Commercial franchising, known as franchising, is a means of doing business through joint cooperation between two parties, the franchisor and the franchisor, where the franchisor who is the owner of the commercial activity and the trademark grants the right to the franchisee to practice commercial activity for his own account, using the trademark or the trade name owned For the franchisor, and that is in return for the franchisor obtaining a percentage of the profits or a certain amount in exchange for the grant of the franchise, or both.
The Saudi Commercial Concession System promulgated by Royal Decree No. M / 22 dated 9-2-1441 AH has clarified the obligations of both the franchisor and the franchisor in the franchise contract, which are as follows:
Franchisor’s obligations
The franchisor shall, unless agreed in writing with the franchisor to the contrary, do the following:
Determine the rights granted to the franchisor in the matter of the franchise.
Determining the franchise business model in detail, including stating the standards and issuing the instructions that the franchisor must adhere to when practicing the franchise business, enabling him to operate those businesses, as well as providing him with operating manuals.
Training of the franchisor’s employees.
Providing technical, marketing and other expertise required by the nature of the granted franchise.
Providing the franchise holder, whether directly or through another party, with the goods or services of the franchise, throughout the term of the franchise agreement, except for the goods and services that the franchise owner is allowed to purchase from others.
Maintaining the confidentiality of accounting and financial information and data related to the business of the franchisor.
Responding to the franchisee’s request to provide him with details of the financial consideration due or paid for in connection with the conduct of the franchise business.
– Not to establish any establishment that practices an activity similar to that of the franchisor in the geographical area specified in the franchise agreement, or granting the right to others in that, during the term of the agreement’s validity.
The obligations of the franchisor
The franchisor shall, unless agreed in writing with the franchisor otherwise, do the following:
– Obtaining the approval of the franchisor upon any change in the goods or services or the method of conducting the franchise business.
To provide to the franchisor the data related to the franchise business that enable him to develop the franchise business model, including the financial and accounting data related to those businesses.
Enabling the franchisor or his representatives to inspect the facilities used in the conduct of the franchise business, provided that this does not result in disrupting the business of the franchisor or harming it.
– Obtaining the approval of the franchisor when changing the place of practice of the franchise business.
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