Cambodia Investment Review

Explainer: Franchising in Cambodia 2024 – Navigating Business Expansion in an Unregulated Landscape

Explainer: Franchising in Cambodia 2024 – Navigating Business Expansion in an Unregulated Landscape

Cambodia Investment Review

Amidst the evolving business landscape of Cambodia, franchising emerges as a strategic pathway for enterprises aiming at swift and economical market expansion. Defined by licensing agreements between franchisors and franchisees, this model bestows the latter with the privilege to operate under the franchisor’s trademark and established business practices. Despite the undeniable appeal of franchising in Cambodia, the lack of explicit regulations introduces a dual landscape of challenges and prospects for those entering this dynamic market.

Franchises in Cambodia: Delving into Key Considerations

Before delving into a franchise agreement within the Cambodian market, prospective franchisees are advised to conduct a thorough evaluation of the franchisor’s brand and the proposed franchise system. Opting for a system that offers comprehensive support is paramount, encompassing not only a recognized brand name but also crucial elements such as site selection assistance, training programs, research and development initiatives, and ongoing marketing campaigns.

Read more: Belly Burger, Yellow Cab Pizza, and GēGē Kitchen Enter into Landmark Franchise Agreement Marking New Chapter for Leading Food Brands in Cambodia

Unlike some jurisdictions, Cambodia currently lacks a dedicated legal framework specifically regulating franchises. However, the prevalent use of franchise agreements in business transactions suggests a willingness to engage in this business model. While franchise agreements aren’t explicitly regulated, they fall under the purview of the Trademark Law. To extend their impact beyond the contracting parties, recording with the Department of Intellectual Property at the Ministry of Commerce becomes imperative.

Requirements for Recordal/Registration in Cambodia: Navigating the Legal Landscape

Article 52 of the Trademark Law mandates the recording of any license contract with the Ministry of Commerce, ensuring confidentiality while withholding any effect against third parties until officially recorded. The Sub-Decree on Trademarks provides detailed requirements for submission, including a copy of the trademark registration certificate, a notarized Power of Attorney, and the original or certified copy of the licensing contract.

Practical considerations extend to detailing the identity of both parties involved, specifying the franchise type (exclusive, non-exclusive, single, or third-party), defining the duration of permission, and establishing terms for monitoring the effectiveness and quality of goods or services. Notarization and signatures from both parties are essential elements of a legally binding contract.

Conclusion: Navigating Uncharted Waters with Legal Expertise

Despite the absence of specific provisions governing franchising in Cambodia, the popularity of this business model continues to rise. Operating a franchise in compliance with existing laws, including the Civil Code, Trademark Law, Law on Taxation, and Labor Law, is crucial.

Read more: Lux Realty Begins Franchising Operations

In conclusion, while navigating the uncharted waters of franchising in Cambodia poses challenges, it also presents opportunities for businesses to establish a strong foothold in this dynamic market. Legal consultation with professionals is strongly recommended for both franchisors and franchisees to ensure compliance with existing laws and regulations, ultimately paving the way for successful and legally sound business ventures.

Disclaimer: The information provided is for informational purposes only and does not constitute legal advice. Consult with qualified legal counsel for specific situations.

This article is part of Cambodia Investment Review’s Explainer series. A collection of simple guides to everything you need to know about business and investment in Cambodia.

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