Setting Online Order Rules Before Franchising in Saudi Arabia

Your existing business may handle orders successfully through a single online shop. But bringing in your first franchisee raises new questions: who gets credit for each order? Who bears the cost of discounts and refunds? Who decides when a busy branch should stop accepting orders? Before expanding through franchising in Saudi Arabia, you need online ordering rules that prevent a shared sales channel from becoming a source of dispute. This is not simply about choosing a technology platform; it is about defining each party’s responsibility at every stage of an order.

1. Map the order journey and identify the parties

Start by listing the channels your brand actually uses: its website, app, delivery platforms and orders placed through social media. Do not assume the same rules will work for all of them. The franchisor may collect payment through one channel, while an external platform collects it and transfers it to the franchisee through another.

For each channel, map the process from order confirmation to financial settlement. Identify who receives the order, who accepts it, who prepares it, who arranges delivery and who handles situations where it cannot be fulfilled. Then clearly identify the party the customer is dealing with on the purchase interface and in the transaction documents, in line with the relevant legal requirements.

Create a short reference sheet for each channel covering:

• The party contracting with the platform provider or delivery service.
• The party receiving payments and issuing invoices under the agreed sales arrangement.
• The branch responsible for fulfilment and the limits of its authority.
• The party authorised to cancel orders and issue refunds, and who bears the associated costs.

This reference sheet is a suggested internal tool, not a legally prescribed form. Its purpose is to expose gaps early. If the franchisor’s team accepts orders but the franchisee alone bears the consequences when they cannot be fulfilled, the allocation of responsibility needs adjusting.

2. Set rules for allocating orders and handling exceptions

It is not enough to say that an order goes to the ‘nearest branch’. That branch may be unable to supply a particular product, be closed or have reached its operating capacity. Set out a clear order of priority that combines location, product availability and the ability to fulfil the order, while respecting the rights agreed in the franchise agreement.

Also specify when an order may be transferred to another branch, who approves the transfer and how the customer will be notified if the delivery time or fulfilling branch changes. If the agreement grants territorial rights, explain how those rights apply to orders received through central channels, rather than leaving the technology to interpret them automatically.

Test scenarios that expose weaknesses in the rules: a customer requesting collection from a different branch, an order containing products unavailable at the selected branch, or a connection failure after payment has been accepted. For each scenario, record the decision, the responsible party and the financial outcome, rather than simply stating that ‘the parties will coordinate’.

Give the branch manager defined authority to suspend incoming orders when fulfilment is not possible, with a recorded reason and a process for resuming them. Ensure that any intervention by the franchisor is traceable, so that decisions by the central team do not conflict with conditions at the branch, or allow orders to keep coming in when staff know they cannot fulfil them.

3. Separate the sales value from the net payment

One of the most common sources of disagreement in setting up an online channel is a franchisee seeing a high sales figure but receiving a smaller payment without adequate explanation. Design a settlement statement that shows the order value, discounts, refunds, platform and delivery fees under the agreed arrangement, and any other deductions permitted by law and the contract.

Distinguish between setting a fee and defining the basis on which it is calculated. If an ongoing fee is linked to sales, the contractual definition must clearly explain how cancelled orders, discounts and refunds are treated. Do not allow platform settings to create a calculation basis that differs from what the parties agreed.

For example, if the franchisor launches a central discount code and the franchisee fulfils the order, who funds the discount? Does the branch’s share change if the delivery platform helps fund the campaign? Resolve these questions before launching the promotion, and establish a process for approving the franchisee’s participation in campaigns in accordance with the agreement.

Set a settlement schedule, a process for disputing discrepancies and a mechanism for correcting them. Ask an accountant to review invoicing and tax treatment based on the identity of the seller and the nature of the relationship, rather than assuming that the franchisor’s collection of payments makes it the seller in every case.

4. Turn the rules into enforceable obligations

Saudi Arabia’s Commercial Franchise Law applies to any franchise agreement carried out within the Kingdom. Article 11 requires the agreement to include a description of the franchise business, the fees payable and obligations relating to marketing, display and maintaining brand identity. Where online orders form part of the business model, the agreement should therefore clearly reflect how responsibilities and their financial consequences are allocated.

Article 8 also provides, unless the parties agree otherwise in writing, for the business model to be defined in detail and for the franchisee to receive operating manuals. Include the steps for accepting, transferring and settling orders in operating procedures linked to the agreement, distinguishing between a minor technical update and a change affecting either party’s rights or financial obligations.

Article 7 requires the disclosure document to be delivered at least 14 days before the agreement is signed or any payment relating to the franchise is made, whichever occurs first. Ensure that the channels and associated costs are described clearly and consistently across the documents, and review how the E-Commerce Law and personal data protection requirements apply to your actual arrangement.

Practical takeaway: Before granting a franchise, run a test order through the full process, from purchase to refund and settlement. If you cannot identify the responsible party and the amount due at every stage, finish defining the channel’s rules before using it with a franchisee.