- Al Takhassousi, An Nakheel, Riyadh 12384
- info@al-tayyar.com.sa
- 0555398969
Case Study
Dispute Value
Termination of a Commercial Franchise Agreement and Award of SAR 500,000 in Damages in Favour of the Franchisee
SAR 500,000 million
Quick Matter Overview
Business Value
More than SAR 4,000,000
Subject of the Claim
Franchise Termination & Damages
Nature of the Relationship
Commercial Franchise Agreement
Dispute Resolution Forum
Arbitral tribunal
Duration of the Matter
Approximately 1 year
Outcome
Agreement Termination & SAR 500,000 Compensation
Background of the Dispute
Nature Agreement
Nature Business
Sale of products and beverages
Subject of the Dispute
Termination and compensation
Project Stage
Before operations commenced
Nature of the Commercial Franchise Dispute
The matter focused on establishing that the franchisor’s contractual breaches were sufficiently serious to justify termination of the franchise agreement and that those breaches caused damage to the client warranting compensation, despite the fact that the business had not yet commenced operations.
- Reviewing the commercial franchise agreement and the provisions governing the relationship
- Analysing the respective obligations of the franchisor and franchisee.
- Identifying the contractual breaches attributed to the franchisor.
- Assessing the seriousness of the breaches and their impact on continuation of the agreement.
- Evaluating the losses and damages suffered by the client.
- Analysing causation between the contractual breaches and the resulting harm.
- Assessing the legal basis for termination of the franchise agreement.
- Conducting the necessary legal and arbitration research
- Drafting statements of claim, memoranda, and responses
- Representing the client before the arbitral tribunal
- Following the proceedings relating to the award before the Commercial Court of Appeal.
- Continuing the matter through to a final decision ordering termination and compensation.
Essential Elements of the Dispute
Commercial Franchise Agreement
Reviewing the agreement and the provisions defining the rights and obligations of the franchisor and franchisee.
Contractual Breaches
Identifying the breaches that prevented the franchise relationship from being implemented in accordance with its intended purpose.
Termination Claim
Establishing that the breaches were sufficiently material to justify bringing the contractual relationship to an end.
Losses and Damages
Assessing the financial and commercial consequences caused by the franchisor’s breaches.
Commercial Arbitration
Managing the dispute before the arbitral tribunal and preparing the claims and legal arguments required for determination.
Compensation
Seeking compensation for the losses resulting from the breaches, with the matter concluding in an award of *SAR 500,000 in favour of the client.
Key Legal Challenges
Termination Challenges
As a general principle, contractual relationships are preserved where possible. The matter therefore required proof of sufficiently serious breaches to justify termination.
Pre-Operational Stage
The commercial project had not entered actual operation, making proof of the consequences of the breaches and resulting losses more complex.
Difficulty Proving Certain Breaches
Some of the contractual violations were not easily demonstrated through direct written documentation.
Proving Contractual Failure
It was necessary to show that the breaches prevented the franchise relationship from achieving the commercial purpose for which the agreement had been concluded.
Termination & Damages
The matter required separate and sufficiently supported legal grounds for both termination of the agreement and compensation for losses.
Arbitration & Litigation
The dispute required management before the arbitral tribunal and subsequent proceedings connected with the award before the Commercial Court of Appeal.
Our Legal Strategy
Franchise Agreement Review
The agreement was examined in detail to identify the material obligations resting on each party.
Identifying Contractual Breaches
The reasoning of the judgment was examined and the available grounds of appeal were identified.
Preparation of the Appeal Memorandum
The legal team explained how the breaches affected the feasibility of launching the project and frustrated the commercial purpose of the franchise arrangement.
Building the Termination Case
A legal and arbitration case was developed to establish that continuation of the agreement would no longer achieve the purpose for which it had been entered into.
Proving Loss & Compensation
The contractual breaches were connected to the financial harm suffered by the client in support of the compensation claim.
Representation Through to Final Decision
The matter was conducted before the arbitral tribunal and followed through the relevant proceedings before the Commercial Court of Appeal until a final outcome was achieved.
