The core answer
Ending a distributor agreement in Thailand is mostly a contract exercise, not a statutory one. We found no Thai statute that gives a terminated distributor compensation or goodwill, or that forces a supplier to buy back stock. What each side can do depends on how the agreement is written, on whether the relationship is really a distributorship or an agency, and on who holds the brand, the approvals and the customer relationships on the day notice is given.
The rule (Civil and Commercial Code and Trademark Act). An agency contract ends when the principal withdraws the agent or the agent gives notice, and either may do so at any time (CCC sections 826 and 827). A distributor who buys and resells in its own name is usually not an agent, so the contract and the general rules on ending a contract for breach (CCC sections 386 to 394) govern. A trademark licence must be in writing and registered with the Registrar (Trademark Act section 68), so the licence record, not only the distribution contract, has to be dealt with.
Our practical view. Before you send any notice, check four things: what the contract says about notice and stock, whose name is on the trademark and the Thai FDA approval, who controls the domain and social accounts, and what customer data the distributor holds. If you cannot answer all four, you are not ready to terminate. Many foreign suppliers in particular discover on termination day that the approval or the page belongs to the distributor.
For choosing between a distributor and your own entity at the start, see Do you need a Thai company to sell here. This guide covers the exit.
1. Is the counterparty a distributor or an agent?
The label in the contract does not decide this. The substance does.
- Agent. The Code defines an agency as a contract by which one person, the agent, has power to act on behalf of another, the principal, and agrees to do so (CCC section 797). The agent signs deals that bind the principal. The sale contracts are between the principal and the customer.
- Distributor. The distributor buys goods from you, takes title, and resells in its own name and at its own risk. The sale contracts with customers are the distributor's own.
Why it matters on exit: agency has its own rules on ending the relationship (below), while a distributorship is governed by the agreement plus general contract law. Many Thai "distributor" contracts mix both, for example a distributor who also takes orders in your name. The mixed features should be identified before you choose the termination route.
This is our reading of the statutory definition, not a rule from a particular decision. Where the facts are mixed, take advice before you rely on either label.
2. How can the agreement end?
| Route | What to check | Main risk |
|---|---|---|
| Expiry of the fixed term | Renewal clause, automatic renewal, notice of non-renewal | Missing the non-renewal date and rolling over another term |
| Termination by notice without cause | Notice period, form of notice, any payment on early exit | Notice that does not follow the contract is itself a breach |
| Termination for breach | Which breaches count, cure period, written notice | Calling a minor issue a material breach |
| Agency withdrawal | CCC sections 826 and 827: either side may end it at any time | The side that ends it at a time inconvenient to the other is liable for the resulting loss, unless it was unavoidable (section 827) |
| Mutual agreement | Signed termination agreement covering stock, brand and data | Gaps left open that reopen the dispute later |
Ending for breach. The Code sets the method for ending a reciprocal contract for breach (sections 386 to 394, described in the Council of State's contract-law memorandum 404/2525). In practice: identify the clause breached, give written notice, allow the cure period in the contract or a reasonable period, then give written notice of termination. Keep proof of delivery. If you terminate without a real breach, the distributor can claim that you are the party in breach.
Agency. Because sections 826 and 827 allow either side to end an agency at any time, an agency contract with a fixed term does not stop the principal from withdrawing the agent. However, section 827 makes a party who withdraws or resigns at a time inconvenient to the other side liable for any resulting loss, unless it was unavoidable. A contract that promised a term can add a further claim, so read the contract before relying on the right to withdraw.
Hypothetical example. A foreign skincare maker has a three-year exclusive distributor contract that allows termination on 90 days' written notice. It sends a one-line email saying "we are ending the agreement next month". Notice by email may not meet the contract's notice clause, 30 days is less than 90, and the maker has said nothing about stock. The distributor can say the termination is defective and claim loss for the balance of the notice period. The same result is avoided by a formal notice, the full period, and a stock plan.
3. What happens to the stock?
If the distributor bought the goods, it owns them. Without a contract term, you cannot simply order it to stop selling or to hand stock back. This is why the agreement should deal with stock before the relationship ends.
| Situation | Usual approach | Point to settle in writing |
|---|---|---|
| Contract has a buy-back clause | Follow it | Cut-off date, condition, price formula, who pays freight |
| Contract is silent | Negotiate a stock count and price | Sell-off period or buy-back, not both left open |
| Stock is near expiry or discontinued | Shorter sell-off period, or buy-back at a discount | Shelf-life, recall responsibility, returns of damaged goods |
| Goods are regulated (food, cosmetics, devices) | Stock keeps the label and approval details it was imported with | Who handles recalls and complaints after termination |
| Distributor holds a large unpaid balance | Offset buy-back against what is owed | Set-off clause; see unpaid invoices from business customers |
Practical points:
- Agree a joint stock count on a fixed date, with photographs and a signed list.
- Decide the buy-back price formula in advance, for example the invoice price less a stated percentage for handling.
