For franchisors and brand licensors operating in Thailand, one problem recurs with uncomfortable frequency: the franchise relationship ends, but the outlets do not. A former franchisee keeps the signage up, the fit-out unchanged, and the doors open — continuing to trade and take orders under a brand it is no longer authorised to use. This note sets out how Thai law lets a brand owner respond, why a trademark claim is often a sharper instrument than a contract claim, and what franchise and chain operators should put in place now to be ready.
The Problem: the Contract Ends, the Outlets Don't
When authorisation is withdrawn, some operators simply continue. Pursuing them on the franchise contract alone is often slow and yields modest relief: a breach claim requires proof of lost expectation profits, the award tends to be limited, and it does little to stop the unauthorised trading quickly. Meanwhile every day the brand stays on an unauthorised storefront, the risk of consumer confusion — and dilution of the brand the franchisor has invested in — compounds.
The Legal Lever: Trademark Rights Outlast the Contract
The more effective route is usually trademark law. Section 44 of the Trademark Act B.E. 2534 grants the registered proprietor the exclusive right to use the mark for the goods and services for which it is registered. Crucially, unauthorised use of that mark can constitute infringement independently of any contract between the parties. That distinction matters in practice:
- Speed — infringement supports an application for an interim injunction, allowing a brand owner to stop the unauthorised use while the case proceeds, rather than waiting for a final contract judgment.
- Scope of damages — beyond contractual loss, a trademark claim can advance the broader harm of consumer confusion and brand dilution, where the court's discretion to assess damages is wider (Civil and Commercial Code Sections 420 and 438).
In short, registered trademark rights let a franchisor recast "the franchise has expired" as "the infringement is ongoing" — a framing that opens the door to faster and more substantial relief.
How This Plays Out in Practice
This scenario is already unfolding in Thailand. According to news reporting, on 26 July 2024 the franchise authorisation of 105 Subway outlets in Thailand was revoked — leaving 51 licensed branches — and some of the de-authorised outlets continued to take delivery orders under the brand, with the brand owner stating that it was pursuing legal action against the unauthorised outlets.
In a situation of this kind, Section 44 of the Trademark Act gives the brand owner a route that does not depend on the franchise contract: unauthorised use of the registered mark can itself constitute infringement, supporting an application for an interim injunction to stop the use quickly and a claim for the broader harm of consumer confusion and brand dilution under Sections 420 and 438 of the Civil and Commercial Code. The strategic move is to anchor enforcement in the registered mark — turning "the franchise has expired" into "the unauthorised use is infringing."
What Franchisors Should Put in Place
The enforcement options above are only as strong as the groundwork laid before a dispute. Franchise and chain operators — particularly Hong Kong and mainland Chinese groups expanding into Thailand — should consider the following:
- Register the core marks and trade dress locally in Thailand, so post-termination enforcement can rest on a statutory exclusive right rather than on the contract alone.
- Draft for the exit — write explicit post-termination cease-use obligations and liquidated damages into the franchise or licence agreement, and include an IP&IT Court jurisdiction or arbitration clause.
- Move early after termination — be ready to apply promptly for an interim injunction and to preserve evidence of consumer confusion while it is fresh.
- Police "ghost outlets" — monitor petrol stations, malls, and similar channels for continued unauthorised use; an incoming licensee or assignee should verify the upstream authorisation chain and avoid taking over already-revoked outlets.
How We Can Help
Lexcelsiam advises franchisors and brand licensors on trademark registration and portfolio strategy in Thailand, on drafting franchise and licence agreements with enforceable post-termination protections, and on infringement enforcement including interim injunctions before the IP&IT Court. To discuss your brand-protection strategy or a specific franchise structure, contact us at business@lexcelsiam.com.
Sources
- Trademark Act B.E. 2534, Section 44 — WIPO Lex official source: https://www.wipo.int/wipolex/en/legislation/details/17164
- Subway Thailand franchise dispute — illustrative background and timeline (news reporting): https://www.nationthailand.com/news/general/40042968