New exemptions for commercial franchising.. "Ministers" It suspends the application of Article 5 to specific categories
Approved , that the requirement contained in Paragraph (1) of Article Five of on some categories of commercial franchisors and franchisors, with the aim of supporting the expansion of franchising activities, and stimulating , and increasing the number of practitioners in promising sectors in the Kingdom.
The decision aims to enable commercial franchising activities that contribute to the development of the national economy and meet the needs of the local market, especially those that fall within the sectors targeted in the Kingdom’s Vision 2030, or in which the state seeks to expand the number of practitioners, in a way that enhances the business environment and reduces the obstacles facing entrepreneurs entering this field.
Franchising activities Commercial
The decision stipulates that the exemption from the aforementioned requirement includes cases in which the franchise is within one of the promising sectors in the Kingdom, or that aims to increase the number of practitioners in it, provided that the franchisor provides a clear and detailed business model, which includes precise operational instructions, a market analysis, and a practical guide supported by a feasibility study that contributes to raising the chances of the project’s success and sustainability.
The decision confirmed that the evaluation of requests to benefit from this exemption will take into account Taking into account the elements of innovation, the expected economic impact, and the extent of responsiveness to market needs, with a focus on activities, products or services that add real value to the national economy or meet an existing demand in the local market.
Requirements and controls
The decision stipulated, within the regulatory controls, that the franchisor not require the franchisor to pay any financial compensation before actually carrying out the franchise business, provided that the compensation is linked to achieving actual revenues from carrying out the activity, as determined by the franchise agreement, with the aim of reducing operational risks for the franchisees. And supporting their financial stability in the early stages of operation.
The decision also stipulated that the standards regulating the exemption be applied through a committee formed under the chairmanship of the Ministry of Commerce, and membership of the Ministries of Investment, Economy and Planning, in a way that ensures the integration of roles between the concerned authorities, and achieves a balance between encouraging commercial privileges and protecting the rights of all relevant parties.
- For more: Follow Khaleejion 24 Arabic, Khaleejion 24 English, Khaleejion 24 Live, and for social media follow us on Facebook and Twitter
