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Saudi Arabia Exempts High-Growth Sectors from Franchise Experience Rule

One of the franchising roadshows organized by the General Authority for Small and Medium Enterprises to support entrepreneurs (SPA)
One of the franchising roadshows organized by the General Authority for Small and Medium Enterprises to support entrepreneurs (SPA)
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Saudi Arabia Exempts High-Growth Sectors from Franchise Experience Rule

One of the franchising roadshows organized by the General Authority for Small and Medium Enterprises to support entrepreneurs (SPA)
One of the franchising roadshows organized by the General Authority for Small and Medium Enterprises to support entrepreneurs (SPA)

Saudi Arabia will allow selected high-growth and innovative sectors to offer franchises without meeting a long-standing operational experience requirement, in a move aimed at accelerating investment and broadening entrepreneurship.

The decision aligns with Vision 2030's goals to expand opportunities in sectors that support national economic growth and meet local market demand.

According to the information, the Council of Ministers approved the non-application of Article Five of the Franchise Law to certain franchisors. The article required businesses to operate for at least 1 year through at least two outlets before offering franchises.

The exemption targets key sectors, including transport and logistics, aviation and defense, entertainment and tourism, sports, healthcare, mining, and renewable energy.

The move is intended to strengthen the local economy’s regional and global competitiveness by creating a flexible environment that allows innovative projects to expand rapidly through franchising, without waiting for traditional establishment periods.

Franchisors must, however, present a clear and detailed business model, including a feasibility study and guarantees of success.

Strict criteria to protect franchisees

To ensure investment quality, the government has set specific conditions for benefiting from the exemption, including:

Franchisors must submit a clear, detailed business model that includes operational guidelines and a market analysis, serving as a practical manual supported by a feasibility study that underpins success.

The franchised activity must be innovative or offer a product or service that contributes to national economic development or meets local market demand. Applications will be assessed based on innovation, economic impact, or responsiveness to market needs.

The exemption also requires that franchisors not charge franchisees any consideration before operations begin. Fees may be collected only after revenues are generated, as defined in the agreement, to reduce operational risks for franchisees and link payments to actual performance.

Specialized committee

To ensure governance, the information revealed the formation of a specialized committee, chaired by the Ministry of Commerce, with members from the Ministries of Investment, Economy, and Planning.

The committee will evaluate exemption applications based on economic impact and the quality of the proposed business model.

A modern system for a secure investment environment

Saudi Arabia’s Franchise Law, approved in 2019, is considered a cornerstone of the Kingdom’s modern commercial regulatory framework. It aims to enhance transparency and clarity in the relationship between franchisors and franchisees, while providing legal protection for both sides.

The law promotes franchising activity in the Kingdom by establishing a clear regulatory framework governing the relationship between franchisors and franchisees, reinforcing transparency and clarity.

It provides necessary protections for both parties and enables informed investment decisions that help raise the quality of goods and services offered in Saudi Arabia.

The provisions of the Franchise Law apply to any franchise agreement implemented within the Kingdom. The law sets a minimum experience requirement for franchisors, regulates the contractual relationship between the parties, and defines their rights and obligations.

It also requires franchisors to disclose key risks, rights, and obligations associated with franchise opportunities, and governs the renewal, termination, or transfer of franchise agreements.

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Business

IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.

Business

Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.

Business

Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.