You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

March 2, 2020

New Regulations on Unfair Trade Practices in Franchise Businesses

Subscribe to Updates
Informed Counsel

New TCC Notification for Franchise Businesses   

On December 6, 2019, the Trade Competition Commission (TCC) promulgated another notification in relation to the new Trade Competition Act B.E. 2560 (2017) (TCA) in the Government Gazette. The notification came into force 60 days after its publication. Issued under the TCA, it addresses certain nuances of franchise businesses’ legislative implications.      

To date, Thailand does not have any single piece of legislation relating to the regulation of franchise business operations in Thailand. Thai courts often construe franchise agreements in the context of a mutually agreed commercial contract under the freedom-of-contract principle, where a franchisor and a franchisee share their benefits pari pasu, making the competition law seem out of context. In reality, as franchise business schemes are vertical integrations, franchisors’ interference in franchisees’ business operations often entails vertical restraints in violation of Thailand’s trade competition law, whereby franchisors often subtly assume dominant positions in their markets. These vertical restraints arising from franchise agreements can be in the form of price-fixing or resale price maintenance, tie-ins, exclusive dealings, territorial exclusivity, or any acts intervening in the business operations of franchisees or imposing unfair compulsory conditions on franchisees.    

Under the TCC notification, these unfair or hostile business interventions of franchisors will be subject to legal implications and ramifications under the TCA.

Key Regulations under the New TCC Notification   

The notification was enacted in light of section 57 of the TCA, with the main purpose of regulating the activities of franchisors during the validity of a franchise agreement. Three key requirements are set forth for franchisors under this notification:

1.  Pre-contract signing disclosure to franchisees

To enhance free trade and fair competition in franchise businesses, the notification expressly stipulates a franchisor’s obligation to disclose essential information to a franchisee prior to entering into a franchise agreement. This required information is mainly in relation to (1) the franchise business’s monetary information (e.g., franchise fees and royalty fees, marketing, personnel training, and inventory expenses), (2) the franchisor’s business plans and scope of after-service assistance given by the franchisors and (3) the franchisee’s scope of entitlement to intellectual property rights—mainly trademarks, patents, and copyrights—and the enforceability thereof.

2.   Offer to franchisees in close proximity to a franchisor’s new franchise location

Territorial exclusivity is one of the common pitfalls found in franchise agreements. In exchange for exclusive licenses, franchisees are often restricted by geographical region in many aspects of operating their franchise businesses, from the distribution of goods and services to the purchase of raw materials thereof.    

Under the new notification, franchisors are obligated to notify their franchisees prior to the establishment of their new franchises in proximity to any of their existing franchises. A franchisee whose franchise location is in proximity to that new franchise location can be offered the right to operate the new franchise before it is offered to any third parties. By doing so, the franchisees are given more leeway in operating their franchise businesses, thus alleviating the territorial exclusivity concern under the trade competition law. 

3.  Prohibition of unfair trade practices

In line with section 57 of the TCA, the notification sets out a non-exhaustive list of franchisors’ unfair trade practices arising during the course of a franchise agreement that may violate the TCA. These unfair trade practices include the following:

  • Unfairly obstructing the business operations of franchisees (e.g., forcing a franchisee to purchase a specified amount or quota limitation, or exclusive dealings);
  • Unfairly imposing extra-contractual conditions on the franchisees after the contract signing; 
  • Unfairly setting trading conditions that restrict or prevent the business operations of the franchisees (e.g., restrictions on selling perishable goods at a discounted price or restrictions on purchasing goods from other suppliers having the same product quality at a lower price);
  • Unfairly treating franchisees on a discriminatory basis; and
  • Unfairly conducting the business relationship in a manner other than to retain the goodwill and standards of the franchisors.

Section 57 of the TCA is considered to be a catch-all provision applicable to any unfair trade practice that does not fall under other more specific provisions set out under the TCA. When this notification is enacted under section 57, its application and implications can thus be broad enough to cover any acts of franchisors that can be deemed unfair trade practices against franchisees.

Legal Ramifications of the Notification    

In line with section 57 of the TCA, franchisors who violate the regulations set out under this notification can be subject to an administrative fine of up to 10 percent of their sales turnover in the year of the offense, under section 82 of the TCA. Apart from this, a third party who suffers damage due to such violations will also have the right to file a civil lawsuit for pecuniary damages against the franchisor under section 69 of the TCA. 

Intellectual Property Implications of the Notification    

The intellectual property rights portfolio is a vital component of franchise agreements—especially those related to the licensing of rights. Conceptually, the intellectual property regime aims to promote rights holders’ exclusivity of rights, which are considered restraints to trade, while the trade competition regime aims at promoting fair trade and a competitive market. Nevertheless, the intellectual property law’s exclusivity of rights must be under the umbrella of trade competition to a certain extent, as any unjustifiably anticompetitive activities could be deemed illegal under several intellectual property provisions. Now that franchise businesses in Thailand are to be governed by the TCA, the intellectual property rights–related conditions under franchise agreements can be regulated and enforced in a more robust manner with regard to franchise businesses by another definite piece of law.    

