Franchise Law in Thailand: How Foreign Franchisors Protect Their Brands

Does Thailand Have a Dedicated Franchise Law?

Thailand does not have a standalone franchise statute. Many investors expect a single code that defines disclosure duties, registration steps, and termination rights. No such code exists. Instead, franchising sits at the intersection of several laws that work together.

The Civil and Commercial Code governs the franchise agreement itself. The Trademark Act protects the brand name and logo at the heart of every franchise. The Trade Secrets Act shields confidential operating manuals and recipes. Finally, the Trade Competition Act B.E. 2560 (2017) regulates how franchisors treat their franchisees. Because these rules sit in separate statutes, foreign franchisors must read them together rather than rely on one document.

The Legal Framework Behind Franchising in Thailand

Three pillars support franchise law in Thailand. Each one addresses a different risk, and each one demands attention before a brand enters the market.

Contract Law and the Franchise Agreement

The franchise agreement is the foundation of the relationship. Thai courts will generally enforce the terms the parties agree on, provided those terms are clear and lawful. Therefore, the agreement should define the territory, the fees, the brand standards, the term, and the consequences of termination. Vague drafting invites disputes. A well-structured contract, by contrast, gives the franchisor a strong basis to act when a partner breaches its obligations. Foreign franchisors should also confirm how Thai courts treat governing-law and dispute-resolution clauses before signing.

Trademark and Intellectual Property Protection

Trademarks are the engine of any franchise. A franchisee pays to use a recognized brand, so that brand must be legally protected in Thailand. Franchisors should register their marks with the Department of Intellectual Property before granting any license. Without registration, enforcement becomes far harder. In addition, confidential systems and know-how should be protected under the Trade Secrets Act and reinforced by strong contractual confidentiality clauses.

The Trade Competition Act and Franchise Guidelines

In December 2019, the Office of the Trade Competition Commission issued specific guidelines on unfair trade practices in franchise businesses. These guidelines took effect on 4 February 2020 and were later refined in 2020 and 2021. They sit under the Trade Competition Act B.E. 2560 (2017) and apply directly to how franchisors structure their deals. As a result, franchise law in Thailand now contains clear fairness standards that did not exist a decade ago.

Disclosure and Fair-Dealing Rules Franchisors Must Follow

The franchise guidelines impose practical limits on franchisor conduct. They aim to prevent powerful brands from imposing one-sided terms on local operators. Foreign franchisors should review these rules carefully, because a breach can expose them to competition law liability.

Several obligations stand out in practice:

• Pre-contract disclosure. Franchisors should give franchisees key information before signing, including fees, royalties, the term, and renewal conditions.
• Right of first offer on new branches. If a franchisor plans to open a new outlet near an existing franchisee, it must first offer that branch to the existing partner.
• No forced unrelated purchases. Franchisors cannot require franchisees to buy goods or services that have no connection to the franchise system without a justifiable reason.
• No unreasonable restrictions. Conditions that damage the franchisee without a legitimate business purpose may be treated as unfair.

These standards mirror obligations already found in the Civil and Commercial Code and the Unfair Contract Terms Act. Consequently, compliance is not optional. It is part of doing business responsibly in Thailand.

Protecting Your Brand After a Franchise Ends

The hardest moment in any franchise relationship is termination. Former franchisees sometimes keep operating under the brand after their rights expire. They may argue that the termination was invalid, which turns the matter into a contract dispute. In the past, that framing made fast relief difficult, because courts often waited for a final judgment on the contract before acting.

Recent Thai court decisions have shifted this picture in the franchisor’s favor. Courts have started to treat unauthorized post-termination operation as trademark infringement, not merely a contract breach. This distinction matters. When a former outlet keeps using protected marks and trade dress, consumers cannot tell it apart from the genuine network. That confusion causes ongoing commercial and reputational harm.

Because of this reframing, franchisors have secured preliminary injunctions and substantial damages before the underlying contract dispute reached a final ruling. The Central Intellectual Property and International Trade Court has been central to this trend. For foreign brand owners, the lesson is practical: a registered trademark plus a clear termination clause creates a powerful enforcement tool.

Tax and Structuring for Foreign Franchisors

Franchise income carries specific tax consequences in Thailand. A franchisee that pays royalties or franchise fees to a foreign franchisor must withhold tax at 15% and remit it to the Revenue Department. A double taxation agreement between Thailand and the franchisor’s home country may reduce that rate, so franchisors should always check the relevant treaty. In addition, the Thai licensee must self-assess 7% VAT on royalties paid abroad.

Structure also matters. Many international brands enter through a master franchise model, appointing one local partner to develop the market and sub-franchise to others. Others license directly to individual operators. Each model carries different control, tax, and Foreign Business Act implications. Therefore, franchisors should choose a structure that fits their growth plan and their appetite for direct involvement in Thailand.

How Foreign Franchisors Can Strengthen Their Position

Practical preparation prevents most franchise disputes. Foreign brand owners can take several concrete steps before and during market entry:

• Register all relevant trademarks with the Department of Intellectual Property before signing any agreement.
• Draft a detailed franchise agreement that addresses fees, standards, term, renewal, and termination. Our guide on enforcing contracts in Thailand explains how Thai courts approach commercial agreements.
• Comply with the Trade Competition Commission’s franchise guidelines on disclosure and fair dealing.
• Protect operating manuals and recipes as trade secrets, supported by strong confidentiality clauses.
• Plan an enforcement strategy in advance, including the option of trademark-based injunctions through the IP&IT Court.
• Choose a dispute-resolution mechanism with care, and understand how foreign arbitral awards are enforced in Thailand if you prefer arbitration.

Above all, treat trademark protection as the priority. A registered mark underpins every other remedy. To learn more, see our complete guide to trademark registration in Thailand.

Frequently Asked Questions