Franchise

Cambodia has no dedicated franchise law. Franchising is governed by laws of general application, principally the Law on Marks, Trade Names and Acts of Unfair Competition (the “Trademark Law”) and the contract rules of the Civil Code. A Law on Commercial Contracts, expected to include provisions on franchise agreements, has been under preparation at the Ministry of Commerce for a number of years.

Is a franchise agreement valid without registration?

Yes. A franchise agreement is valid and enforceable between the franchisor and the franchisee whether or not it is recorded. Recordal with the Department of Intellectual Property Rights of the Ministry of Commerce is what gives the agreement effect against third parties, for example where the franchisee needs to act against an infringer of the licensed marks. Cambodian courts also give considerable weight to officially recorded documents, so recordal is recommended.

Trademark requirements

• The franchisor’s marks should be registered in Cambodia before the franchise is granted. Cambodia has been a member of the Madrid Protocol since 2015. See Trademark Registration.
• Under Article 19 of the Trademark Law, any trademark license, including a franchise agreement that contains one, must require the licensor to exercise effective control over the quality of the goods or services.
• Under Article 52, license contracts are recorded with the Ministry of Commerce. The contents of the contract remain confidential.

Documents for recordal

Under the Ministry of Commerce Notification on License Contracts and Franchise Contracts of March 12, 2015, and current practice, an application to record a franchise agreement generally includes:

• The prescribed request form;
• The franchise agreement signed by the parties, or a notarized copy. In practice a short-form trademark license or a summary extract may be filed in place of the full agreement;
• A Khmer translation of the document filed;
• The certificates of trademark registration issued in Cambodia;
• A notarized power of attorney if an agent is appointed; and
• Company registration documents of the Cambodian franchisee.

Points to address in the agreement

• Disclosure: Cambodian law does not require pre-contract disclosure, but all information given to the franchisee must be accurate.
• Governing law: the parties may choose a foreign governing law, although local courts may be reluctant to apply it, and some matters such as advertising approvals, real estate and zoning are governed by Cambodian law in any case.
• Dispute resolution: foreign court judgments are generally not enforceable in Cambodia, so arbitration is commonly chosen. See Dispute Resolution FAQ.
• Competition: exclusivity and non-competition clauses should be reviewed against the 2021 Law on Competition.
• Tax: royalties and fees paid to a non-resident franchisor are subject to withholding tax. See Taxes – FAQ.

Recordal practice at the Department of Intellectual Property Rights changes from time to time. Franchisors should confirm the current document requirements before filing.