SCA 4530548642/2024
This case involved the breach of a franchise agreement including by purchasing outside agreed suppliers. A key issue was that the franchise agreement had already been terminated and evidence of causation was needed for compensation claims.
Background
A claimant, franchisor, entered into a franchise agreement with the defendant, granting the defendant the right to operate under the claimant’s trademark and sell its branded products in a designated area. The claimant alleged that the defendant had breached several contractual obligations, including purchasing products outside of the approved suppliers, manufacturing certain products on-site contrary to the franchise terms, failing to maintain cleanliness and proper operation standards, introducing a partner without consent, and not promoting franchise offers as required under the contract. The claimant asserted that these breaches harmed its reputation and sought both the rescission of the franchise agreement and compensation of 200,000 SAR for reputational damage.