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The Ministry of Commerce has stressed the need for strict adherence to the Commercial Franchise Law and its implementing rules in all aspects of granting and operating franchises across the Kingdom. According to the ministry, six primary violations can occur during these activities, starting with the failure to register both the franchise agreement and the required disclosure document within 90 days of the contract signing. The ministry also highlighted the breach that occurs when a franchisor does not supply the disclosure document to a prospective franchisee at least 14 days before finalizing the agreement or receiving any payment, whichever comes first.
Further violations outlined by the ministry include neglecting to register any amendments to an existing franchise agreement, such as changes to the parties involved or the contract duration, within the mandated 90-day window following execution. The ministry added that parties must request cancellation of a franchise registration within 90 days after an agreement expires, is terminated or faces a court ruling that invalidates it. Offering or granting a franchise before the business model has been actively operated for at least one year, whether by two separate entities or through at least two distinct sales outlets, rounds out the list of prohibited actions that the ministry is now underscoring.
In its announcement the ministry clarified that it maintains an electronic system on its official website to receive reports of any violations under the franchise regulations and their executive provisions. This reporting mechanism allows stakeholders to flag issues without needing to visit ministry branches in person. The framework forms part of broader efforts to foster transparency and fairness in franchise relationships since the law’s introduction under a 2019 royal decree, a measure that a Legal 500 country guide described as comprehensive and aligned with global standards.[[1]](https://www.legal500.com/guides/chapter/saudi-arabia-franchise-licensing/)
The compliance warning arrives as the franchise sector continues to register strong growth. Monsha’at, the General Authority for Small and Medium Enterprises, reported that 1,514 brands were operating under the franchise system in the Saudi market by the close of the second quarter of 2026.[[2]](https://www.okaz.com.sa/economy/na/2256644) Local brands accounted for 744 of that total, or roughly 49 percent, the authority’s figures show. This marks a sharp rise from the 692 brands recorded when the dedicated Franchise Center was established in 2020.
Monsha’at has directly assisted in converting 214 Saudi brands to the franchise model, a share exceeding 28 percent of all domestic franchise operators, its assessment found. The authority has additionally confirmed franchising readiness for another 2,636 local brands as it works to expand national participation in the sector. These initiatives have helped establish Saudi Arabia as the dominant player in the regional franchising landscape.
Industry reports place the Kingdom’s franchise market value above 60 billion riyals, with forecasts pointing to 35 percent expansion by 2030, according to coverage in Arab News that drew on statements from the National Franchise Committee.[[3]](https://www.arabnews.com/node/2637452/business-economy) The sector spans food service, retail and various service categories, supporting wider goals for economic diversification and small-business development. The ministry’s renewed focus on enforcement seeks to safeguard participants as more brands enter the growing market.
