Managing Customer Complaints Before Granting a Franchise in Saudi Arabia

Your current business may successfully resolve complaints because the founder intervenes personally, but that approach is not enough when you start franchising. Customers see a single brand, while responsibility for service is shared between independent businesses. To build trust across your franchise network, establish a process before granting franchises that defines who receives complaints, who resolves them, who bears the cost and when escalation is needed.

1. Define responsibilities before making promises

Start by identifying potential friction points in the customer journey: ordering, payment, delivery, use, returns and after-sales service. For each point, record which party has the information and authority needed to resolve the issue. A central brand account might receive a complaint about an order fulfilled by a franchisee, for example, while the fault lies with a supplier or an external delivery platform.

Do not leave customers to work out these relationships. Provide a clear point of contact, then route the complaint internally to the appropriate party, keeping a named person responsible for following up on the response. Referring a complaint elsewhere does not mean closing it, and it is not enough for an employee simply to note that the problem concerns an independently operated branch.

Create a practical responsibility matrix covering the following for each type of case:

• The party responsible for communicating with the customer.
• The party that verifies the facts and retains supporting documents.
• Who has authority to approve a replacement, refund or additional compensation.
• The party that bears the cost, based on the cause of the problem.
• The escalation route if the franchisor and franchisee disagree.

Test the matrix against real cases from your existing business, not just straightforward complaints. Try an order paid for through a central channel, a service delivered locally and a customer seeking a remedy from another branch operating under the same brand.

2. Align the policy with the contract and Saudi legal requirements

Franchising in Saudi Arabia is governed by the Commercial Franchise Law and its Implementing Regulations. The law applies to any franchise agreement carried out within the Kingdom. Complaint-handling responsibilities should therefore be consistent with the franchise agreement and both parties’ obligations, rather than set out in separate instructions that impose unclear financial burdens after signing.

Specify in the agreement or an annex how complaints will be received, who may intervene, how resolution costs will be allocated and how disputes over those costs will be settled. If the franchisor is authorised to issue refunds on the franchisee’s behalf, define the scope of that authority, the supporting documentation required and how the amounts will be calculated and settled. Avoid blanket wording such as ‘the franchisee bears all customer compensation costs’, regardless of where the fault lies.

The franchisor must provide the disclosure document at least 14 days before the franchise agreement is signed or the franchisee pays any consideration relating to the franchise, whichever occurs first. When preparing the franchise documentation, review material customer-service obligations and costs so that they are reflected as required by the law and regulations, rather than emerging later as operational surprises.

Arrangements allocating responsibility between the parties do not override customers’ statutory rights. Obligations vary by business activity and sales channel, and the E-Commerce Law may apply to online sales. Seek a legal review of your returns, warranty and compensation policies, and distinguish between mandatory entitlements and goodwill benefits offered voluntarily by the brand.

3. Design a resolution process that protects customers and their data

Give every complaint a reference number and a standardised record showing the branch concerned, the nature of the complaint, the action required, the person currently responsible and the latest communication. Set target response and resolution times based on the seriousness of the case and your team’s capacity, and make clear internally that these are operational targets, not universal statutory deadlines.

Establish clear severity levels. An enquiry about a delayed order is different from an allegation of injury, a safety risk or the exposure of personal data. Sensitive cases require immediate notification to the appropriate person and preservation of evidence, alongside consideration of any duties to report to the relevant authorities under applicable laws. Do not wait for the normal reporting cycle.

Customer data processing is subject to the Personal Data Protection Law and its Implementing Regulations, where applicable. Define each party’s role according to the processing it actually carries out, the lawful basis for that processing and what may be shared between franchisor and franchisee. Collect only the data needed, control access permissions and retention and deletion periods, and do not circulate copies of identity documents or payment details in large group chats.

Provide staff with a response template that helps them acknowledge the complaint and explain the next step without making promises they cannot fulfil. Requests for further information must not lead to the collection of irrelevant data or obstruct an established customer right.

4. Test the process before the first cross-branch complaint

Run a tabletop exercise involving operations, customer service, finance and the person responsible for legal matters. Choose a complaint involving more than one party and ask the team to handle it from receipt to closure. Watch for bottlenecks: does the employee know who approves the response? Can the accountant identify which party bears the cost?

Then monitor recurring problems, reopened complaints and the clarity of the reasons for compensation, rather than focusing solely on how quickly tickets are closed. Rapid closure may conceal an ongoing problem, while similar complaints may reveal a central issue rather than a failing by an individual franchisee.

Review cost allocation regularly with franchisees and give them a defined route for challenging charges with supporting documents. Transparency helps preserve cooperation across the franchise network and prevents customer service from becoming a recurring accounting dispute.

Practical takeaway: Before granting a franchise, prepare a responsibility matrix, a clear contractual annex and a complaints register with controlled access permissions. Then test one complex case. If you cannot identify who decides, who pays and who communicates, the process is not yet complete.