#franchiselawyer

Franchising has emerged as a popular and effective business expansion model in Thailand, particularly for international brands seeking market entry and local entrepreneurs looking for proven business systems. However, unlike countries such as the United States or Australia, Thailand does not have a dedicated Franchise Act or specific franchise legislation. Instead, franchise transactions are governed by a patchwork of general business laws, making the role of a specialized franchise lawyer not just beneficial but essential.

This article provides an in-depth examination of the role of franchise lawyers in Thailand, the legal landscape they navigate, key services they provide, and critical considerations for both franchisors and franchisees.

1. The Legal Landscape: Why Franchise Lawyers Are Essential

Thailand's legal framework for franchising is unique. As of 2026, there is no specific franchise law in Thailand. Several draft versions of a Franchising Business Act have been proposed over the years, but none have been enacted. The most recent draft was returned to legislators for amendments in late 2016, and its promulgation is not currently a government priority.

Instead, franchise agreements in Thailand must conform to multiple existing laws, including:

Civil and Commercial Code – Governs contract law, agency relationships, and general obligations between parties

Trademark Act B.E. 2534 (1991) – Protects brand names, logos, and intellectual property used in franchise operations

Trade Competition Act B.E. 2560 (2017) – Regulates anti-competitive behavior and ensures fair business practices

Foreign Business Act B.E. 2542 (1999) – Restricts foreign companies from directly operating certain types of franchises

Unfair Contract Terms Act B.E. 2540 (1997) – Protects against exploitative contractual provisions

Trade Secrets Act B.E. 2545 (2002) – Protects confidential business information

Revenue Code – Governs taxation of franchise fees and royalties

The Franchising Guidelines

In October 2019, the Office of the Trade Competition Commission (TCC) issued the Notification on the Guidelines for the Consideration of Unfair Trade Practices in Franchise Businesses (Franchising Guidelines), which were subsequently amended in 2020 and 2021. While not a comprehensive franchise law, these guidelines provide important protections for franchisees and establish criteria for identifying unfair trade practices in franchise relationships.

Under these guidelines, a "franchise" is defined as a business operation where a franchisor enters into a written agreement allowing a franchisee to operate a business using the franchisor's models, systems, procedures, and intellectual property rights within a specific timeframe and/or location, with the franchisee paying consideration to the franchisor.

2. Key Roles and Responsibilities of Franchise Lawyers

Given this complex legal environment, franchise lawyers in Thailand provide essential services to both franchisors and franchisees.

2.1 Drafting and Reviewing Franchise Agreements

Since no specific franchise law exists, franchise agreements are highly contract-driven. A franchise lawyer ensures that the agreement clearly defines:

Franchise fees and royalties – Initial fees, ongoing royalty structures, and payment terms

Intellectual property usage – Rights to use trademarks, logos, branding, and operational systems

Operational obligations – Standards, training requirements, and ongoing support from the franchisor

Territorial rights – Whether the franchise is exclusive or non-exclusive within Thailand

Duration and renewal conditions – Franchise term, renewal options, and exit clauses

Termination and dispute resolution – Grounds for termination and legal remedies available

2.2 Ensuring Compliance with the Foreign Business Act (FBA)

A critical consideration for foreign franchisors is compliance with the Foreign Business Act B.E. 2542 (1999) . Under the FBA, a company is classified as "foreign" if non-Thai nationals hold 50% or more of its shares. This classification triggers restrictions under the FBA's three lists, with List Three covering many service-sector businesses where Thai nationals are not yet ready to compete with foreigners.

Many service-based franchises—including restaurants, education, consulting, and retail chains—may require a Foreign Business License (FBL) if operated directly by a foreign entity in Thailand. Experienced franchise lawyers help navigate these requirements, often structuring operations through master franchise agreements where a Thai entity holds the master franchise and sub-franchises to local operators, providing a legally compliant pathway for foreign brand entry.

