Thailand Franchise Rules 2026: No Franchise Act, 10% Fines Still Bite

Franchisors operating in Thailand face administrative fines of up to 10% of annual income for failing to make pre-contractual disclosures, even though the country still has no dedicated franchise law. That is the core tension running through the ICLG's Thailand chapter of Franchise Laws and Regulations 2026, which surveys 19 jurisdictions and finds Bangkok's regime resting on guidelines rather than legislation.

What regulates franchising in Thailand today?

The Office of the Trade Competition Commission (TCC) issued the Notification on the Guidelines for the Consideration of Unfair Trade Practices in Franchise Businesses in October 2019, under the Trade Competition Act B.E. 2560 (2017). The Government Gazette published them in December 2019, and amendments followed on August 11, 2020, and July 13, 2021.

The Guidelines define a franchise as a written agreement under which a franchisee operates a business using the franchisor's models, systems, procedures and intellectual property, within a set timeframe or location, and pays consideration for it. Beyond that, franchise agreements must conform to a patchwork of laws:

• Civil and Commercial Code
• Trademark Act B.E. 2534 (1991), as amended
• Patent Act B.E. 2522 (1979)
• 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. 2560 (2017)
• Act Relating to Price of Merchandise and Service B.E. 2542 (1999)
• Revenue Code B.E. 2481 (1938)

Thai courts generally leave deals between parties of equal bargaining power alone unless a clear public policy reason exists.

Is the Franchising Business Act coming?

Not soon. In late December 2016, the Council of Ministers returned the draft Franchising Business Act to legislators for amendments over policy issues. Its first reading by the National Assembly still has no scheduled date, and promulgation is apparently not a current government priority.

The ICLG chapter notes Thailand may follow the China model — the 2005 PRC Ministry of Commerce's Administrative Measures on Commercial Franchising and the 2007 Franchise Regulations. A point to watch is whether Thailand copies China's requirement that franchisors prove profitability at two or more outlets before selling a franchise.

What must franchisors disclose?

Thai franchisors and master franchisees of foreign franchisors must disclose, before signing:

• payments and expenses: franchise fees, royalties, marketing, training, mandatory equipment costs, calculation methods, reimbursement conditions
• the business model: assistance, training, advisory services, existing and future branches nearby, sales and promotion information
• intellectual property rights: trademarks, patents, copyright, protection terms, licensing scope and restrictions
• renewal, amendment, cancellation and termination terms

There's no prescribed format, no update timeline and no continuing disclosure duty. Non-compliance violates Section 57 of the Trade Competition Act, triggering the 10% administrative fine. First-year offenders face a cap of THB 1 million (roughly USD 32,000). The TCC can also suspend, revise or discontinue a violating franchise company's activity, and injured third parties can sue civilly. Directors who directed the offence face the same punishment as the corporate entity.

What about foreign franchisors?

Foreigners can operate in Thailand subject to the Foreign Business Act B.E. 2542 (1999), which restricts certain business types and sets licensing requirements. Exceptions run through the Board of Investment (BOI) and the Industrial Estate Authority of Thailand (IEAT), plus several free trade agreements.

Overseas franchisors generally don't need a separate Thai entity, though some require franchisees to set up new businesses — for instance when the franchisee can't import FDA-regulated goods. Under the Land Code, foreign individuals and companies can't own land, with exceptions for companies where foreigners hold no more than 49% of shares, residential land up to one rai in certain cases, and BOI or IEAT concessions.

What are the money and IP terms?

Royalties and franchise fees paid to overseas franchisors carry 15% Thai withholding tax. Advertising and promotional spending required by foreign franchisors may also count as franchise fees subject to the 15% withholding, even when not paid directly to the franchisor, per Supreme Court Judgment 4440/2552 (2009).

Trademark protection runs through registration with the Department of Intellectual Property. A franchisee's recorded use of a mark counts as the franchisor's use, a defence in non-use cancellation actions. Trade secrets fall under the Trade Secrets Act, but enforcement requires demonstrable steps to maintain secrecy. IP licence agreements recorded with the DIP must be translated into Thai; franchise agreements themselves don't.

Other ground rules: no maximum franchise term, minimum resale prices risk violating the Trade Competition Act, and a franchisee located near a proposed new franchise must get the right to operate it before third parties. Non-competes are enforceable if not excessive. Leases cap at 30 years under the Civil and Commercial Code, extendable to 30-50 years under the 1999 commercial leasing act. Thailand is a New York Convention signatory, and electronic signatures are valid under the Electronic Transactions Act of 2001 — though the ICLG still recommends keeping paper copies.

What's next?

No material AI or automation impact on Thai franchising yet, but the ICLG flags the Personal Data Protection Act B.E. 2562 (2019): with the regulator enforcing more proactively in recent months, non-compliant franchisors and franchisees handling personal data face significant fines.