{"id":5428,"date":"2023-12-13T13:12:56","date_gmt":"2023-12-13T05:12:56","guid":{"rendered":"https:\/\/fdlaw.com.tw\/?p=5428"},"modified":"2026-06-20T16:38:02","modified_gmt":"2026-06-20T08:38:02","slug":"franchising-contract","status":"publish","type":"post","link":"https:\/\/fdlaw.com.tw\/en\/blog\/franchising-contract\/","title":{"rendered":"Key points to review in a franchise agreement: franchise fee, penalty for breach of contract, non-compete clauses, and trademark licensing risks."},"content":{"rendered":"<style id=\"fdlaw-biz-polish\">\n.single-post .entry-content{color:#334155;}\n.single-post .entry-content p,.single-post .entry-content li{font-size:16.5px!important;line-height:1.92!important;color:#334155;}\n.single-post .entry-content p{margin-top:0;margin-bottom:18px;}\n.single-post .entry-content h2.wp-block-heading,.single-post .entry-content h2.H2{font-size:24px!important;line-height:1.42!important;color:#0f172a!important;background:#f8fafc;border-left:4px solid #0f766e;padding:12px 16px;margin:38px 0 18px;border-radius:0 8px 8px 0;}\n.single-post .entry-content h3.wp-block-heading{font-size:20px!important;line-height:1.5!important;color:#0f172a!important;margin:28px 0 12px;}\n.single-post .entry-content .has-vivid-red-color{color:#0f172a!important;}\n.single-post .entry-content .fdlaw-biz-seo h2,.single-post .entry-content .fdlaw-biz-seo h3{border:0!important;background:transparent!important;padding:0!important;}\n.single-post .entry-content .fdlaw-biz-seo p,.single-post .entry-content .fdlaw-biz-seo li{font-size:16px!important;}\n.single-post .entry-content .fdlaw-article-image img{max-height:520px;object-fit:cover;}\n@media (max-width: 760px){.single-post .entry-content p,.single-post .entry-content li{font-size:16px!important}.single-post .entry-content h2.wp-block-heading{font-size:22px!important}}\n<\/style>\n\n\n<div class=\"fdlaw-biz-seo\" style=\"font-family:system-ui,-apple-system,BlinkMacSystemFont,'Segoe UI',sans-serif;color:#1f2933;line-height:1.86;margin:18px 0 30px;\">\n  <section style=\"background:#fff;border:1px solid #d9e2f2;border-top:5px solid #0f766e;border-radius:8px;padding:26px 24px;margin:0 0 18px;box-shadow:0 10px 28px rgba(15,23,42,.06);\">\n    <p style=\"margin:0 0 8px;color:#0f766e;font-weight:800;font-size:14px;letter-spacing:.04em;\">Franchise Agreement and Chain Franchising<\/p>\n    <h2 style=\"font-size:27px;line-height:1.38;margin:0 0 12px;color:#0f172a;\">Before signing a franchise agreement, carefully review the franchise fee, penalty for breach of contract, trademark authorization, and exit conditions.<\/h2>\n    <p style=\"margin:0 0 18px;color:#334155;font-size:16px;line-height:1.9;\">Franchising may seem to offer brand recognition, standard operating procedures (SOPs), and headquarters support, but common issues that arise in disputes include whether franchise fees are refundable, incomplete disclosure of information by headquarters, unfulfilled profit guarantees, trademark licensing restrictions, non-compete clauses, excessive penalties for breach of contract, designated procurement of decoration and equipment, and early termination of the contract. Having a lawyer review the franchise agreement before signing is often more effective than engaging in litigation afterward.<\/p>\n    <div style=\"display:flex;flex-wrap:wrap;gap:8px;margin:0 0 18px;\"><span style=\"display:inline-block;background:#ecfdf5;border:1px solid #a7f3d0;border-radius:999px;padding:5px 10px;color:#065f46;font-size:14px;font-weight:700;\">Franchise Lawyer<\/span><span style=\"display:inline-block;background:#ecfdf5;border:1px solid #a7f3d0;border-radius:999px;padding:5px 10px;color:#065f46;font-size:14px;font-weight:700;\">Franchise disputes<\/span><span style=\"display:inline-block;background:#ecfdf5;border:1px solid #a7f3d0;border-radius:999px;padding:5px 10px;color:#065f46;font-size:14px;font-weight:700;\">Franchising<\/span><span style=\"display:inline-block;background:#ecfdf5;border:1px solid #a7f3d0;border-radius:999px;padding:5px 10px;color:#065f46;font-size:14px;font-weight:700;\">Non-compete Agreement<\/span><span style=\"display:inline-block;background:#ecfdf5;border:1px solid #a7f3d0;border-radius:999px;padding:5px 