Why You Need Law Firm for Franchise Business in Thailand?
posted 10 months ago
If you are going to start a franchise business in Thailand, you will need a seasoned law firm or professional to undertake those activities that you may not be apt or comfortable with. These activities can be related to tax regulations, statutory compliance, or legal grounds. Continue reading to know them all.
𝐃𝐫𝐚𝐟𝐭𝐢𝐧𝐠 𝐨𝐫 𝐑𝐞𝐯𝐢𝐞𝐰𝐢𝐧𝐠 𝐌𝐚𝐬𝐭𝐞𝐫 𝐅𝐫𝐚𝐧𝐜𝐡𝐢𝐬𝐞 𝐀𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭𝐬
Thai law is relatively liberal since it is a civil law country, allowing the courts to evaluate the regulation’s meaning rather than its specific terms of operation. Due to this, other general rules governing contracts and commercial operations govern franchisee relationships in the absence of an express law of franchise.
Therefore, to review or draft a franchise agreement in Thailand, you will typically need to be conversant with the following legal sources:
- Civil and Commercial Code
- Thailand Trade Mark Act B.E. 2534 (1991), as amended by the Trade Mark Act (Number 2) B.E. 2543 (2000)
- Thailand Patent Act B.E. 2522 (1979), as amended by the Patent Act (Number 2) B.E. 2535 (1992) and Patent Act (Number 3) B.E. 2542 (1999)
- Thailand Copyright Act B.E. 2537 (1994)
- Trade Secrets Act B.E. 2545 (2002)
- Unfair Contract Terms Act B.E. 2540 (1997)
- Trade Competition Act B.E. 2542 (1999)
- Act Relating to Price of Merchandise and Service B.E. 2542 (1999)
- Revenue Code B.E. 2481 (1938)
- Direct Sales and Direct Marketing Act B.E. 2545 (2002)
- Product Liability Act B.E. 2551 (2008)
When creating and reviewing franchise agreements and franchise development agreements, it is also important to take into account the different Ministerial Regulations that implement and further develop these Acts.
𝐃𝐮𝐞 𝐃𝐢𝐥𝐢𝐠𝐞𝐧𝐜𝐞 𝐟𝐨𝐫 𝐅𝐫𝐚𝐧𝐜𝐡𝐢𝐬𝐨𝐫𝐬/ 𝐅𝐫𝐚𝐧𝐜𝐡𝐢𝐬𝐞𝐞𝐬
Due diligence on a possible franchisee is crucial, not only to ensure that they are reliable and will properly establish a business in Thailand but also to ensure that they have the necessary skills and experience to operate the company as the franchisor would instruct. Additionally, some essential due diligence measures include:
- To verify directors, shareholding, and company debt, the Ministry of Commerce conducts searches on the corporate organization.
- Court searches in the relevant areas to find litigation or other disputes that note the parties involved, the nature of the conflict, the court’s jurisdiction, the cause or causes of action, and the stage at which any actual, threatened, or pending litigation, administrative action, or settlements are in.
- The list of all necessary regulatory approvals for food, drink, pharmaceuticals, nutrition, medical devices, and cosmetics, together with documents of these approvals.
- Knowledge of takeover procedures and any necessary transitional plans.
So, to reassure you that you need a law firm to set up your franchisee business in Thailand, let us cover the common pitfalls that can trap you anytime during the course of the business.
There are prohibitions in some clauses in franchise agreements by Thai law, notwithstanding the propensity of some franchise agreement drafters to overdo it in an effort to offer the franchisor significant protection.
For instance, it is against the law for an agreement to be struck in advance that absolves a debtor of his own deception or egregious carelessness. Additionally, other terms that can violate the Thai Unfair Contract Terms Act include:
- a clause that limits or excludes liability for contract breach.
- any clause that permits contract termination without cause or without the opposing party has committed a substantial breach.
- a clause that permits one party to postpone or refuse to carry out its duties under a contract without providing justification.
- a clause that permits one party to impose additional duties on the other party beyond those reached at the time the contract was executed.
Don’t you think that these pitfalls can turn grave for your franchisee business in Thailand? Therefore, instead of running the horses of your brain, consult with Konrad Legal today.
- Commercial and Business Law
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