Business Continuity Planning Before Granting a Franchise in Saudi Arabia

Your business may run efficiently under normal conditions, but what happens if the point-of-sale system goes down or an outlet becomes inaccessible? Before granting a franchise, you need a clear way to keep serving customers safely or suspend operations in an orderly manner. In franchising, it is not enough for the founder to be able to resolve a crisis over the phone. You need a plan that the franchisee can implement within defined limits of authority, without improvising in ways that harm customers or the brand.

Define the minimum acceptable operating conditions

Start by identifying the functions essential to delivering your service, rather than drawing up a long list of potential disasters. These may include taking orders, verifying payments, accessing booking details, maintaining supplies of essential materials and ensuring premises are safe. For each function, ask: can we continue without it? What is an acceptable alternative? When would stopping be safer than continuing?

Consider three operating levels: full service using an approved alternative; limited service, with certain products or appointments unavailable; and suspension of operations when safety requirements cannot be met or orders cannot be fulfilled. These are management categories tailored to your business, not mandatory regulatory classifications.

Create a response card for each scenario, setting out the trigger, the initial decision, who is responsible, the available alternative and the conditions for resuming normal operations. A failed order display may allow a controlled workaround, whereas an inability to store a sensitive product safely requires you to stop selling it. Do not make continued revenue your only decision criterion, or assume that every workaround used at your own outlet will automatically suit all other outlets.

Align the plan with the law and the agreement, without open-ended promises

Saudi Arabia’s Franchise Law applies to any franchise agreement implemented within the Kingdom. Unless otherwise agreed in writing, Article 8 addresses defining the business model and its standards, supplying the franchisee with operating manuals, providing training and sharing the necessary expertise. Disruption procedures can therefore be included in the operating manuals, with core obligations clearly set out in the agreement, rather than left to unwritten expectations.

Article 11 also requires the agreement to specify important obligations, including the provision of technical and marketing expertise, supply arrangements and financial consideration. In practice, translate these into clear limits on support during disruption: will the franchisor provide remote guidance? Will it liaise with the service provider? Is on-site assistance available under specified conditions? Avoid promises such as ‘we guarantee that the outlet will never stop operating’ if you do not control every possible cause of disruption.

Unless otherwise agreed in writing, Article 9 addresses obtaining the franchisor’s approval for changes to goods, services or the way the business operates. You should therefore define which alternatives are approved in advance and which require specific consent, and have the wording legally reviewed. The franchisor’s approval alone does not authorise a franchisee to conduct an activity or use alternative premises without meeting the relevant regulatory requirements.

If the plan reveals material risks or significant obligations, review how these are reflected in the disclosure document. The law requires that document to be provided at least 14 days before the agreement is signed or any franchise-related payment is made, whichever comes first. An operational plan is not a substitute for disclosure.

Allocate decision-making authority and costs before disruption occurs

Prepare an authority matrix that distinguishes urgent action from commercial decisions. Under the plan, an outlet manager may be authorised to stop accepting new orders when they cannot be fulfilled, while transferring orders to another outlet or offering an alternative service may require specific arrangements and approvals. Nominate a backup contact if the primary decision-maker cannot be reached, and establish a communication channel that does not rely on the affected system.

Agree how response-related expenses will be allocated, without assuming that the franchisor covers every loss or that the franchisee bears every cost. Distinguish between the cost of the alternative arrangement, additional assistance, dealing with prepaid orders and any contractual claims. Refer questions of liability, compensation and insurance for specialist review appropriate to the business and the agreement.

For example, if an outlet that takes bookings cannot operate, simply directing customers to a nearby outlet is not enough. You need to check its capacity, obtain the customer’s agreement, establish how payments will be settled between the two businesses and limit the information transferred to what is necessary. Rescheduling the appointment or issuing a refund in accordance with the relevant terms and regulations may be better than transferring the service without proper arrangements.

Test the response and the return to normal operations

Run a tabletop exercise before granting the franchise: assume that a core system fails during a busy period, then ask the manager to explain their decisions in sequence. Check whether they know where to find the procedure, whom to contact and what they are authorised to approve. The aim is to test whether the plan can be put into practice, not whether staff have memorised the manual.

Record any ambiguities and revise the plan accordingly. If a fallback requires a device that is unavailable, or a password known only to the founder, it is not ready to use. If support depends on one person, appoint a backup and verify that they can perform the task.

Create a recovery checklist too: confirm that the service is stable, reconcile orders and payments recorded during the disruption, tell staff when temporary procedures have been withdrawn, and then record the cause and corrective action. Do not declare the incident over simply because the screen is working again.

Practical takeaway: Before granting a franchise, prepare response cards for the highest-impact scenarios, define decision-making authority and cost allocation, and test the plan with a manager other than the founder. A good plan makes continuing, stopping and restarting operations clear decisions, rather than acts of improvisation under pressure.