10px;color:#065f46;font-size:14px;font-weight:700;\">Trademark Licensing<\/span><\/div>\n    <a href=\"tel: 886277093611\" style=\"display:inline-block;background:#0f172a;color:#fff;text-decoration:none;font-weight:800;padding:10px 16px;border-radius:6px;margin-right:8px;\">02-7709-3611<\/a>\n    <a href=\"https:\/\/line.me\/ti\/p\/@723pifhz\" target=\"_blank\" rel=\"noreferrer noopener\" style=\"display:inline-block;background:#0f766e;color:#fff;text-decoration:none;font-weight:800;padding:10px 16px;border-radius:6px;\">LINE Inquiry<\/a>\n  <\/section>\n  <section style=\"background:#f8fafc;border:1px solid #d9e2f2;border-radius:8px;padding:22px;margin:0 0 22px;\">\n    <h2 style=\"font-size:23px;line-height:1.4;margin:0 0 12px;color:#111827;\">In what situations is it advisable to have a lawyer review your case first?<\/h2>\n    <div style=\"display:grid;grid-template-columns:repeat(auto-fit,minmax(220px,1fr));gap:12px;\"><div style=\"background:#fff;border:1px solid #e2e8f0;border-radius:8px;padding:14px 16px;color:#334155;font-size:16px;line-height:1.75;\">I&#039;m planning to join a franchise brand and would like to review the franchise agreement and fee terms first.<\/div><div style=\"background:#fff;border:1px solid #e2e8f0;border-radius:8px;padding:14px 16px;color:#334155;font-size:16px;line-height:1.75;\">The headquarters requires signing non-compete agreements, confidentiality clauses, or hefty penalties for breach of contract.<\/div><div style=\"background:#fff;border:1px solid #e2e8f0;border-radius:8px;padding:14px 16px;color:#334155;font-size:16px;line-height:1.75;\">After joining, some franchisees find that revenue is lower than expected, support from headquarters is insufficient, or information disclosure is inaccurate.<\/div><div style=\"background:#fff;border:1px solid #e2e8f0;border-radius:8px;padding:14px 16px;color:#334155;font-size:16px;line-height:1.75;\">The franchise headquarters wants to design franchise agreements, trademark authorization, and store management systems.<\/div><\/div>\n  <\/section>\n  <figure class=\"fdlaw-article-image\" style=\"margin:24px auto 28px;max-width:680px;text-align:center;\">\n    <img decoding=\"async\" src=\"https:\/\/fdlaw.com.tw\/wp-content\/uploads\/2023\/12\/\u52a0\u76df\u5951\u7d04\u52a0\u76df\u5e97\u9023\u9396\u52a0\u76df.jpg\" alt=\"\u52a0\u76df\u5951\u7d04,\u52a0\u76df\u5e97,\u9023\u9396\u52a0\u76df\" style=\"display:block;width:100%;height:auto;border-radius:8px;box-shadow:0 12px 28px rgba(15,23,42,.12);\" title=\"\">\n  <\/figure>\n<\/div>\n\n\n<div class=\"wp-block-rank-math-toc-block has-medium-font-size\" id=\"rank-math-toc\"><h2>Table of contents<\/h2><nav><ul><\/ul><\/nav><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-44e448985e7900e33026eec7132ed8d8\" id=\"\u5f15\u8a00\">introduction<\/h2>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\">When considering the franchise model, whether it is a company expanding investment or an individual owner joining the brand system, carefully signing contracts and negotiating conditions are necessary steps to avoid risks. This article will discuss important legal issues related to franchising, including the definition of franchising, types of franchising, contract terms, non-compete clauses, and key information that the headquarters should provide.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-0ef06d2b956230eca3ba13bdd6c9baec\" id=\"\u4ec0\u9ebc\u662f\u52a0\u76df\uff1f\">What is joining?<\/h2>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\">Franchise is an efficient business model that allows self-employed individuals to join chain stores of the same brand through authorization and guidance from the business headquarters. There are clear definitions in the law, including the authorization of trademarks or business technologies, to form a sustainable cooperative relationship.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-38df420f24be4c7d47e7f90e23bd23d5\" id=\"\u56db\u7a2e\u52a0\u76df\u578b\u614b\">Four types of franchises<\/h2>\n\n\n\n<ol class=\"wp-block-list\">\n<li class=\"has-medium-font-size\"><strong>Voluntary joining:<\/strong> Franchise stores have equal status with the headquarters and have greater management autonomy and need to bear most of the preparation and operating costs themselves.