Background Franchising in Saudi Arabia has been rapidly developing, which resulted in the adoption of the Commercial Franchise Law (CFL) in 2019 due to the Royal Decree M/22. This law was enacted to regulate franchising activities in Saudi Arabia, enhance transparency, fairness, and safeguard the rights of franchisees. Nevertheless, the success of the Commercial Franchise Law (CFL) in fulfilling these goals and particularly in protecting franchisees has come under scrutiny. Methods The present paper critically analyzes the provisions of the Commercial Franchise Law concerning mandatory franchise disclosure, as well as the rights and duties of franchisors and franchisees. It further compares these provisions with franchising practices in other jurisdictions, particularly the United States and France. The study also provides an overview of the regulatory environment, including key instruments such as the Franchise Disclosure Document (FDD) requirements and the relevant enforcement mechanisms. Results The study concludes that the Commercial Franchise Law contains clauses on the protection of franchisees including obligatory registration and disclosure, however, the law lacks effectiveness in certain aspects, especially the imposition of penalties in case of non-compliance. The absence of punitive measures against the failure to register agreements is another major weakness although it fosters transparency. Conclusions Commercial Franchise Law is a major milestone towards improving protection of franchisees in Saudi Arabia but should be improved further. It is suggested that the Saudi government should put more elaborate enforcement protocols in place, come up with templates that FDDs should follow and that disclosure requirements should be applied retroactively to the current franchises. Despite its strengths, the Commercial Franchise Law still faces challenges in full implementation, particularly in enforcing penalties for non-compliance. Further refinements are needed to ensure the law effectively protects franchisees and enhances market confidence.
ALSHEIKH et al. (Fri,) studied this question.