Franchising - Franchise - Missed Opportunities in Saudi Arabia
Call +966 11 4004404
Franchise: always been described and known concession system.
The system structured exercise which find interest to small and large investors is spreading throughout the world, its significant benefits in the Kingdom of Saudi Arabia for long years is limited to certain areas only most noticeably in restaurants and cuisines business. In spite of this, franchise failed to expand to any other field of business.
Franchise system current awareness originated in the United States for more than 200 years. It was initially introduced by the machine - singer - tailoring, the process of marketing and distribution which is proven to be dynamic to other industrial investment and services. Achieving the benefits of profitability in investments as well as the advantage of transferring the technological knowledge and art, it quickly invaded the world and expanded its usage under the name or trademark of a successful company.
Currently the franchise industry has expanded beyond the scope of service in industrial products to become an instrument in transferring the advanced technology between modern companies and institutions who recognized the usage of this know-how in their economic development.
A franchise system can be defined (franchise) as the "contract whereby one end (the grantor franchisor) approval of the other party (awarded franchisee) to use one or more of the intellectual and industrial property rights or know-how for the production of goods or the distribution of products or services under the brand of the grantor, in accordance with its instructions and under its supervision, exclusively in a particular geographical area and specific period of time with its commitment of providing technical assistance, in return for financial compensation.
This definition clearly reveals the importance of franchise being optimal and secure tool for small investments success and at the same time avoiding the pitfalls or entering into bumps proliferation and advertising. Franchise winning fame and prestige continuously sought by the grantor to distribute the goods to consumers in the largest possible geographical areas. From its country of origin, the grantor manage to lessen the method of distribution and advertising already proven and tested for consumer satisfaction.
The important aspects when entering into investment through -franchise- is the selected contract in relationship between parties (the grantor and granted), it is important that you should be aware on all potential risks, carefully and clearly defined, leaving no opportunity for flexible interpretations to prevent future problems. This contract is known in the past as (Submissive contract) relationship between the parties ruling and reference.
In my honest opinion: First, we have to stimulate businessmen especially young people to seize the opportunities offered by franchise system, and expand their focus to other areas of technical and home industries that ensures success in the business world.
Second, to make them aware of the probable problem and obstacles particularly at the conclusion of the contract, the most sensitive part of the franchise system.
ABOUT THE AUTHOR: Abdullah Al Fallaj - Saudi Legal expert
Accredited Arbitrators since 1992 in Ministry of Justice, Saudi Arabia, and GCC Commercial Arbitration Center.
Copyright Abdullah A. Al Fallaj Law Firm
More information about Abdullah A. Al Fallaj Law Firm
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Franchise system current awareness originated in the United States for more than 200 years. It was initially introduced by the machine - singer - tailoring, the process of marketing and distribution which is proven to be dynamic to other industrial investment and services. Achieving the benefits of profitability in investments as well as the advantage of transferring the technological knowledge and art, it quickly invaded the world and expanded its usage under the name or trademark of a successful company.
Currently the franchise industry has expanded beyond the scope of service in industrial products to become an instrument in transferring the advanced technology between modern companies and institutions who recognized the usage of this know-how in their economic development.
A franchise system can be defined (franchise) as the "contract whereby one end (the grantor franchisor) approval of the other party (awarded franchisee) to use one or more of the intellectual and industrial property rights or know-how for the production of goods or the distribution of products or services under the brand of the grantor, in accordance with its instructions and under its supervision, exclusively in a particular geographical area and specific period of time with its commitment of providing technical assistance, in return for financial compensation.
This definition clearly reveals the importance of franchise being optimal and secure tool for small investments success and at the same time avoiding the pitfalls or entering into bumps proliferation and advertising. Franchise winning fame and prestige continuously sought by the grantor to distribute the goods to consumers in the largest possible geographical areas. From its country of origin, the grantor manage to lessen the method of distribution and advertising already proven and tested for consumer satisfaction.
The important aspects when entering into investment through -franchise- is the selected contract in relationship between parties (the grantor and granted), it is important that you should be aware on all potential risks, carefully and clearly defined, leaving no opportunity for flexible interpretations to prevent future problems. This contract is known in the past as (Submissive contract) relationship between the parties ruling and reference.
In my honest opinion: First, we have to stimulate businessmen especially young people to seize the opportunities offered by franchise system, and expand their focus to other areas of technical and home industries that ensures success in the business world.
Second, to make them aware of the probable problem and obstacles particularly at the conclusion of the contract, the most sensitive part of the franchise system.
ABOUT THE AUTHOR: Abdullah Al Fallaj - Saudi Legal expert
Accredited Arbitrators since 1992 in Ministry of Justice, Saudi Arabia, and GCC Commercial Arbitration Center.
Copyright Abdullah A. Al Fallaj Law Firm
More information about Abdullah A. Al Fallaj Law Firm
View all articles published by Abdullah A. Al Fallaj Law Firm
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