<\/li>\n\n\n\n<li class=\"has-medium-font-size\"><strong>Franchise:<\/strong> The headquarters grants the franchise store the right to operate and operate according to the guidance, pay a one-time franchise fee and draw a proportional share of the profits.<\/li>\n\n\n\n<li class=\"has-medium-font-size\"><strong>Entrusted to join:<\/strong> The headquarters entrusts the franchise stores to operate, and the headquarters bears most of the preparation expenses. The franchise stores pay a one-time franchise fee and share the profits according to the agreed proportion.<\/li>\n\n\n\n<li class=\"has-medium-font-size\"><strong>Cooperation and joining:<\/strong> Franchise stores are the main ones, and they organize their own headquarters to jointly purchase goods to reduce costs and jointly carry out marketing activities.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-b7a1d877c9e45a144f5dfc1f88c029d4\" id=\"\u52a0\u76df\u5408\u7d04\u7684\u95dc\u9375\u689d\u6b3e\">Key terms of the franchise contract<\/h2>\n\n\n\n<h3 class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-a20248e377ec3b09aacfc5e44d85b41b\" id=\"1-\u52a0\u76df\u7d50\u675f\u5f8c\u7af6\u696d\u7981\u6b62\u689d\u6b3e\">1. Non-compete clause after joining<\/h3>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\">Non-compete clauses are designed to prevent franchisees from using business secrets to compete with the headquarters. Terms should meet court review standards, including protection of business secrets, reasonable scope, duration, and provision of reasonable compensation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-0bbeed70f2e98eef3596183bfc55839b\" id=\"2-\u7e3d\u90e8\u63d0\u4f9b\u7684\u95dc\u9375\u8cc7\u8a0a\">2. Key information provided by the headquarters<\/h3>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\">In the contract, the headquarters should provide the following 7 key information to ensure transparency and fairness of cooperation:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"has-medium-font-size\">Expenditure items before starting operations<\/li>\n\n\n\n<li class=\"has-medium-font-size\">Expenditure items during the franchise period<\/li>\n\n\n\n<li class=\"has-medium-font-size\">Intellectual property licensing conditions<\/li>\n\n\n\n<li class=\"has-medium-font-size\">Business guidance and education training<\/li>\n\n\n\n<li class=\"has-medium-font-size\">Business market segmentation<\/li>\n\n\n\n<li class=\"has-medium-font-size\">Business conditions and restrictions during the franchise period<\/li>\n\n\n\n<li class=\"has-medium-font-size\">Conditions and handling methods for modification, termination and rescission of the franchise contract<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-74a6b4a008dcb9a97cc4ff96fe4e2933\" id=\"\u7d50\u8a9e\">Conclusion<\/h2>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\">The franchise model provides a relatively low-risk path for entrepreneurship, but contract terms and legal issues still need to be treated with caution. Properly designing non-compete clauses and providing complete information are the cornerstones of ensuring the rights and interests of both parties. It is recommended that when facing legal issues, you consult a professional lawyer as soon as possible to ensure the legality of the contract and protect your rights and interests to the greatest extent. I wish you smooth sailing and a prosperous career in joining the franchise.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\"><a href=\"https:\/\/fdlaw.com.tw\/en\/\" target=\"_blank\" rel=\"noreferrer noopener\">Fuda Law Firm<\/a>Specializing in the field of legal counsel, the team&#039;s lawyer members all have rich practical experience and long-term experience in serving listed companies and small and medium-sized enterprises, and can provide assistance. If you have any needs, you can contact our firm at any time.