【Business Law】Doing Franchise Business in Taiwan: Legal Landscape and Market Overview
1. Introduction
If you are considering expanding your franchise to Taiwan, you will find a market that encourages innovation but also requires strict adherence to legal regulations. Taiwan’s strong consumer demand and sophisticated business environment present promising opportunities for franchise development. Just having a well-known brand is not enough for success. You must understand and follow a range of local laws and rules from the start. This overview walks you through the essentials of this regulatory environment. Our goal is to help you turn legal compliance into your advantage as you operate your franchise in Taiwan.
2. A Market of Opportunity and Intense Competition
Taiwan’s franchise market is well-developed, crowded, and highly competitive. According to the Taiwan Chain Stores and Franchise Association (台灣連鎖暨加盟協會; TCFA), there are 2,888 chain brands with a total of 118,952 stores in 2024.[1] This represents a significant and vibrant sector of the economy. Stronger brands continue to expand by acquiring outlets from weaker competitors. PX-Mart (a major supermarket chain in Taiwan) and Uni-President (the operator of 7-Eleven in Taiwan) are examples of this trend.[2] Because competition is so intense, disputes between franchisors and franchisees are common. A firm grasp of the legal fundamentals is both helpful and essential.
Competition in traditional sectors like food and beverage remains fierce.[3] However, emerging markets offer growth potential. Taiwan’s green diet market, for instance, is expanding, with about three million vegetarians (13.8% of the population) fueling a market valued at over $2 billion.[4] The pet supply market is also growing, valued at over $1.67 billion as more people own pets.[5] By 2026, over 20% of Taiwan’s population will be 65 or older, increasing demand for elderly care services.[6] Digital transformation, which the pandemic has hastened, is changing every sector and reshaping the market.[7] The rise of delivery services like Foodpanda and Uber Eats demonstrates the impact of digital transformation.[8] Digital tools have become essential for franchisors in many areas, from investment planning to daily operations.[9]
3. The Regulatory Framework
Taiwan does not have a single, dedicated franchise law.[10] Instead, various interlocking laws, regulations, and administrative guidelines apply to franchise businesses.[11] Understanding how these rules work together is the first step to compliance. Here, we highlight the main legal areas you need to know.
3.1 Fair Trade Act
The Fair Trade Act (公平交易法; the “FTA”) is Taiwan’s primary competition law. The Fair Trade Commission (公平交易委員會; the “FTC”), the competent authority under the FTA, has issued specific administrative rules that affect franchising. The most notable are the Fair Trade Commission Disposal Directions (Guidelines) on the Business Practices of Franchisors (公平交易委員會對於加盟業主經營行為案件之處理原則; the “Franchisor Guidelines”). The Franchisor Guidelines are authoritative interpretations that guide the FTC’s enforcement actions and carry significant weight.[12] They address pre-contractual information disclosure, contract review periods, and other conduct to prevent unfair competition. Other FTC rules may also apply to franchises, depending on the circumstances. Point 6 of the Franchisor Guidelines specifically references the Fair Trade Commission Disposal Directions (Guidelines) on Handling Cases Governed by Article 21 of the Fair Trade Act (公平交易委員會對於公平交易法第二十一條案件之處理原則), the Fair Trade Commission Disposal Directions (Guidelines) on Handling of Cases of Comparative Advertising (公平交易委員會對於比較廣告案件之處理原則), and the Fair Trade Commission Disposal Directions (Guidelines) on the Application of Article 25 of the Fair Trade Act (公平交易委員會對於公平交易法第二十五條案件之處理原則; the “Article 25 Guidelines”). Each of these adds compliance obligations that may affect your franchise in Taiwan.
