<p>In Nepal, both global and national brands can run franchise businesses. Foreign Investment and Technology Act 2019 (2075)&nbsp;<strong>(</strong><a href="https://investmentpolicy.unctad.org/investment-laws/laws/313/nepal-foreign-investment-and-technology-transfer-act-2019-2075-#:~:text=(1)%20Any%20industry%20incorporated%20in,1)%20shall%20be%20as%20prescribed."><strong>FITTA</strong></a><strong>)</strong>; Patent, Design, and Trademark Act 1965 (2022)&nbsp;<strong>(</strong><a href="https://www.lawcommission.gov.np/en/wp-content/uploads/2018/10/patent-design-and-trademark-act-2022-1965.pdf"><strong>PDTA</strong></a><strong>)</strong>; Foreign Exchange (Regulation) Act 1962&nbsp;<strong>(</strong><a href="http://www.investnepal.gov.np/portal/index.php?p1=download&amp;f=cmVzb3VyY2VfMzlmYjEwM2IwYWIyODQucGRmOjpGb3JlaWduIEV4Y2hhbmdlIChSZWd1bGF0aW9uKSBBY3QucGRm#:~:text=provisions%20on%20the%20foreign%20exchange,4.&amp;text=No%20person%20shall%2C%20without%20obtaining,person%20other%20than%20the%20licensee."><strong>FERA</strong></a><strong>)</strong>&nbsp;govern, regulate and control foreign brand franchise process and operates business in Nepal.</p><p>&nbsp;</p><h3><strong>The Procedure of Franchising of International Brand</strong></h3><p>&nbsp;</p><p>One must complete certain procedures to properly regulate the business when franchising an international brand in Nepal. Registering a foreign brand as a local brand is necessary when franchising it in a particular country, as independent registration of foreign trademarks is not allowed.</p><p>&nbsp;</p><p>In Nepal, Foreign Direct Investment and limits are restricted under some rules of payment and related laws:</p><ul><li>Registration of <a href="https://nepaltradeportal.gov.np/contents?p_p_id=ntipportlets_WAR_tepc&amp;p_p_lifecycle=0&amp;p_p_state=normal&amp;p_p_mode=view&amp;_ntipportlets_WAR_tepc_param=displayProcedure&amp;id=23">Trademark</a> of Foreign Brand in the Department of Industry</li><li>Execution of Franchise Agreement with Foreign Company and Local Company</li><li>Approval of Franchise Agreement and Related Agreement if any from the Department of Industry</li></ul><p>&nbsp;</p><p>Initially, it is better to research the market demand and find the perspective market solution. Research about the interest and franchise options of the <a href="https://www.biznestbazaar.com/blog/advantage-of-buying-registered-business-in-nepal">business</a> is also important. Before entering into the franchise agreement, one must measure the business agreement, regulations, and organization requirements based on the standards.</p><p>&nbsp;</p><p>Keep in mind,</p><ul><li>It requires 9 to 13 months for trademark registration in Nepal.</li><li>Unless the organization registers the trademark of the foreign brand, the department of the industry will not approve a franchise agreement.</li><li>Legitimacy and protection of the trademark are not considered if the organization does not register the foreign trademark locally in the Department of Industry.</li><li>Registering the original trademark of the foreign brand, without any changes, is necessary in a foreign jurisdiction.</li></ul><p>&nbsp;</p><p>Any sector where foreign investment is permitted offers franchises. Nepalese sectors with limited foreign investment also allow franchises. Cultural differences, political instability, policies, infrastructure, and many more affect the franchise in Nepal.</p><p>&nbsp;</p><p>Also read: <a href="https://www.biznestbazaar.com/blog/advantage-is-buying-pre-registered-companies-in-nepal">Advantage is Buying Pre-registered Companies in Nepal</a></p><h3>&nbsp;</h3><h3>Documents required for franchising process</h3><p>&nbsp;</p><ol><li>Original copy of the application of licensing of foreign brand.</li><li>A notary certified copy of foreign registration certificate of licensor including memorandum and article of association of the foreign company</li><li>Certified copy of the translation of <a href="https://cleartax.in/s/memorandum-of-association-moa">MOA</a>, <a href="https://www.thecorporategovernanceinstitute.com/insights/lexicon/what-are-articles-of-association/#:~:text=Articles%20of%20Association%20are%20rules,on%20the%20rights%20of%20shareholders.">AOA</a> and incorporation in the Nepali language</li><li>Two copies of the franchise agreement and other agreements if any exist</li><li>A copy of the certificate of incorporation including memorandum and article of association of a local company</li><li>A copy of bio-data and complete company profile with detailed information and citizenship of the foreign party</li><li>Copy of the industry registration certificate of a local company, information of authorized representative in Nepal</li><li>A copy of the minute of the board of the local company and foreign company</li><li>Copy of the power of attorney</li></ol><h3>&nbsp;</h3><h3><strong>Licensing term period and rate of royalty of foreign trademark (franchise)</strong></h3><p>&nbsp;</p><p>There is no particular regulation for the foreign trademark license instead, <a href="https://doind.gov.np/">DOI</a> permits trademark licensing for a period of 5 years and can be renewed upon request for the same period of time by issuing an application.</p><p>&nbsp;</p><p>Similarly, the royalty fee is also not specified by any governing law. DOI limits the rate of royalty based on the gross sale or net profit to 1% up to 5%.</p><p>&nbsp;</p><p>There is a requirement to limit the use of foreign or domestic trademarks, not exceeding 10% of net profit or 6% of the selling price for royalty or licensing fees in the production of liquor and beer (excluding government tax).</p><h3>&nbsp;</h3><h3><strong>Fee for the repatriation of licensing fee</strong></h3><p>&nbsp;</p><p>With the approval of <a href="https://www.nrb.org.np/">Nepal Rastra Bank,</a> the licensor of a foreign trademark can repatriate licensing or royalty fees abroad by selling the share or products under the prevailing law of Nepal after the clearance of taxes and accordance with the prevailing law of Nepal.</p><p>&nbsp;</p><p>The major documents necessary for the approval of foreign trademark licensing are a franchise agreement, a document indicating computation of the amount due to the foreign technology supplier certified by an auditor, and a certificate of payment of income tax on royalty.</p><h3>&nbsp;</h3><h3><strong>The amount that can be repatriated to the respective country for foreign investment</strong> are:</h3><p>&nbsp;</p><ul><li>Amount received from the sale of a share or whole investment</li><li>Profit or dividend earned from the franchise business</li><li>The interest of the foreign loan or the principal amount and</li><li>Other concerned currency approved by the department of industry</li></ul>

Franchise of foreign brand business (in context of Nepal )

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