Franchise Law

1. If the franchisee requests the termination of the franchise agreement in accordance with Article 17 of this Law, or if the franchisor terminates the franchise agreement in violation of Article 18 of this Law or refuses to renew or extend the franchise agreement for a reason not specified in Article 15 (2,3,4 and 5) of this Law, the franchisor, whether by himself or through any of his associates, shall: a) repurchase the material assets used exclusively in the franchised business which, based on the franchisor’s directives, the franchisee has purchased from the franchisor or a third party within 60 days from the date of the franchisee’s request. The repurchase price shall not be less than the price paid by the franchisee after deduction of any depreciation the amount of which is calculated in accordance with the acceptable accounting standards and with the franchisee’s prior accounting practices; and b) compensate the franchisee for any damage he has incurred due to the establishment, acquisition, or operation of the franchised business in the Kingdom, or any other damage, except in the case where the franchisor refuses to renew or extend the franchise agreement for a reason not specified in Article 15 (2,3,4 and 5) of this Law. 2. Unless the franchise agreement provides otherwise, the franchisor may claim compensation if the franchisee terminates the franchise agreement in violation of this Law and the franchisor incurs damage as a result thereof.