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

July 12, 2022

Thailand’s Updated Unfair Trade Practice Guidelines for Franchising

Subscribe to Updates
Managing Intellectual Property

Before the issuance in late 2019 of the Trade Competition Commission of Thailand’s Guidelines on Unfair Trade Practices in Franchise Businesses, which took effect in February 2020, Thai law made little mention of franchising as a business model—despite the great popularity of franchising in the country. The guidelines, which were issued under the Trade Competition Act B.E. 2560 (2017), partly made up for the absence of a single, codified franchising law in the country and offered valuable direction on how franchisors and franchisees should operate in compliance with Thai law.

One of the most significant conditions introduced by the original guidelines in February 2020 was a requirement for franchisors to provide a right of first refusal to their existing franchisees before opening a new franchise outlet within current franchisees’ operating vicinity. An update to the guidelines addressing the right of first refusal was issued in August 2020. Most recently, a second update was announced on July 13, 2021. It was published in the Government Gazette on August 19, 2021, and came into force on the following day. The August 2021 update further revised this provision, and the updated guidelines now adopt a less restrictive approach for franchisors in relation to this first-refusal requirement.

Under the updated guidelines, a franchisor who decides to open a new outlet, whether it will be operated by the franchisor or by another franchisee or person, must notify the existing franchisee located in closest proximity to the intended location, and provide the franchisee with a right of first refusal for a period of 30 days. However, the franchisor does not have to provide the closest franchisee with a right of first refusal if the franchisee’s existing performance does not meet the franchisor’s criteria as specified and communicated to the franchisee in advance.

In determining what constitutes “closest proximity,” consideration is given to the demand for the goods and services, the geographical area, and the competition in the market.

If a franchisor is not able to grant rights to operate a new outlet to an existing franchisee due to existing area development rights or other contractual obligations, the franchisor must consider granting the right to open the new outlet to other suitable franchisees based on reasonable commercial justifications.

Franchisors should also be mindful of all other requirements stipulated in the guidelines, such as the mandatory precontractual disclosure requirements. Under these rules, franchisors must disclose the following information to prospective franchisees before entering into a franchise agreement:

  • Information on applicable payments and expenses relating to the franchise, such as franchise fees, royalties, marketing expenses, training costs, costs of mandatory equipment and materials, as well as their respective calculation methods, payment details, and conditions for reimbursement;
  • Information on the franchise business model, including matters relating to assistance, training, and advisory services to be provided by the franchisor, as well as information regarding the existing and future branches (and their respective locations) operated by other franchisees in the vicinity, and information on sales and promotion;
  • Information on intellectual property rights, such as trademarks, patents, and copyright, including their respective terms of protection, and their licensing scope and restrictions; and
  • Information on the renewal, amendment, cancellation, and termination of the franchise agreement.

Additionally, the guidelines prohibit franchisors from engaging without justification in trade practices deemed capable of causing damage to franchisees under the Trade Competition Act, such as the imposition of purchasing restrictions and other restrictive conditions, and the stipulation of discriminatory conditions among franchisees.

Noncompliance with the guidelines and the subsequent amendments, including those introduced in the most recent update, may subject business operators to penalties under the Trade Competition Act, including administrative orders and fines, and civil claims for damages. Hence, franchisors in Thailand should ensure that their franchise agreement templates and disclosure documents to be used in the country are in full compliance with all local requirements, including the requirements imposed under the updated guidelines.

This article first appeared in Managing Intellectual Property.

Related Professionals

Practices

Antitrust and Competition

Customs and International Trade

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