<\/p>\n\n\n<p class=\"has-medium-font-size\">Fuda Law Firm<br \/>Line\uff1a<a href=\"https:\/\/line.me\/ti\/p\/@fdlaw\" target=\"_blank\" rel=\"noopener\">https:\/\/line.me\/ti\/p\/@fdlaw<\/a><br \/>Tel:<a href=\"tel:0277093611\">0277093611<\/a><br \/>Facebook:<a href=\"https:\/\/www.facebook.com\/fudalawyer\" target=\"_blank\" rel=\"noopener\">https:\/\/www.facebook.com\/fudalawyer<\/a><br \/>website:<a href=\"https:\/\/fdlaw.com.tw\/en\/\">https:\/\/fdlaw.com.tw\/<\/a><br \/>Corporate legal advisor website:<a href=\"https:\/\/fdlaw.com.tw\/en\/consulting\/\">https:\/\/fdlaw.com.tw\/consulting<\/a><br \/>e-mail:<a href=\"mailto:info@fdlaw.com.tw\">info@fdlaw.com.tw<\/a><\/p>\n<\/p>\n\n\n<div class=\"fdlaw-biz-seo\" style=\"font-family:system-ui,-apple-system,BlinkMacSystemFont,'Segoe UI',sans-serif;color:#1f2933;line-height:1.86;margin-top:34px;\">\n  <section style=\"background:#111827;color:#fff;border-radius:8px;padding:24px;margin:0 0 26px;\">\n    <h2 style=\"font-size:24px;line-height:1.4;margin:0 0 10px;color:#fff;\">For corporate legal issues, it is recommended to have a lawyer review the case before signing any contracts or before any conflict escalates.<\/h2>\n    <p style=\"margin:0 0 14px;color:#e5e7eb;font-size:16px;line-height:1.86;\">Fidelity Law Firm has extensive experience in handling corporate legal counsel, business contracts, partnership and shareholder disputes, franchise agreements, and trademark and intellectual property disputes. If you are a business owner, corporate counsel, franchisee, brand operator, or partner, we recommend that you first organize your contracts, records of transactions, and evidence, and then have a lawyer assess them for the next step.<\/p>\n    <a href=\"tel: 886277093611\" style=\"display:inline-block;background:#fff;color:#111827;text-decoration:none;font-weight:800;padding:10px 16px;border-radius:6px;margin-right:8px;\">02-7709-3611<\/a>\n    <a href=\"https:\/\/line.me\/ti\/p\/@723pifhz\" target=\"_blank\" rel=\"noreferrer noopener\" style=\"display:inline-block;background:#0f766e;color:#fff;text-decoration:none;font-weight:800;padding:10px 16px;border-radius:6px;\">LINE Inquiry<\/a>\n  <\/section>\n  <section style=\"margin:0 0 28px;background:#f7f9fc;border:1px solid #d9e2f2;border-radius:8px;padding:24px;\">\n    <p style=\"margin:0 0 8px;color:#0f766e;font-weight:800;font-size:14px;letter-spacing:.04em;\">FAQ<\/p>\n    <h2 style=\"font-size:25px;line-height:1.4;margin:0 0 12px;color:#111827;\">Frequently Asked Questions<\/h2>\n    <details style=\"border:1px solid #d9e2f2;border-radius:8px;padding:16px 18px;margin-bottom:12px;background:#fff;box-shadow:0 6px 18px rgba(15,23,42,.04);\" open><summary style=\"font-weight:800;cursor:pointer;color:#111827;line-height:1.55;\">What clauses should you review most before signing a franchise agreement?<\/summary><p style=\"margin:12px 0 0;color:#334155;font-size:16px;line-height:1.86;\">Key aspects include franchise fees, royalties, security deposits, trademark authorization, education and training, store opening areas, designated procurement, penalties for breach of contract, non-compete agreements, confidentiality obligations, termination of contracts, and exit conditions.<\/p><\/details>\n    <details style=\"border:1px solid #d9e2f2;border-radius:8px;padding:16px 18px;margin-bottom:12px;background:#fff;box-shadow:0 6px 18px rgba(15,23,42,.04);\"><summary style=\"font-weight:800;cursor:pointer;color:#111827;line-height:1.55;\">Can I request a refund of the franchise fee or security deposit?<\/summary><p style=\"margin:12px 0 0;color:#334155;font-size:16px;line-height:1.86;\">It depends on the contract terms, the reason for termination, whether the headquarters breached the contract, and whether there was any false information disclosure or failure to fulfill support obligations. Different payments are different in nature and cannot be generalized.<\/p><\/details>\n    <details style=\"border:1px solid #d9e2f2;border-radius:8px;padding:16px 18px;margin-bottom:12px;background:#fff;box-shadow:0 6px 18px rgba(15,23,42,.04);\"><summary style=\"font-weight:800;cursor:pointer;color:#111827;line-height:1.55;\">Is a non-compete clause in a franchise agreement always valid?<\/summary><p style=\"margin:12px 0 0;color:#334155;font-size:16px;line-height:1.86;\">Not necessarily. Non-compete agreements must still meet the requirements of necessity, duration, region, scope, and reasonableness. If the restrictions are excessive, they may be subject to adjustment or invalidation by the courts.