, local marketing obligations

13. Confidentiality: Protection of confidential information and trade secrets

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

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

16. Termination: Grounds for termination, procedures, and consequences

17. Post-Termination Obligations: Obligations and restrictions after agreement ends

18. Dispute Resolution: Methods for resolving disputes, including Sharia-compliant arbitration provisions

19. Governing Law: Application of Saudi law and compliance with Sharia principles

20. Notices: Communication procedures between parties

21. General Provisions: Miscellaneous legal provisions including severability, entire agreement, and amendments