2.3 Intellectual Property Protection

Franchise businesses rely heavily on brand recognition and intellectual property. Franchise lawyers assist with:

Trademark registration in Thailand to prevent infringement and establish legal rights

Drafting licensing agreements that define how franchisees can use the brand legally

Taking legal action against trademark violations and counterfeiting

Critical warning: "Trademark squatting"—where unscrupulous individuals register a foreign brand's trademark in Thailand before the actual franchisor enters the market—is a significant risk. Franchise lawyers help secure IP rights before signing any agreements to prevent this.

2.4 Structuring Franchise Business Models

Franchise lawyers help clients determine which franchise model best suits their business:

Single-unit franchise – One franchisee operates a single location

Multi-unit franchise – The franchisee operates multiple locations

Master franchise – A foreign brand grants an exclusive license to a Thai company, which then sub-franchises to local operators

The master franchise model is particularly common in Thailand because it allows foreign brands to operate legally without directly violating the Foreign Business Act.

2.5 Franchise Dispute Resolution

Common franchise disputes include:

Breach of contract or unfair termination

Trademark infringement

Competition disputes (franchisor selling directly in a franchisee's territory)

Royalty fee disputes

Franchise lawyers employ various resolution strategies, including negotiation, mediation, arbitration, and litigation when necessary. Notably, many international franchise agreements include foreign arbitration clauses, but Thai courts may not always enforce them unless properly drafted.

3. Recent Legal Developments and Case Law

3.1 Nonrefundable Fees and the Trade Competition Act

A recent case before the Trade Competition Commission of Thailand (TCCT) addressed the enforceability of nonrefundable franchise fees. After a franchisor ceased operations for financial reasons, a franchisee sought a refund of the nonrefundable fee. The TCCT found that the franchisor's cessation was commercially justified and that both parties had voluntarily agreed to the nonrefundable clause. The clause was therefore not deemed an unfair trade practice.

This decision reaffirms that clear, explicit contract terms—entered into freely and supported by legitimate business rationale—remain enforceable under Thai law, even if unfavorable to one party.

3.2 Mandatory Purchasing Conditions

In a bubble tea franchise case, the franchisor required franchisees to purchase all tea products exclusively from the franchisor. When a franchisee failed to comply, the franchisor refused further sales. The TCCT held that the franchisor's actions were not unfair, as the purchasing condition served a legitimate purpose—ensuring consistency and quality control across franchise outlets.

This demonstrates that purchasing restrictions can be justified if they are:

Clearly stated in the agreement

Reasonably necessary for maintaining brand or product standards

Applied in good faith rather than to restrict market competition

4. Practical Considerations for Foreign Franchisors

Foreign franchisors entering the Thai market face several unique challenges:ChallengeSolutionForeign Business Act restrictionsUse master franchise model or obtain Foreign Business LicenseTrademark squattingRegister trademarks in Thailand before market entryCultural and legal differencesModify contracts for compliance with Thai civil lawNo specific franchise lawStructure agreements carefully under existing lawsCross-border dispute resolutionEnsure arbitration clauses are properly drafted for Thai enforcement

5. Selecting the Right Franchise Lawyer

When choosing a franchise lawyer in Thailand, businesses should look for:

Expertise in franchise law and commercial contracts

Experience handling international franchise agreements

Understanding of Thai trademark and intellectual property laws

Strong litigation and dispute resolution skills

Familiarity with the Foreign Business Act (FBA) and licensing requirements

Major international law firms with presence in Thailand, such as Tilleke & Gibbins, have dedicated franchise practices and extensive experience advising global brands on Thai market entry.

Conclusion

Franchising in Thailand offers significant opportunities but requires careful navigation of a complex legal landscape. The absence of a dedicated franchise law means that franchise agreements are governed by multiple statutes, making specialized legal expertise essential. Franchise lawyers in Thailand play a critical role in drafting enforceable agreements, protecting intellectual property, ensuring compliance with the Foreign Business Act, and resolving disputes when they arise.

For both foreign franchisors entering the Thai market and Thai entrepreneurs investing in franchise businesses, engaging a qualified franchise lawyer is not merely advisable—it is essential for ensuring a legally sound and commercially successful franchise operation in Thailand.