Your most critical legal duty as a franchisor is mandatory pre-contractual disclosure of key information. Point 3 of the Franchisor Guidelines requires you to provide prospective franchisees with essential information, including all upfront and ongoing fees, intellectual property rights, operational support, territorial rights, restrictions on operations, and termination conditions. You must disclose this information at least ten days before signing a binding agreement or accepting any non-refundable payment. Point 4 of the Franchisor Guidelines mandates you provide the franchisee a copy of the final franchise agreement for review at least five days before signing. You must also deliver the signed agreement to your franchisee within thirty days after signing. According to Point 5 of the Franchisor Guidelines, failure to meet these requirements violates Article 25 of the FTA, which exposes you to fines or other administrative sanctions.
Article 25 of the FTA is a broad, catch-all provision that prohibits any business from engaging in “deceptive or obviously unfair conduct that is able to affect trading order.” Because this article is principle-based rather than a list of specific prohibitions, the FTC has significant discretionary power to evaluate business practices on a case-by-case basis. The Article 25 Guidelines further clarify the application of Article 25. Under Point 6 of the Article 25 Guidelines, conduct is considered “deceptive” if it misleads trading partners by concealing material information that could influence their decisions. Point 7 of the Article 25 Guidelines defines “obviously unfair” conduct as engaging in market competition or commercial transactions using means that are clearly inequitable. Examples include exploiting a superior bargaining position, imposing unfair terms in standard form contracts, or leveraging information asymmetry against your franchisee. The FTC will intervene if the conduct could harm the overall fairness of the marketplace (i.e., “able to affect trading order”). The FTC’s evaluation considers various factors instead of just an isolated dispute. For instance, according to Point 5 of the Article 25 Guidelines, the factors considered include the number of franchisees affected, the severity of the harm, the deterrent effects, and the relative market power.
3.2 Trademark Act
The Trademark Act (商標法) is essential because franchising relies on brand licensing.[13] Unlike some jurisdictions that recognize trademark rights through use, Taiwan operates on a first-to-file principle.[14] Registration with the Taiwan Intellectual Property Office secures your trademark rights, as stipulated in Article 2 of the Trademark Act.
Register your trademark before you offer franchises to any franchisee in Taiwan.[15] Failing to do so exposes you to various legal risks.[16] For instance, if you sign a franchise agreement to license a trademark you have not registered, you could face claims of fraud from your franchisee.[17] You could also violate the disclosure requirements under the Franchisor Guidelines.[18] Moreover, competitors could register your mark first and legally own your brand identity in Taiwan.[19] While legal recourse exists, the process is costly, time-consuming, and uncertain.[20] It is much safer and more effective to register your trademark early.
3.3 Trade Secret Act
Franchising often involves sharing your valuable, non-public information (such as know-how, methods, recipes, processes, or supplier lists) with your franchises.[21] Some franchisors mistakenly assume all information they deem confidential automatically qualifies as a trade secret.[22] That is a misunderstanding. Statutory trade secret protection and contractual confidentiality are not the same. The Trade Secret Act (營業秘密法; the “TSA”) protects your valuable, non-public information if (1) your information is not generally known to people in the relevant field, (2) your information has actual or potential economic value from its secrecy, and (3) you have taken reasonable measures to keep that information secret. On the other hand, you may include a confidentiality clause in your franchise agreement to ensure your franchisee protects your valuable, non-public information. This contractual confidentiality obligation binds your franchisee regardless of whether the information qualifies as a trade secret.[23]
3.4 Civil Code
The Civil Code (民法) outlines the basic rules for all contracts in Taiwan, including franchise agreements.[24] The Civil Code does not set out a specific category or chapter for franchise agreements.[25] Nevertheless, the Civil Code applies because a franchise agreement is a private contract that contains franchise arrangements,[26] establishing a continuing contractual relationship.[27] The terms of your franchise agreement are important because, along with the good faith principles, they will fill the gaps left by the absence of a dedicated franchise statute. Clear and fair contract drafting is essential to protect your interests and define your relationship with franchisees.