- If the distributor may sell off stock, set an end date, price floor and channel limits, so old stock is not dumped online.
- State who is responsible for after-sales service and warranty on goods already sold.
4. Who keeps the brand?
Three separate things sit under "the brand":
- The trademark registration. Check the register. If the brand owner never registered, or if the distributor registered in its own name, the supplier may have no right to stop it from using the mark. Register in your own name before the relationship breaks down. See trademark registration in Thailand and brand and trademark ownership when setting up a Thai company.
- The trademark licence. Under the Trademark Act, the owner of a registered mark may license another person to use it, but the contract must be in writing and registered with the Registrar. The Department of Intellectual Property guide says the application must show the quality-control terms and the goods covered, and states a registration fee of 2,000 baht (check the current fee). If your distributor uses the mark beyond simple resale of your genuine goods, find out whether a licence was registered, and check with the Department how an ended licence is dealt with on the record. The guide also notes that a licence ends if the mark registration itself is revoked (section 76).
- Online assets. Domain names, social media pages, LINE Official Accounts and marketplace stores opened by the distributor may be in the distributor's name. See what to do when an agency will not return the Facebook page, LINE OA or domain for the practical steps. The agreement should say who owns each asset and require transfer of credentials on termination.
5. Who holds the FDA approval or notification?
For food, supplements, cosmetics and medical devices, the approval is held by a named business in Thailand. If your distributor is that holder, the approval does not move to a new distributor just because the contract has ended. Our guides explain the issue for food, supplements and devices and for cosmetic notification holders.
We have not set out the agency's procedure for changing a holder in this guide, because it differs by product category. Check with the Thai FDA, or with us, before you give notice. The practical rule is simple: do not terminate until you know who the holder is and how a change of holder or a new filing will work, and until you have a plan for how the products stay legally on sale in between.
6. Customers, customer lists and personal data
- Who owns the relationship? Usually the distributor sold to its customers in its own name. Unless the contract says the customer list belongs to you, or requires the distributor to share it, you may have no right to it.
- Personal data. A list of named individual customers is personal data. Each side that decides how it is used is generally a data controller under the Personal Data Protection Act, with duties on purpose, notice and security. A supplier should not simply demand a copy of the distributor's customer list without a lawful basis and a clear purpose. See our PDPA compliance checklist.
- Non-solicit and non-compete. The contract may restrict the distributor from approaching your customers or representing a competitor after termination. We have not verified a particular Supreme Court rule on how far such clauses are enforced, so draft them narrowly: a short period, a defined territory and a defined product range. Broad restrictions are the ones most likely to be challenged.
- Orders in progress. Decide who fulfils open orders, warranty claims and deposits.
7. Competition law
Thailand's Trade Competition Act 2017 contains rules on unfair trade practices that can apply to a supplier with market power. We did not verify the section text or the tests for this guide. If your company has a large share of the Thai market, or your distributors depend heavily on you, ask for advice on competition law before you refuse to renew or terminate.
8. A transition plan that works
| When | What to do |
|---|---|
| Before notice | Read the contract. Search the trademark register. Identify the FDA holder. List domains, pages and accounts. Check any customer data you hold. |
| Day of notice | Send the written notice by the method the contract requires. Keep proof of delivery. |
| Notice period | Joint stock count. Hand-over of marketing material and credentials. Introduce the new distributor to key accounts only as the contract permits. |
| End date | Sign a termination agreement covering stock, payments, data deletion or return, and confidentiality. |
| After | Update the trademark licence record if one exists. Close the old distributor's access to portals and platforms. Cancel authorisations. |
9. If the other side does not cooperate
Start with a written demand that names the clause, states what you require and sets a deadline. A demand letter is evidence of what was asked and when. See demand letters. Keep the tone factual. Statements about the former distributor to its customers should be accurate, since careless statements can create liability of their own.
Checklist
- Read the distributor agreement: term, notice, breach, cure, stock, post-termination clauses.
- Decide if the relationship is distributor, agent or mixed.
- Search the trademark register and any licence record.
- Identify the Thai FDA holder for each product.
- List domains, social accounts, LINE OA and marketplace stores and who controls them.
- Check what customer data each side holds and for what purpose.
- Plan stock: count date, buy-back or sell-off, price formula.
- Draft the notice and the termination agreement.
- Plan the transition to the new distributor or your own entity.
- Take advice on competition law if you hold market power.
Further reading
- Do you need a Thai company to sell here? Distributor or own entity
- Brand and trademark ownership when setting up a Thai company
- Agency will not return the Facebook page, LINE OA or domain
- Cosmetic notification: who should be the holder
- PDPA compliance checklist
Settle who holds the stock, the trademark, the approval and the customer data before you give notice, and put the exit terms in the agreement while the relationship is still good.
We advise manufacturers, importers and distributors on distributor agreements, termination and brand protection. Initial consultation is free — call +66 92 254 2045 or send us the details. See also contracts and documents, trademark registration, demand letters and our business law practice.
This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.
