The Experiences of Franchise Business Regulations in the United States, the European Union and South Korea: Lessons for Thailand

Abstract

Franchise is a business system which is increasing and becoming popular in both Thailand and foreign countries. Franchise business occurs through franchise agreement to distribute goods and services between franchisor and franchisee. Franchisee conducts his business by franchisor’s knowledge and trademark then pays franchise fee in return. Generally, franchisor has more bargaining and market power to impose such the unfair contract terms in the franchise agreement. Those terms may take too many advantages from other party and becomes illegal. It has been found from the study that currently Thailand has no specific law regulating franchise business. Thailand regulates franchise business by the Civil and Commercial Code, the Unfair Contract Term Act and the Competition Act. Through this study, the experiences of franchise business regulations in the United States and South Korea are effective in the aspect of the specific law regulating franchise business. Franchisors are required to disclose the substantial information. Moreover, both countries have the commission to look after the fairness in franchise business particularly. As for the competition law in the United States, the European Union and South Korea are effective and franchise businesses are applicable. In order to improve the franchise business regulation in Thailand. While the franchise specific law is in the developing process, making guideline for franchise business in Thailand is recommended. This guideline contains all essential information and in the respect of clarifying the unfair contract term provision. The guideline will play the substantial role by combining franchise specific law and competition law together.