The first franchise question is not simply “how do I register?” It is whether the brand, know-how and payment flow are domestic or foreign. A local franchise and a foreign franchise can both need a sound contract, a lawful operating business and brand protection. But a foreign arrangement may also fall within Nepal’s foreign-investment and technology-transfer framework. That distinction matters before anyone assumes DOI approval is required. See the foreign-franchise route and technology-transfer approval guide for that narrower analysis.
For the overall route, see the franchise registration guide. This comparison focuses on the fork in the road.
The short comparison
| Issue | Domestic franchise | Foreign franchise or foreign technology transfer |
|---|---|---|
| Core arrangement | A Nepal-based brand owner licenses its system to a Nepal operator. | A foreign provider licenses a brand, know-how, process, services or franchise system to a Nepal industry. |
| DOI technology-transfer route | Not automatic merely because the arrangement is called a franchise. | FITTA expressly includes franchise in its technology-transfer definition; the structure must be assessed against the Act and applicable approval route. |
| Payment direction | Commercial payments generally remain within Nepal. | Royalty or similar outward payment needs the approved basis and foreign-exchange process. |
| IP review | Confirm who owns the mark and who may use it. | Also confirm Nepal trademark evidence and the TTA-file implications where a trademark is included. |
| Other licences | Activity-specific permits can still apply. | The same sector permits can apply, in addition to the foreign/technology-transfer analysis. |
Which Route Fits You?
Something very practical:
- Nepal brand + Nepal operator → domestic franchise route
- Foreign brand + Nepal operator + trademark/know-how/services → foreign/TTA analysis
- Foreign payment/royalty → foreign-exchange layer also matters
- Regulated business → sector licence applies regardless of route
Why the source of the franchise matters
Section 2(f) of the Foreign Investment and Technology Transfer Act, 2019 (FITTA) includes the use of technological knowledge, including a franchise, within “technology transfer.” It describes an agreement between an industry and a foreign investor concerning, among other things, a trademark, goodwill, formula or process, licence, know-how, or foreign technical, management or marketing services.
That is a targeted foreign-provider framework. It is not a rule that every agreement between two Nepal parties is a DOI technology-transfer application. FITTA section 3(2) addresses a technology transfer to an industry in the Schedule made with DOI approval where the industry is established with Nepali investment; section 7 addresses foreign investment through technology transfer. The actual parties, recipient industry, rights being supplied and payment terms need to be matched to the applicable route.
Local entity and operating permissions
Calling an arrangement a franchise does not itself create a Nepal operating vehicle or authorise the business activity. The operating party should have the appropriate company, industry, tax and sector position for the planned activity. The Companies Act framework governs a Nepal company’s incorporation; the industry and sector rules determine what else is needed for the particular business.
For a domestic franchise, that is usually the practical starting point: identify the Nepal operator, its approved activity and the rights it will receive. For a foreign arrangement, it remains important, but it sits alongside the FITTA/DOI analysis rather than replacing it.
Trademark and operating-system rights
Trademark registration and the franchise licence solve different problems. The first concerns the mark; the agreement should identify the permitted Nepal use, quality controls, brand materials, training and the point at which use must stop. DOI’s Industrial Property Section publishes registration checklists, and DOI’s technology-transfer materials call for a valid trademark-registration certificate where the technology transfer includes a trademark.
This is why a brand owner should not rely on a name appearing in a contract alone. Review the ownership record, the Nepal use rights and the commercial controls together. The franchise trademark licensing guide explains that narrower issue.
Royalties and foreign exchange
The payment clause is a decisive difference. FITTA says a technology-transfer agreement must state its terms and cannot provide royalty repatriation above the prescribed ceiling. It does not establish a universal franchise royalty percentage in the Act itself.
For a foreign technology-transfer royalty, NRB’s published foreign-exchange framework describes a Schedule 9 application and requires the relevant approval or recommendation. The published evidence list for a technology-transfer royalty includes, among other records, the DOI approval letter, approved agreement, invoice and certified-auditor statement of the amount due, along with corporate, tax and compliance records. Treat the payment schedule as a records-and-approval issue, not just a commercial invoice.
A practical decision sequence
- Identify the provider and recipient: Nepal-to-Nepal, or foreign provider to Nepal industry?
- List what is being supplied: brand, know-how, operating process, training, services or a combination.
- Check the recipient’s legal and sector position for the intended activity.
- For a foreign arrangement, assess FITTA and DOI technology-transfer approval before committing to a payment route.
- Verify trademark ownership and Nepal use rights.
- Align the agreement, approval file, invoices and payment evidence before any royalty remittance.
Official Sources and Further Reading
- Foreign Investment and Technology Transfer Act, 2019 — sections 2(f), 3(2) and 7.
- DOI Foreign Investment and Technology Transfer Section
- Companies Act, 2063
- DOI Industrial Property Section
- NRB Foreign Exchange Management Department
