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Lawyer
posted 2 years 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.
๐๐ซ๐๐๐ญ๐ข๐ง๐ ๐จ๐ซ ๐๐๐ฏ๐ข๐๐ฐ๐ข๐ง๐ ๐๐๐ฌ๐ญ๐๐ซ ๐
๐ซ๐๐ง๐๐ก๐ข๐ฌ๐ ๐๐ ๐ซ๐๐๐ฆ๐๐ง๐ญ๐ฌ
Thai law is relatively liberal since it is a civil law country, allowing the courts to evaluate the regulationโs 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.
๐๐ฎ๐ ๐๐ข๐ฅ๐ข๐ ๐๐ง๐๐ ๐๐จ๐ซ ๐
๐ซ๐๐ง๐๐ก๐ข๐ฌ๐จ๐ซ๐ฌ/ ๐
๐ซ๐๐ง๐๐ก๐ข๐ฌ๐๐๐ฌ
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 courtโs 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.
Donโt 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.
Fields:- Commercial and Business Law
- Contract
- Corporate and Company