4. ConclusionThe Fair Trade Act (公平交易法; the “FTA”) is Taiwan’s primary competition law. The Fair Trade Commission (公平交易委員會; the “FTC”), the competent authority under the FTA, has issued specific administrative rules that affect franchising. The most notable are the Fair Trade Commission Disposal Directions (Guidelines) on the Business Practices of Franchisors (公平交易委員會對於加盟業主經營行為案件之處理原則; the “Franchisor Guidelines”). The Franchisor Guidelines are authoritative interpretations that guide the FTC’s enforcement actions and carry significant weight.[12] They address pre-contractual information disclosure, contract review periods, and other conduct to prevent unfair competition. Other FTC rules may also apply to franchises, depending on the circumstances. Point 6 of the Franchisor Guidelines specifically references the Fair Trade Commission Disposal Directions (Guidelines) on Handling Cases Governed by Article 21 of the Fair Trade Act (公平交易委員會對於公平交易法第二十一條案件之處理原則), the Fair Trade Commission Disposal Directions (Guidelines) on Handling of Cases of Comparative Advertising (公平交易委員會對於比較廣告案件之處理原則), and the Fair Trade Commission Disposal Directions (Guidelines) on the Application of Article 25 of the Fair Trade Act (公平交易委員會對於公平交易法第二十五條案件之處理原則; the “Article 25 Guidelines”). Each of these adds compliance obligations that may affect your franchise in Taiwan.
Your most critical legal duty as a franchisor is mandatory pre-contractual disclosure of key information. Point 3 of the Franchisor Guidelines requires you to provide prospective franchisees with essential information, including all upfront and ongoing fees, intellectual property rights, operational support, territorial rights, restrictions on operations, and termination conditions. You must disclose this information at least ten days before signing a binding agreement or accepting any non-refundable payment. Point 4 of the Franchisor Guidelines mandates you provide the franchisee a copy of the final franchise agreement for review at least five days before signing. You must also deliver the signed agreement to your franchisee within thirty days after signing. According to Point 5 of the Franchisor Guidelines, failure to meet these requirements violates Article 25 of the FTA, which exposes you to fines or other administrative sanctions.
Article 25 of the FTA is a broad, catch-all provision that prohibits any business from engaging in “deceptive or obviously unfair conduct that is able to affect trading order.” Because this article is principle-based rather than a list of specific prohibitions, the FTC has significant discretionary power to evaluate business practices on a case-by-case basis. The Article 25 Guidelines further clarify the application of Article 25. Under Point 6 of the Article 25 Guidelines, conduct is considered “deceptive” if it misleads trading partners by concealing material information that could influence their decisions. Point 7 of the Article 25 Guidelines defines “obviously unfair” conduct as engaging in market competition or commercial transactions using means that are clearly inequitable. Examples include exploiting a superior bargaining position, imposing unfair terms in standard form contracts, or leveraging information asymmetry against your franchisee. The FTC will intervene if the conduct could harm the overall fairness of the marketplace (i.e., “able to affect trading order”). The FTC’s evaluation considers various factors instead of just an isolated dispute. For instance, according to Point 5 of the Article 25 Guidelines, the factors considered include the number of franchisees affected, the severity of the harm, the deterrent effects, and the relative market power.
3.2 Trademark Act
The Trademark Act (商標法) is essential because franchising relies on brand licensing.[13] Unlike some jurisdictions that recognize trademark rights through use, Taiwan operates on a first-to-file principle.[14] Registration with the Taiwan Intellectual Property Office secures your trademark rights, as stipulated in Article 2 of the Trademark Act.
Register your trademark before you offer franchises to any franchisee in Taiwan.[15] Failing to do so exposes you to various legal risks.[16] For instance, if you sign a franchise agreement to license a trademark you have not registered, you could face claims of fraud from your franchisee.[17] You could also violate the disclosure requirements under the Franchisor Guidelines.[18] Moreover, competitors could register your mark first and legally own your brand identity in Taiwan.[19] While legal recourse exists, the process is costly, time-consuming, and uncertain.[20] It is much safer and more effective to register your trademark early.
