Provisions on the Assignment of Franchise Agreements under the Saudi Law – An Analytical Study

Abstract

This study proposes a regulatory framework for the assignment of franchise agreements under Saudi law. It addresses a gap whereby the Franchise Law conditions a franchisee’s assignment on the franchisor’s consent but specifies neither the nature nor the form of that consent، and remains silent on its legal effects. The Law also fails to regulate assignments by the franchisor، leaving a vacuum regarding the rules and consequences of assigning a franchise agreement.

The research asks: what rules should govern assignment; how do franchisor assignments differ from franchisee assignments; what are the legal consequences; and what amendments are warranted to the current regime? Its importance lies in the frequency of such transactions and their economic and legal implications.

Methodologically، the paper uses an analytical–deductive approach to the Franchise Law، the Civil Transactions Law، and general legal principles to derive an integrated framework.

Findings show that the current law inadequately addresses assignment. They also indicate that franchisors occupy a superior legal position to franchisees، which is reflected in divergent rules and outcomes upon assignment. Accordingly، the paper advances a detailed، implementable framework regulating assignment of franchise agreements.

The study recommends updating the Franchise Law by adding a dedicated chapter that comprehensively governs assignment in line with the proposed framework and findings، thereby promoting fairness، enhancing transparency، and strengthening the commercial environment.