Franchise Agreements in Hong Kong
Franchise Agreements in Hong KongUpdated on Thursday 19th May 2016
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Franchising in Hong Kong
Franchising is allowed in Hong Kong and investors enjoy a permissive regime and minimum formalities for the procedure. However, franchise agreements in Hong Kong are subject to special requirements, one of the most important being the competition rules, as they are expressed in the Competition Ordinance.
Most franchisors in Hong Kong open limited liability companies and incorporate them as per the requirements for company formation and registration with the Companies Registry.
The franchise agreement is signed between the business (franchisor) who grants usage for its brand and business model to another independent business (the franchisee). Both companies can benefit from entering into such an agreement as the franchise business in Hong Kong has better chances at entering the market effectively.
Our law firm in Hong Kong can help you draw up and conclude franchise agreements as well as provide you with adequate legal counselling and guidance.
Regulations for franchising agreements in Hong Kong
Hong Kong does not impose a special legislation or regulatory regime for franchises, however, various other laws apply to the agreements that govern these business entities. The Competition Ordinance is extremely relevant for any business owner that acquires a franchise. He will need to take the necessary steps to ensure that the intellectual property belonging to the franchisor is well protected. The purchase or sale of goods by a franchise in Hong Kong is permitted as long as these actions observe the competition law in Hong Kong.
Any labour and employment issues that arise within the franchise are governed as usual by the Employment Ordinance. Our Hong Kong law firm can provide you with relevant information about the importance of the Competition Ordinance and how it is enforced in the city.
Doing business in Hong Kong
Local and foreign companies are treated the same way in Hong Kong and franchises are no exception. This type of company will need to comply with the tax requirements and they are subject to the usual taxes in Hong Kong: the profits tax, real property tax or social security. Hong Kong has a low taxation regime and there are no withholding taxes on dividends. A number of double tax treaties also allow for the preferential taxation of certain businesses.
For more information about doing business in Hong Kong or for complete legal assistance for franchising in the city, please contact our law firm in Hong Kong.