Cabinet exempts certain categories from Franchise Law

 The Cabinet approved, in a decision published in the Official Gazette, not applying the requirement stipulated in Article 1/5 of the Franchise Law to certain categories of franchisors and franchisees.

The decision comes in accordance with some criteria, including the franchise activities should fall within one of the Kingdom’s promising sectors targeted for an increase in the number of practitioners.

The franchisor should provide a clear and detailed franchise business model, and the franchise activity should be innovative, or the product or service contributes to the development of the national economy or meets the needs of the local market.

The franchisor does not require the franchisee to pay franchise fees prior to commencing franchise operations, and that such fees are payable only after the franchisee generates revenues from operating the franchise, as stipulated in the franchise agreement.