Franchise Business in Thailand

In order to set up your corporate presence in Thailand, there are several options to do so.  Apart from registering new businesses, another popular method is to buy a franchise and operate such franchise in the local market.

If you want to open a franchise business in Thailand, you have to be guided with the provisions of the Civil and Commercial Code and other relevant laws such as relating to trademarks and copyright and contract terms.

With the help and expertise of our corporate lawyers, Legal Unit Co., Ltd. can help you set up a franchise business which is straightforward, fast and easy.  With years of knowledge in the commercial legislation, our lawyers can offer detailed and reliable information on the pertinent laws which need to be followed when setting up a franchise in Thailand.

 

The Parties to franchise agreement in Thailand

A franchise in it’s simplest form is an agreement or license entered into between two parties, the franchisor and the franchisee.  The agreement is commonly termed as the Franchise Agreement, whereby the terms and specific conditions relative to the franchise are set forth. The parties involved in franchising are franchisor and franchisee. Franchisor is a person who has an existing business and wants to expand or diversify it. Franchisee is a person who wants to invest his capital in the existing business of franchisor.

The Franchise Agreement under  Thai law:

In the execution of the franchise agreement, the following provisions are a must:

  1. The details of the franchisor and the franchisee;
  2. Information about the object of the franchise agreement;
  3. The rights of both franchisor and franchisee towards one another;
  4. The obligations of the franchisor and the franchisee; and
  5. The date of commencement of the franchise business, as well as its period.

The most important aspects when setting up a Thai franchise business are related to the rights and obligations of the franchisor and the franchisee. The franchisor has the obligation of putting at the disposal of the franchisee all the know-how and materials to help him/her follow the business model in exchange for a flat fee or a percentage of the royalties. The franchisee must respect all the conditions and use only the materials under the commercial name of the franchisor.

Types of franchise businesses                             

The following are types of franchise businesses one can establish in Thailand:

  1. The local franchise under which the franchisee can open a business in a certain city;
  2. The regional franchise under which the franchisee can represent a brand at a regional level;
  3. The international franchise under which a foreign investor can represent an international brand in Thailand;
  4. The single-unit franchise under which the franchisee can operate in a single location in Thailand; and
  5. The multi-unit franchise under which the franchisee is allowed to establish several locations.

Important considerations when setting up setting up a Thai franchise business are related to the rights and obligations of the franchisor and the franchisee. The franchisor has the obligation of putting at the disposal of the franchisee all the know-how and materials to help him/her follow the business model in exchange for a flat fee or a percentage of the royalties. The franchisee must respect all the conditions and use only the materials under the commercial name of the franchisor.

If you are interested in setting up a franchise business and needs our help in getting through the process of drafting the franchise agreement as well as consultation with the relevant laws on the franchise business in Thailand, please contact our law firm and we are more than willing to assist you.