Licensee Issues in Thailand: Post-Termination Experiences

Thailand has long been a popular country for companies to have goods manufactured. It has a skilled labor force, especially when it comes to apparel, and it offers competitive labor costs. But it is vital to have strong license agreements in place when authorizing such companies to manufacture and/or distribute your goods to ensure that these benefits do not suddenly turn into problems.

For one reason or another, most license arrangements come to an end. However, care must be taken to ensure that the licensed activities also come to an end. A common problem in Thailand, and indeed in Asia, is that ex-licensees will continue to manufacture, distribute, or sell the goods following termination of the agreement. It is important to have very clear termination and phase-out clauses in the license agreement so that each party knows exactly what they are allowed to do following termination.