Amendments to the commercial franchise system make it clear that prior experience requirements in the commercial franchise system do not apply to certain categories of donors and franchisees. This approach aims to increase market flexibility and widen the base of practitioners for important economic activities, particularly those aligned with the objectives of Saudi Vision 2030 and its enforcement programmes.
The amendments included the need to include franchising among the promising areas in which the state is looking to expand investment. The administration also required franchisors to submit an integrated business model with detailed instructions and accurate market analysis, supported by feasibility studies and practical guidance to increase the chances of successful operation of the project.
In terms of supporting innovation, this standard focuses on ensuring that business activities are innovative, contribute effectively to the development of the national economy and meet the needs of local markets. In order to reduce the financial risk of investors, it has been decided that there is no need to receive compensation for the concession before carrying out the business, and this compensation is linked to the achievement of actual revenue by the franchisee in accordance with the concession agreement concluded between the parties.
To ensure optimal application of these standards, it was decided to establish an expert committee headed by the Ministry of Commerce and with the Ministries of Investment, Economy and Planning as members. This committee is responsible for overseeing the implementation of management and evaluating applications in a manner that ensures the achievement of desired economic outcomes and the development of a good commercial environment in the Kingdom.
The amendments to the franchise system have made it clear that the experience requirements in the franchise system do not apply to certain categories of franchisees and franchisors. This approach aims to increase market flexibility and broaden the base of practitioners in key economic activities, particularly those aligned with the objectives of Saudi Vision 2030 and its enforcement programmes.
The amendments included the need to carry out franchising activities within promising sectors in which the country aims to expand investment. The regulation also requires franchisors to provide a comprehensive business model that includes detailed instructions and accurate market analysis, supported by feasibility studies and practical guidance to increase the chances of successful operation of the project.
In terms of supporting innovation, this criterion focuses on whether business activities are innovative, contribute effectively to the development of the national economy and local market, and meet needs. In order to reduce the financial risk of investors, it was decided not to require the payment of franchise fees before the commencement of operations, and this payment was linked to the achievement of actual revenue by the franchisee in accordance with the franchise agreement concluded between the parties.
To ensure optimal application of these standards, it was decided to establish an expert committee chaired by the Ministry of Commerce and with the Ministries of Investment, Economy and Planning as members. This committee will oversee the implementation of regulations and evaluate applications to ensure the desired economic impact and development of the franchising environment in the Kingdom.