Legal Services Provided
Legal Advice
Advising on the franchise agreement, contractual breaches, termination claim, and compensation claim.
Legal Study
Analysing the agreement, relevant facts, obligations, and the client’s legal position.
Advocacy and Arbitration
Representing the client and conducting the dispute before the arbitral tribunal.
Drafting Pleadings and Legal Memoranda
Preparing statements of claim, submissions, responses, and other required legal memoranda.
Legal Research
Conducting research concerning franchise agreements, contractual termination, damages, and arbitration.
Commercial Appeal Representation
Handling the judicial proceedings connected with the arbitral award before the competent court.
Legal Insight
Termination of a commercial franchise agreement generally requires more than the existence of a contractual breach. It is necessary to assess the nature and materiality of the breach, its impact on the continuation of the relationship, and whether the agreement can still achieve the commercial purpose for which it was concluded The evidential challenge becomes greater where the dispute arises before actual operations commence, because the resulting harm may relate to preparatory expenditure, commercial opportunities, or contractual commitments rather than a completed operating history.For that reason, a well-structured termination and damages claim requires each breach to be linked to a specific contractual obligation and its direct effect on the franchisee’s legal and commercial position.
Legal Value Delivered to the Client
- Analysed a commercial franchise arrangement relating to business activities exceeding SAR 4 million.
- Established material contractual breaches affecting continuation of the relationship.
- Developed a comprehensive legal case for termination of the franchise agreement.
- Represented the client before the arbitral tribunal and the Commercial Court of Appeal.
- Established the client’s entitlement to compensation for the resulting harm.
- Secured termination of the agreement and an award of SAR 500,000 in damages
The Firm’s Experience in Franchise Disputes and Arbitration
Atyar Advocates and Legal Consultants provides legal services in disputes arising from commercial franchise agreements and relationships between franchisors and franchisees, as well as broader commercial and arbitration disputes.The firm’s services include review of franchise agreements, analysis of contractual breaches, termination and damages claims, preparation of legal memoranda and submissions, and representation before arbitral tribunals and competent courts.
Legal Team Responsible for This Matter
Prof. Dr. Turki Al-Tayyar
Founder and Managing Partner, and an expert in the judiciary, legal practice, arbitration, and university education, with more than 25 years of combined experience.
Mr. Salem Saad Al-Dosari
Partner specialising in administrative contracts, investment, and litigation, with extensive experience in administrative and commercial cases.
Practice Areas Related to This Matter
- Real Estate Dispute Resolution
- Property Ownership Claims
- Litigation Before the General Courts
- Investment Disputes
- Government Contracts and Administrative Matters
- Compensation Claims
Need Legal Representation in a Commercial Franchise Dispute?
If your company is involved in a dispute concerning a commercial franchise agreement, contractual breaches by a franchisor or franchisee, or a claim for termination and compensation, Atyar Advocates and Legal Consultants provides legal advice, legal studies, arbitration, litigation, and preparation of pleadings and legal submissions.
جاهز لحماية حقوقك أو تطوير أعمالك؟
تواصل معنا اليوم واحصل على استشارة قانونية موثوقة
سواء كنت فردًا تبحث عن تمثيل قانوني موثوق أو شركة تحتاج إلى دعم قانوني متخصص، نحن في شركة أطيار للمحاماة والاستشارات القانونية جاهزون لمساعدتك. دعنا نكون شريكك القانوني في كل خطوة، بخبرة تتجاوز 23 عامًا في الأنظمة السعودية.
بيانات الاتصال
- شارع التخصصي، النخيل، الرياض 12384
- 3132 شارع الأمير تركي، الكورنيش، 6309, الخبر
- Info@al-tayyar.com.sa
- 00966555398969
مجالات الممارسة
القانون التجاري والشركات
صياغة العقود والوثائق القانونية
القانون المالي والمصرفي
الضرائب والزكاة والجمارك
العقارات والملكية الخاصة
© 2025 All Right Reserved Al Tayyar Leagal company