TITLE:
Pre-Contractual Disclosure as a Cornerstone of the New Saudi Commercial Franchise Legislation
AUTHORS:
Rakan F. Alrdaan
KEYWORDS:
Franchise, Franchising, Law, Legislation, Saudi Arabia
JOURNAL NAME:
Beijing Law Review,
Vol.12 No.1,
March
31,
2021
ABSTRACT: A healthy franchise market needs a legal environment that regulates the orderly development of franchising for the benefit of all involved. The new Saudi Commercial Franchise Legislation (CFL) was introduced in October 2019, and came into force in April 2020, to promote transparency and disclosure of rights and obligations and to afford protection to all the contracting parties. One of the significant changes introduced by the CFL was the obligation of “pre-contractual disclosure”. This article aims to explore and analyse the duty of franchise disclosure as introduced by the CFL, and will compare it best practices from other jurisdictions. The first part of this paper briefly introduces the franchise format, first defining it, and then giving an overview of the franchise regulation in Saudi Arabia. The second part will offer answers to the questions: what is meant exactly by franchise disclosure; why do we need pre-contractual disclosure; and is it alone sufficient to provide a healthy regulatory environment for franchising? In the third part, the key features of the obligation of disclosure, as imposed by the CFL, will be examined in depth.