The Trade Competition Commission (TCC) on 6 December 2019 issue the “Guidelines on Unfair Trade Practices in the Franchise Business”.
There is not specific regulation governing franchise agreement in Thailand. However, within the authoritative power on unfair competition and practices, the Trade Competition Commission issued the Guidelines on Unfair Trade Practices in the Franchise Business in order to deal with unfair practices between franchisor and franchisee.
The Article 3 of the guideline prescribes that franchisor must disclose the details and information of its franchise business operation to franchisee prior to entering the franchise agreement. The information is including; the compensation and expenses for the franchise businesses, the business operation plan, the intellectual property rights, and the renewal and termination of the franchise agreement.
The Article 4 of the guideline obliges that franchisor must notify the franchisee the decision to open a new franchise branch located in the nearest area of the franchisee. In case the franchisor intends to open the new branch, the franchisor must firstly offer the franchisee in that area the right to operate the new branch.
The Article 5 of the guideline, in pursuant to section 57 of the Thai Competition Act BE 2560(2017), prohibits the franchisor from conducting unfair franchise practices including; 1) the setting of restrictive obligation without business justification, 2) setting up additional obligation after the franchise agreement has already taken effect, 3) restricting the franchisee not to purchase products or services from other manufacturers, distributors or service providers which sell products or services in the same quality with lower price, 4) setting discriminatory conditions among franchisees without justifiable reasons and 5) setting out unreasonable conditions with the purposes other than maintaining the franchise reputation.
Pornchai Wisuttisak, IDI Country Expert for franchising in Thailand