PRACTICE OVERVIEW
Franchising Agreements
Franchising arrangements are often the preferred means to enter the Thai marketplace by foreign parties unfamiliar with Thai law and business practice. As long as the foreign franchisor engages in no business activity in Thailand, it is not required to comply with Thailand’s Foreign Business Operations Act.
Carefully drafted franchise agreements allow foreign companies to control their local franchisees use of trademarks and service marks, trade names, trademark value and goodwill and licensing arrangements. They can provide a means for helping ensure quality control without having staff on the ground in Thailand. Analytics has drafted and assisted in the drafting of scores of franchising agreements for major, brand name franchisors.
Analytics works with foreign franchisors and outside counsel of foreign franchisors. Analytics understands franchise relationships and can explain their advantages and limitations of franchise relationships to franchisors.
Thailand does not yet have a “franchise law”, but this statement can be misleading for two reasons. Thailand has been discussing adoption of a franchise law, albeit for quite some time. More important, Thailand’s 1997 Trade Competition law has been used to regulate what many would consider franchise relationships under the guise of regulating “unfair” trade practices. The Trade Competition Commission has issued orders against an automotive company for from “unfairly” terminating an automotive distributorship because of, among other reasons, the alleged use of trading conditions that interfered in the trading conditions of its distributors. The gap between these sorts of orders and more traditional the straightforward regulation of franchise relationships under franchise laws is very narrow.
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