<\/p><\/details>\n    <details style=\"border:1px solid #d9e2f2;border-radius:8px;padding:16px 18px;margin-bottom:12px;background:#fff;box-shadow:0 6px 18px rgba(15,23,42,.04);\"><summary style=\"font-weight:800;cursor:pointer;color:#111827;line-height:1.55;\">Does the franchise headquarters need legal assistance?<\/summary><p style=\"margin:12px 0 0;color:#334155;font-size:16px;line-height:1.86;\">Yes, it is necessary. If the headquarters wants to establish a franchise system, it should properly design the franchise agreement, trademark authorization, education and training, store area, trade secrets and breach of contract handling mechanism to avoid a large number of disputes in the future.<\/p><\/details>\n  <\/section>\n  <section style=\"margin:0 0 28px;background:#f8fafc;border:1px solid #d9e2f2;border-radius:8px;padding:24px;\">\n    <p style=\"margin:0 0 8px;color:#0f766e;font-weight:800;font-size:14px;letter-spacing:.04em;\">RELATED READING<\/p>\n    <h2 style=\"font-size:25px;line-height:1.4;margin:0 0 12px;color:#111827;\">Further reading<\/h2>\n    <div style=\"display:grid;grid-template-columns:repeat(auto-fit,minmax(220px,1fr));gap:12px;\"><a href=\"https:\/\/fdlaw.com.tw\/en\/consulting\/\" style=\"display:block;text-decoration:none;color:#111827;background:#fff;border:1px solid #d9e2f2;border-radius:8px;padding:16px 18px;box-shadow:0 6px 18px rgba(15,23,42,.04);\"><strong style=\"display:block;font-size:17px;line-height:1.5;margin-bottom:8px;color:#0f172a;\">Company Law<\/strong><span style=\"display:block;font-size:15px;line-height:1.75;color:#475569;\">Corporate legal counsel, contract review, and business risk management.<\/span><\/a><a href=\"https:\/\/fdlaw.com.tw\/en\/commercial\/\" style=\"display:block;text-decoration:none;color:#111827;background:#fff;border:1px solid #d9e2f2;border-radius:8px;padding:16px 18px;box-shadow:0 6px 18px rgba(15,23,42,.04);\"><strong style=\"display:block;font-size:17px;line-height:1.5;margin-bottom:8px;color:#0f172a;\">Business lawyers and corporate law<\/strong><span style=\"display:block;font-size:15px;line-height:1.75;color:#475569;\">Company operations, business cooperation, shareholder and commercial dispute resolution.<\/span><\/a><a href=\"https:\/\/fdlaw.com.tw\/en\/contracts\/\" style=\"display:block;text-decoration:none;color:#111827;background:#fff;border:1px solid #d9e2f2;border-radius:8px;padding:16px 18px;box-shadow:0 6px 18px rgba(15,23,42,.04);\"><strong style=\"display:block;font-size:17px;line-height:1.5;margin-bottom:8px;color:#0f172a;\">Chinese and English contract review<\/strong><span style=\"display:block;font-size:15px;line-height:1.75;color:#475569;\">Review of business contracts, franchise agreements, licensing agreements, and cooperation agreements.<\/span><\/a><a href=\"https:\/\/fdlaw.com.tw\/en\/ip\/\" style=\"display:block;text-decoration:none;color:#111827;background:#fff;border:1px solid #d9e2f2;border-radius:8px;padding:16px 18px;box-shadow:0 6px 18px rgba(15,23,42,.04);\"><strong style=\"display:block;font-size:17px;line-height:1.5;margin-bottom:8px;color:#0f172a;\">Intellectual Property Lawyer<\/strong><span style=\"display:block;font-size:15px;line-height:1.75;color:#475569;\">Disputes involving trademarks, copyrights, trade secrets, and intellectual property rights.<\/span><\/a><a href=\"https:\/\/fdlaw.com.tw\/en\/blog\/taipei-new-taipei-company-legal-counsel\/\" style=\"display:block;text-decoration:none;color:#111827;background:#fff;border:1px solid #d9e2f2;border-radius:8px;padding:16px 18px;box-shadow:0 6px 18px rgba(15,23,42,.04);\"><strong style=\"display:block;font-size:17px;line-height:1.5;margin-bottom:8px;color:#0f172a;\">Taipei and New Taipei City Corporate Legal Counsel<\/strong><span style=\"display:block;font-size:15px;line-height:1.75;color:#475569;\">Does the company need legal counsel and a corporate legal risk disclosure?<\/span><\/a><\/div>\n  <\/section>\n<\/div>\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [\n    {\n      \"@type\": \"Question\",\n      \"name\": \"\u52a0\u76df\u5951\u7d04\u7c3d\u7d04\u524d\u6700\u61c9\u8a72\u770b\u54ea\u4e9b\u689d\u6b3e\uff1f\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": 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