3.3 Trade Secret Act
Franchising often involves sharing your valuable, non-public information (such as know-how, methods, recipes, processes, or supplier lists) with your franchises.[21] Some franchisors mistakenly assume all information they deem confidential automatically qualifies as a trade secret.[22] That is a misunderstanding. Statutory trade secret protection and contractual confidentiality are not the same. The Trade Secret Act (營業秘密法; the “TSA”) protects your valuable, non-public information if (1) your information is not generally known to people in the relevant field, (2) your information has actual or potential economic value from its secrecy, and (3) you have taken reasonable measures to keep that information secret. On the other hand, you may include a confidentiality clause in your franchise agreement to ensure your franchisee protects your valuable, non-public information. This contractual confidentiality obligation binds your franchisee regardless of whether the information qualifies as a trade secret.[23]
3.4 Civil Code
The Civil Code (民法) outlines the basic rules for all contracts in Taiwan, including franchise agreements.[24] The Civil Code does not set out a specific category or chapter for franchise agreements.[25] Nevertheless, the Civil Code applies because a franchise agreement is a private contract that contains franchise arrangements,[26] establishing a continuing contractual relationship.[27] The terms of your franchise agreement are important because, along with the good faith principles, they will fill the gaps left by the absence of a dedicated franchise statute. Clear and fair contract drafting is essential to protect your interests and define your relationship with franchisees.
Taiwan’s franchise market offers real opportunities and clear responsibilities. The potential for growth is strong, but long-term success means more than just bringing your current business model. You need to adapt to local rules and follow the FTC’s requirements for disclosure and fair business practices. Careful contract drafting and good faith business practices are essential. Building mutually beneficial, fair franchise relationships with your franchisees is your strongest defense against regulatory action and your best strategy for long-term success. By understanding the legal framework outlined here, structuring transparent operations, and treating your franchise partners fairly, you position your franchise and brand for sustainable growth in Taiwan’s dynamic market.
[1] Taiwan Chain Stores and Franchise Ass’n, 連鎖業產業寶典「2025台灣連鎖店年鑑」最新出版上市 [Chain Store Industry Treasure “2025 Taiwan Chain Store Yearbook” Newly Published and Available] (May 14, 2025), https://tcfa.org.tw/announce_detail.asp?id=9210793.
[2] U.S. Int’l Trade Admin., Franchising, in Taiwan Country Commercial Guide (Jan. 10, 2024), https://www.trade.gov/country-commercial-guides/taiwan-franchising.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Wen-Yueh Chung, Jane Wang & Charles Chen, Chapter 9: Taiwan, in The Franchise Law Review 116, 117, 119 (Alan H. Silberman ed., 10th ed. 2023); 蕭富庭 [Fu-Ting Xiao], 加盟契約實務研究 [A Study on the Practice of Franchise Agreements] 7 (2d ed. 2024).
[11] Chung, Wang & Chen, supra note 10, at 117
[12] Xiao, supra note 10, at 8.
[13] Chung, Wang & Chen, supra note 10, at 117; Xiao, supra note 10, at 14.
[14] Chung, Wang & Chen, supra note 10, at 117; Xiao, supra note 10, at 15.
[15] Xiao, supra note 10, at 14.
[16] Id. at 15.
[17] Id.
[18] Id.
[19] Id.
[20] Id.
[21] Id.
[22] Id.
[24] Xiao, supra note 10, at 17; Chung, Wang & Chen, supra note 10, at 119.
[25] 向明恩 [Ming-En Hsiang], 論加盟契約之性質與終止 [On the Nature and Termination of Franchise Agreements], 10 Taiwan Bar J. 34, 34 (2022) (Taiwan); Xiao, supra note 10, at 17.
[26] Xiao, supra note 10, at 17; Chung, Wang & Chen, supra note 10, at 119.
[27] Hsiang, supra note 25, at 35-36, 41-43, 51.
