The Legal Obligations of the Parties in a Franchise Contract: A Study According to the Saudi Franchise Law

The franchise contract has become a key tool for economic development by attracting investments and generating job opportunities. In Saudi Arabia, its growing importance led to the issuance of the Saudi Franchise Law (SCFL-2019) to regulate the legal relationship between franchisors and franchisees. This article aims to examine the concept of franchising and the contractual obligations it imposes on both parties, in accordance with the Saudi Franchise Law (SCFL-2019). It also seeks to enrich legal education and professional training programs by enhancing the competencies of entrepreneurs and legal practitioners through a clear understanding of the legal obligations arising from franchise agreements. The study adopts a normative legal research methodology, drawing on Saudi legislation, regulatory standards, and relevant academic literature. It further emphasizes the novelty of the legal framework established by SCFL-2019 in regulating the respective obligations of franchisors and franchisees, and clarifies the rights, duties, and protections set forth therein. The findings reveal that the franchisor is required to disclose essential information prior to contract formation, license the use of commercial and industrial property rights, transfer know-how, provide technical and marketing support, and maintain confidentiality. Likewise, the franchisee is obligated to utilize the trademark, comply with the exclusion clause, pay the agreed fees, preserve the confidentiality of technical knowledge, avoid competition, and follow the franchisor’s operational guidelines. Furthermore, the franchisee must protect intellectual property rights, allow the franchisor to inspect and monitor operations, and report any urgent improvements. Received: 5 May 2025 / Accepted: 30 August 2025 / Published: 05 September 2025