Questions?
We reply within 24 hours, free of charge.
Thailand has no franchise law. A franchise is a contract: the franchisor licenses a brand, a business system and know-how, and the franchisee runs the outlet under it. For a foreigner looking at a franchise in Thailand, the Foreign Business Act B.E. 2542 applies exactly as it would to any other company — the word "franchise" changes nothing. What decides the rules is the business the outlet actually runs. A restaurant, a hotel, a tour business, a language school, and most retail formats fall under the Act's List 3 of restricted services, and a foreign-majority franchisee needs a Foreign Business Licence (FBL), BOI promotion, or, for US nationals, a Treaty of Amity certificate.
In short
- There is no franchise statute in Thailand. Franchising runs on the Civil and Commercial Code, and since February 2020 the Trade Competition Commission's guidelines on unfair franchise practices apply as well.
- The Foreign Business Act looks at what the outlet does, not at the word "franchise."
- Restaurants, hotels, tour businesses and language schools were not among the service activities the government exempted from licensing in 2026.
- A licence to use a trademark registered in Thailand must be in writing and registered with the Department of Intellectual Property under section 68 of the Trademark Act.
- Royalties sent to a foreign franchisor with no business in Thailand generally carry a 15% Thai withholding tax, subject to any applicable tax treaty, and the franchisee separately self-assesses 7% VAT.
Franchises and the Foreign Business Act
Under the Foreign Business Act, a company is "foreign" once foreigners hold half or more of its capital. That single rule — commonly called the 51/49 split — decides whether a company can run a restricted activity on its own or needs a licence. A franchise does not change this test. If your franchisee company is foreign under that definition and the outlet's activity is restricted, the franchise agreement gives you no exemption; the brand is irrelevant to the Act.
This is also where the main risk sits. Some investors are tempted to let Thai nationals hold the majority of shares on paper while the money and the decisions stay with the foreign franchisee. That is a nominee arrangement, which is a criminal offence under section 36 of the Act; running a restricted business without the required licence is a separate offence under section 37. Both carry up to three years in prison and/or a fine of THB 100,000 to 1,000,000, with directors personally liable under section 41. We do not set up nominee shareholders, and we would not recommend a structure built on one.
Restaurant, retail, services: which limits apply
Most franchise concepts that attract foreign investors in Thailand — cafés, casual restaurants, convenience retail, language schools — land on List 3 of the Foreign Business Act: services where the government considers Thai businesses not yet ready to compete with foreign ones. Other outlet types, such as fitness studios, need their own check against the Act before you assume which list applies. The table below matches common outlet types to what a foreign-majority franchisee needs.
| Outlet type | Where it sits under the FBA | What a foreign-majority franchisee needs |
|---|---|---|
| Restaurant or café | List 3 | FBL, BOI promotion or a treaty certificate |
| Hotel | List 3 | FBL, BOI promotion or a treaty certificate |
| Tour business | List 3 | FBL, BOI promotion or a treaty certificate |
| Language school | List 3 | FBL, BOI promotion or a treaty certificate |
| Retail below the capital test | List 3, item 14 | FBL, BOI promotion or a treaty certificate |
| Retail with THB 100 million+ paid-up capital and THB 20 million+ per store | List 3, item 14 | No licence required for this activity |
BOI promotion is listed above as one of the possible routes, but it is not automatic: whether the Board of Investment promotes a particular franchised activity has to be confirmed separately, case by case, before you count on it.
On 28 August 2026 a ministerial regulation published in the Royal Gazette removed the licensing requirement for eight service businesses — among them certain telecom services and intra-group administrative and treasury functions. It did not touch restaurants, hotels, tour businesses or language schools. The Department of Business Development's director-general said in September 2026 that reports claiming otherwise were mistaken; those activities stay on List 3 as before.
Structure: Thai company, BOI or an FBL
Once you know which list your outlet falls under, there are a few lawful ways to structure the business:
- Foreign Business Licence (FBL). Minimum capital of THB 3 million for List 2 and List 3 activities. The law gives the authority 60 days to decide, extendable by another 60, but in practice an FBL takes about 4 to 8 months.
