Franchising has become a successful business model globally, and Thailand is no exception. Franchising businesses are rapidly expanding, yet Thailand still lacks a specific regulatory law to govern such businesses. This is surprising, as a draft of the Franchising Business Act was first released to the public in 2006, but not until recently has it returned to public attention. A public hearing, organised by the Commerce Ministry, was held in March 2011. Based on the current draft, franchisors and franchisees will need to prepare themselves for several changes.
Important impacts: In the pending bill, the two most important issues affecting franchisor practice are provided in Chapter 3 (Sections 18-32), which focuses on restrictions of a franchise business operation, and Chapter 4 (Sections 33-50), which discusses registration of a franchise business operation.
Restrictions: Franchisors and franchisees will be required to comply with certain restrictions on business operations. For example, franchisors will be duty bound to disclose data necessary for the franchise business operation. Furthermore, franchise business agreements must be in writing and must specify the details required by law. Failure to comply with these requirements would void the agreement between the franchisor and the franchisee. Full article.