Download Full Article
Related Professionals

Practices

Intellectual Property

Location

RELATED INSIGHTS​ 

August 28, 2026
When considering a franchise, many people first think of a restaurant, retail chain, or service outlet. From a legal perspective, however, the foundation of every franchise lies in the right to use a brand, which is typically granted through a trademark license. Trademarks are often the most valuable assets in a franchise system. Through a trademark license, a franchisor authorizes a franchisee to use its trademarks, logos, and branding while maintaining control over how the brand is presented to customers. The Role of Trademarks in Franchise Businesses Under the Trademark Law 2019, a mark is defined as a sign that is capable of distinguishing the goods or services of one undertaking from those of others in the course of trade. This distinguishing function is particularly important in a franchise arrangement, where the franchisee’s use of the franchisor’s trademark allows consumers to recognize the source, quality, and reputation of the business. In this way, trademarks help preserve brand identity, strengthen market recognition, and protect the commercial value of the franchise system. Legal Foundation for Franchise Brand Protection Myanmar presently does not have a specific statutory framework governing franchise arrangements. As a result, franchise agreements are generally regulated under the broader applicable legal framework, including the Contract Act 1872, the Trademark Law 2019, the Competition Law 2015, the Consumer Protection Law 2019, and the relevant implementing rules and regulations. The licensing of trademarks within a franchise arrangement is particularly governed by the Trademark Law 2019. Franchisors should ensure that the trademarks intended to be licensed to franchisees in Myanmar are registered under the Trademark Law 2019 and that the relevant trademark license is properly recorded with the Intellectual Property Department (IPD). Trademark License Recordal Under the Trademark Law 2019, the owner of a registered trademark may grant a license to another
Read More
August 27, 2026
It is generally understood that patents are granted for new designs that have not been widely known or used in Thailand and not been disclosed anywhere prior to the date of the patent application. It is trite law that design law protects the distinctive appearance or products. Under Section 3 of the Thai Patent Act B.E. 2522, as amended by the Patent Act (No. 2) B.E. 2535 and the Patent Act (No. 3) B.E. 2542, a design is defined as “any form or composition of lines or colors that gives a product a special appearance and can serve as a pattern for an industrial or handicraft product.” This raises an important question. Can a patent be issued for a product design that contains text, numerals, trademarks, or symbols that do not fall under the definition of a design? This issue commonly arises when attempting to register packaging, labels, and graphical user interfaces (GUIs). Until a few years ago, applicants could file design applications with the Thai Patent Office for designs that contained such elements, provided that an appropriate disclaimer was included. This practice was generally accepted by Thai design examiners at that time, but the Patent Office has since implemented a change in its practice that could have a significant impact on applicants for design patents. Where design representations are submitted as line drawings or computer-aided design (CAD) drawings, the examiner may now issue an office action requiring their removal. This practice, however, appears to be applied inconsistently, as some examiners still exercise their own discretion in determining whether drawings containing these elements are acceptable. Below are examples of a GUI design, a CAD drawing design, and a photographic design representation that illustrates issues relating to the presence of nonallowable elements. GUI design For this GUI design, the submitted
Read More
August 27, 2026
Franchising in Thailand has matured into a sizeable commercial sector, but the rules governing franchisor–franchisee relationships remain scattered across general legislation rather than consolidated in a dedicated franchise statute. In this environment, the decisions of the Trade Competition Commission of Thailand (TCCT) have emerged as valuable practical guidance. Thailand follows a civil-law system in which judicial and administrative decisions do not create binding precedent; however, past rulings are nonetheless influential. This article examines the most instructive recent TCCT decisions and distills the practical compliance considerations for franchisors and franchisees operating in Thailand. Postcontract Changes: Justified or Unfair? A recurring issue is whether a franchisor may alter the terms of engagement after contract execution. The TCCT has established that midterm modifications are not inherently unfair; the determinative factors are whether there was a reasonable business justification, adequate advance notice, and a transparent process. In a 2023 coffee franchise matter, for instance, the TCCT declined to find a violation where a franchisor increased raw material prices, noting the increase had been communicated in advance and supported by demonstrable cost pressures. A bubble tea franchise matter reinforces this principle. The TCCT found that postcontract mandatory purchases of branded syrup and flavorings were justified, as the agreement reserved the franchisor’s right to modify product requirements, the materials were sold at or below market prices, and the branded ingredients possessed distinctive qualities deemed essential to franchise quality. The complaint was dismissed, with the additional requirements characterized as a legitimate measure to preserve brand consistency. Considered together, these decisions indicate that post‑contract modifications will be evaluated against three criteria: (1) whether there is a legitimate business rationale, (2) whether adequate advance notice was provided, and (3) whether franchisees were treated equitably throughout the transition. Discriminatory Treatment: Are Renewals and Information Equal? A 2024 automotive dealership
Read More
August 20, 2026
As part of its membership in Lex Mundi, Tilleke & Gibbins has released the latest edition of its Guide to Doing Business in Thailand, providing an overview of the legal, regulatory, and commercial considerations for companies establishing or expanding operations in Thailand. The 2026 edition offers practical insight into the country’s business environment, investment framework, and operational requirements. The guide covers a wide range of topics relevant to foreign and domestic investors, including: Investment incentives and promotion schemes Financial facilities and banking regulations Exchange controls and money transfers Import and export regulations Business structures and incorporation options Requirements for establishing a business Operational and compliance considerations Business cessation and insolvency procedures Employment and labor laws Taxation Immigration and visa requirements Prepared by Tilleke & Gibbins lawyers across multiple practice areas, the publication outlines key aspects of doing business in Thailand, including foreign investment restrictions, regulatory compliance obligations, corporate structures, employment requirements, and recent legal and economic developments affecting investors. The publication forms part of Lex Mundi’s Country Guides series, a global collection of jurisdiction-specific reference materials prepared by member firms around the world. Together, these guides help companies evaluate opportunities, compare regulatory environments, and plan international business activities across multiple markets. The full Guide to Doing Business in Thailand 2026 is available through the button below.
Read More