- BOI promotion. A Board of Investment certificate under section 12 exempts most of the Act's restrictions for the promoted activity.
- Treaty of Amity. Available to US nationals, with its own certificate process; whether a particular company qualifies needs checking separately.
- A genuinely Thai-controlled company. Thai shareholders hold more than half of the capital and pay for their shares with their own money — not a nominee arrangement.
If you plan to run the outlet yourself, day to day, you will also need a work permit tied to that employer under the Foreign Workers Management Emergency Decree B.E. 2560 (2017); owning shares in the company does not give you the right to work in it. Our lawyers start by checking which FBA list covers the specific outlet's activity, then compare the FBL, BOI and Thai-control routes against your plans before recommending one of them.
Since 1 August 2026, under DBD Order 2/2569, a company where foreigners hold less than 50% or where a foreigner is an authorised director files an investment explanation letter, three months of bank statements for each Thai shareholder, and a statement of the company's own receiving account with the registration. Our guide on registering a company in Thailand covers that filing in detail, and our company registration service, without nominee shareholders, walks through it step by step. See a typical scenario showing how genuine shareholding can be documented for a DBD review: how real shareholders were documented at a DBD review.
The franchise agreement: what to check
Thailand has no statute specific to franchise contracts, but since February 2020 the Trade Competition Commission's guidelines on unfair practices in franchise business apply to the relationship between franchisor and franchisee. Before you sign, check that the agreement covers:
- Disclosure before signing — the fees and costs you will pay, the franchisor's business plan for the territory, nearby outlets already operating or planned, and the trademarks and other IP being licensed to you, with their licence terms.
- Unfair terms — the guidelines treat several practices as unfair unless the franchisor has a justifiable reason for them; a one-sided clause with no explanation is worth questioning.
- New outlets nearby — the guidelines also address what happens when the franchisor opens another outlet close to yours; the agreement should spell out your protection, if any.
- The trademark licence — a licence to use a registered Thai trademark must be in writing and registered with the Department of Intellectual Property under section 68 of the Trademark Act. Failure to register may affect the enforceability of the licence. Do not assume that a foreign governing-law clause resolves this — have the licence reviewed before relying on it.
- Renewal and termination — the conditions for each, and what happens to your fit-out and stock if the agreement ends.
- Marketing fund contributions — Thai courts have treated these payments as part of the royalty for tax purposes, not as a separate cost.
We check whether the trademark licence underlying your franchise is actually registered with the Department of Intellectual Property before you rely on it: failure to register may affect the licence's enforceability, so have its registration status and terms reviewed before relying on it.
Royalties and withholding tax
A royalty paid to a franchisor that does not do business in Thailand carries a 15% Thai withholding tax. A tax treaty between Thailand and the franchisor's home country can reduce that rate, but the reduction — and whether there is one at all — depends on the specific treaty, so it is worth checking before you sign a royalty schedule rather than after.
Separately, the Thai franchisee self-assesses 7% VAT on the royalty, filed on form PP.36 for the month the payment is actually made, as the Revenue Department's rulings set out. This VAT is on top of the withholding tax, not instead of it. We suggest working out the royalty together with the withholding tax and the VAT before you sign, so the numbers in your business plan match what will actually leave the business each time a payment is due.
What to do next
Before you commit to a franchise fee, work through the pieces in order: confirm which FBA list covers the outlet's actual activity, choose the structure that fits — Thai-controlled company, FBL, or BOI promotion — and have a lawyer review the franchise agreement itself, including the trademark licence and the royalty terms. Registration comes last, once the structure and the contract are settled, not before.
Our team can walk through this with you from the first step. We will tell you which list applies to your outlet, what structure is realistic for your situation, and what to raise with the franchisor before you sign. If you are still deciding whether to franchise or build your own concept from scratch, our page on opening a business in Thailand with a lawyer covers the broader picture, including the work permit for yourself as the owner-operator. We prepare the documents in two languages and agree the fee with you before work starts.
