Franchise Law in Nepal (2025)

Franchise law in Nepal refers to the set of legal rules and contract frameworks that govern the relationship between a franchisor (brand owner) and a franchisee (local operator). Nepal does not have a standalone “Franchise Act,” but multiple legislations interplay to regulate franchise operations.

Franchising in Nepal has seen a surge in popularity, particularly with the expansion of international and national brands across sectors like food, retail, education, and wellness. At Moksha Legal Group, we assist businesses in navigating Nepal’s franchise legal framework with a razor-sharp focus on licensing, intellectual property, taxation, and regulatory compliance. This article provides an in-depth legal analysis of franchise law in Nepal, optimized for business owners, legal advisors, and foreign investors seeking clarity and guidance.

1. Franchise Law in Nepal

In Nepal, franchising is categorized as a form of “technology transfer” under Section 3(f) of the Foreign Investment and Technology Transfer Act, 2019 (FITTA).

As per FITTA, technology transfer includes agreements between a foreign investor and a local industry concerning the licensing of technology, sharing of technical expertise, or utilization of proprietary knowledge (franchise).

2. Laws Regulating Foreign Franchise in Nepal

The key legal provisions regulating foreign franchise in Nepal include:

• Foreign Investment and Technology Transfer Act, 2019 (FITTA)
• Patent, Design, and Trademark Act, 1965 (PDTA)
• Foreign Investment and Technology Transfer Regulations, 2020 (FITTR)

3. Process for Franchising an International Brand

Under FITTA, the steps for establishing a franchise of an international brand in Nepal are as follows:

Franchising Process in Nepal

Step 1: Register the trademark (foreign brand) with the Department of Industry (DOI).

Step 2: Enter into a franchise agreement between the foreign company and the local business entity.

Step 3: Obtain approval for the franchise agreement and any associated agreements from the DOI.

Important Considerations:

• Trademark registration in Nepal typically takes between 9 to 12 months.
• Franchise agreements for foreign brands cannot receive DOI approval unless the trademark has been duly registered.
• Without trademark registration, foreign brands do not receive legal protection in Nepal.

4. Sectors Allowed for Foreign Franchises

Unlike general foreign investment, FITTA does not impose restrictions on specific industries for franchise businesses.

5. Investment via Technology Transfer

FITTA permits foreign investments through technology transfer agreements. Section 7 of FITTA stipulates:

“A foreign investor may invest in any industry through a technology transfer agreement with the respective industry.”

However, such agreements are subject to certain conditions:

• The repatriation of royalties must comply with prescribed limits.
• Approval must be obtained from the relevant foreign investment authority.

6. Required Documents for Franchising a Foreign Brand in Nepal

The following documents must be submitted to establish a franchise in Nepal:

1. An original copy of the application for licensing the foreign brand (1 Copy)
2. Passport of the foreign partner or a company registration certificate of the licensor, including its memorandum and articles of association (1 Copy)
3. Franchise agreement or any other related agreements (2 Copies)
4. Certificate of incorporation, including the memorandum and articles of association of the local franchisee (1 Copy)
5. Profile or bio-data of the foreign investor (1 Copy)
6. Latest audit report and tax clearance certificate (1 Copy)
7. Industry registration certificate of the local franchisee (1 Copy)
8. Copies of board resolutions from both the local and foreign companies concerning the execution of the franchise agreement and related approvals (1 Copy)
9. Power of Attorney (1 Copy)

7. Royalty Structure for  Technology Transfer and Franchising

The Foreign Investment and Technology Transfer Regulations (FITTR) under Schedule 1 set the following royalty rates for technology transfer and franchising:

General Technology Transfer

Trademark Usage Only

This legal framework ensures a structured process for foreign franchises, safeguarding intellectual property rights while promoting investment opportunities in Nepal.

8. Conclusion

Moksha Legal Group provides comprehensive legal services for foreign brand registration in Nepal, assuring seamless compliance with local trademark regulations. Their skilled legal staff supports with the entire process, from application to approval, while safeguarding your brand’s identity and intellectual property rights. Moksha Legal Group is the right partner for businesses looking to expand and secure their brand in Nepal, as they are committed to professionalism, prompt service, and transparent pricing.