A franchise business represents a common way to open a company in Taiwan. Prior to investing here, it is important to know that Taiwan has one of the largest concentrations of franchise businesses in the world; it is also the home of numerous foreign franchises, and the country’s main investor in this sense is represented by the United States of America.
In Taiwan, the franchising sector is not developed only in the food industry, as numerous franchise businesses also operate as: convenience stores, hair salon, foreign languages schools, footwear and apparel stores, health stores, spa services centers, drug stores and others. Investors who want to start a franchise business can receive in-depth legal assistance on the procedures for entering the local market as a franchise from our team of specialists in company registration in Taiwan, who can also advise on the legislation regulating this field.
Table of Contents
What is the law on franchise businesses in Taiwan?
Currently, there is no specific rule of law which regulates the franchise in Taiwan. In order to start a franchise business in this country, the investors will have to sign a franchise agreement, a legal document that is recognized by several rules of law. Thus, the franchise business will have to follow the regulations which governs this type of document.
The manner in which a franchise agreement has to be concluded is governed by the regulations of the Fair Trade Act 2010; additional regulations derive from the Disposal Directions (Guidelines) on the Disclosure of Information by Franchisers, which were adopted by the Fair Trade Commission. The provisions of these laws present the main aspects that have to be disclosed by the franchisor to the franchisee, which refer to matters such as:
- the name of the franchise business and the date at which the company started its operations;
- the names of the persons who are in charge with the management of the franchise business and their relevant experience;
- the fees that are imposed by the franchisor to a franchisee, the deadline at which such fees have to be paid or the methods for collecting such fees;
- the duration of the franchising contract and the intellectual property rights that will be granted by the franchisor to the franchisee;
- the duration for which such rights can be used, the manner in which they can be used and the limitations imposed to the franchisee.
The above mentioned data has to be disclosed by the franchisor with at least 10 days before the franchisor and the franchisee will sign the franchise agreement. Besides these, the franchisor has to provide additional information, such as the conditions in which the contract can terminate and the rights to modify various aspects included in the agreement; our team of consultants in company registration in Taiwan can assist with advice on other relevant aspects that should be clarified when entering this type of contract.
Please note that, when the franchisor discloses the information on his or her business, it is also legally required to inform the franchisee on all the stores that were closed down to various reasons. In this sense, it is necessary to prepare a list, including all the statistics regarding this issue. The document must also provide information on the franchisor’s businesses that are available for sale.
What is the size of the franchise market in Taiwan?
As we mentioned at the beginning of the article, the Taiwanese market is one of the most developed at a global level, regarding the operations carried out by franchising businesses. Currently, the highest number of franchise businesses operate in the food and beverage industries, this being the most competitive sector and with the highest demand. Below, you can discover some of the most relevant information on the Taiwanese franchise market:
- in 2017, Taiwan had a more than 3,100 franchising brands operating on its market;
- franchise businesses in Taiwan are operating in 110 different industries;
- in 2016, the franchise market had a total value of $41,998 million;
- in 2017, the Taiwanese franchise market grew at $44,098 million;
- in 2018, the market further expanded, reaching a total value of $45,420 million.
Those who want to open a company in Taiwan as a franchise business should know that the Taiwanese businessmen are rather attracted to this idea, as this business model provides a simpler way to access the local consumer market. For more details on the procedures applicable when starting a franchise business, we invite you to contact our team of specialists in company formation in Taiwan; our representatives are also prepared to assist you with any information on the tax requirements available for this type of business.