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Watertight contracts for franchise business a must

Sangeetha Amarthalingam / Khmer Times Share:
Liow Yeekai, lawyer at Kelvin Chia Partnership. KT/Sangeetha Amarthalingam

Franchise businesses are viable investments in Cambodia as disposable income rises in tandem with Cambodia’s economic growth, but with the absence of laws governing this business segment, investors are urged to draw up watertight contracts.

“There is no specific franchise law and some international companies are put off by that. However, this can be overcome by having a robust and comprehensive franchise agreement between the parties because there are no ministries or regulatory bodies that oversee this industry,” said corporate lawyer Liow Yeekai with Kelvin Chia Partnership (Cambodia) Ltd.

The legal firm partner said it is important to have a solid legal contract that specifies how franchisees must perform to avoid disagreements.

“The contracts should cover ways to resolve disagreements to ensure sustainability and efficiency. In addition, the contracts can be registered at the Ministry of Commerce as a license agreement to provide further protection to the franchisor,” he added.

Speaking at the ‘Entrepreneur Cambodia’ event organised by Phillip Bank Plc on Friday, Mr Liow said that, in addition to the food and beverage (F&B) sector, the franchise business in Cambodia is expanding into real estate and education, with rising interest from Asian F&B corporations.

Phillip Bank general manager Han Peng Kwang said the inaugural event was held to gather its investor clients to collaborate and network while appreciating their relationship with the bank.

Meanwhile, 30-year-old entrepreneur and investment coach Cheth Serey Sopheak advised his peers to go into the online cosmetics business, which he said is likely to boom in the next two years with Thailand’s growth.

“The business to go into now is cosmetics. When the economy is good and people have lots of money, lifestyle counts. They want to be healthy, look good and eat well,” said Mr Sopheak, who made his first million at the age of 18.

The self-made businessman is involved in five areas of business, including a coffee franchise, an original equipment manufacturing plant for pharmaceuticals and cosmetics, real estate and an investment consultancy.

“I recommend they start with something easier. I advise my customers who want fast returns or cashback from investments to go into the online business as there are lots of opportunities and it needs less capital,” he added.

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