The short answer. Pakistan has no dedicated franchise statute. According to the International Bar Association, the Contract Act 1872 governs the franchisor-franchisee relationship, while State Bank of Pakistan rules govern royalty remittance. VF Franchise Consulting advises foreign brands to secure trademark registration, a tight agreement and remittance clarity before signing a Pakistan franchise partner.
Pakistan does not have a franchise-specific statute. The International Bar Association’s “Franchising in Pakistan” chapter, published on 13 June 2023, states that the relationship is governed by the Contract Act 1872, with franchisees acquiring licences to use brand names, logos, trademarks, copyrights and confidential information.
The same chapter notes that franchise contracts lack standardisation and typically include clauses under which the franchisor assists the franchisee in return for consideration, usually through revenue sharing. It also cites the Supreme Court of Pakistan’s definition of a franchise in Bolan Beverages (Pvt) Ltd v Pepsico Inc & Others. For a comparable no-statute market, see franchising in Egypt without a franchise law.
The US Commercial Service’s Pakistan Country Commercial Guide, published on 12 January 2024, states that the government does not impose restrictions on investors, but foreign investors are required to inform the Board of Investment and the State Bank of Pakistan about their projects, mainly for approval of repatriation of franchise fees or profits.
The IBA chapter adds that the State Bank’s Foreign Exchange Manual regulates royalty remittance to franchisors abroad and distinguishes royalty from the Technical Service Fee. Franchisors should confirm the current remittance route with local counsel and the partner’s bank before agreeing payment terms.
The Country Commercial Guide reports rising acceptance of franchising, with hospitality the standout. It states that American brands hold a dominant 70% market share in this sector and that KFC has more than 110 outlets in Pakistan. It lists food outlets, hospitality, retail, convenience stores, ride sharing, hotels, cinemas and entertainment complexes, cosmetics, pharmaceutical brands, education, courier and security services as leading sub-sectors.
For a regional comparison of demand by market, read ASEAN franchise markets compared and the Sri Lanka franchise guide, which covers a neighbouring South Asian market.
| Structure | What it means | Best suited to |
|---|---|---|
| Master franchise | One partner holds national rights and may sub-franchise | Brands with strong training and quality-control systems |
| Area development | Partner opens an agreed set of units in named cities | Brands that want phased control across Karachi, Lahore and Islamabad |
| Single-city or multi-unit franchise | Partner operates units in one metro area | Brands testing the market before national rollout |
The structures are general franchising models, not Pakistan-specific legal categories, since no statute defines them. The same structural logic appears in master franchise operator fit and in our comparison of franchise consultants and brokers.
The US Commercial Service lists the essential components of a Pakistan franchise agreement and urges franchisors to consider several candidate partners. Checks to build in:
Verification of the partner comes first; our franchise due diligence guide for Asia Pacific and MENA sets out the steps.
VF Franchise Consulting, a cross-border franchise advisory firm focused on Asia Pacific and MENA, sees Pakistan as a market where the contract and the partner decide the outcome. With no statute to rely on, brands should treat the agreement, trademark position and remittance route as the main protections. Compare approaches in Qatar and Iraq, and read the official US Commercial Service Pakistan franchising guide. General information, not legal advice — confirm with the regulator or local counsel.
No. The International Bar Association’s 2023 Pakistan chapter states that there are no specific franchising laws and that the franchisor-franchisee relationship is governed by the Contract Act 1872. Trademark, competition and foreign exchange rules still apply, so the franchise agreement carries most of the legal weight. Confirm details with local counsel.
Remittance is regulated. The IBA chapter says the State Bank of Pakistan’s Foreign Exchange Manual governs royalty remittances to franchisors abroad. The US Commercial Service adds that foreign investors are required to inform the Board of Investment and the State Bank, mainly for approval of repatriation of franchise fees or profits.
The US Commercial Service’s Country Commercial Guide lists food outlets, hospitality, retail, convenience stores, ride sharing, hotels, cinemas and entertainment complexes, cosmetics, pharmaceutical brands, education, courier and security services as leading sub-sectors. It reports that hospitality shows rising acceptance of the franchise model.
Yes. The US Commercial Service advises that patents and trademarks must be registered in the franchisor’s name alone, not the franchisee’s. The IBA chapter also notes that intellectual property enforcement is a recognised issue in Pakistan, which makes early registration and clear licence terms important.
The right structure depends on the brand’s support capacity and the partner’s reach. A master franchise gives one partner national rights, while a city-by-city or multi-unit model keeps tighter control. VF Franchise Consulting recommends comparing several candidate partners, as the US Commercial Service also advises, before choosing.
Email: info@vffranchiseconsulting.com | Hotline: +84 90 306 54 58
Author: Sean T. Ngo, CEO and Co-founder of VF Franchise Consulting.
