Hong Kong has no franchise-specific legislation, which makes it one of the fastest places in Asia to launch a franchise — and puts the entire legal relationship into the contract you sign. That speed is a real advantage, but it means the groundwork you do before signing determines your downside.
In this blog, we discuss how to start a franchise in Hong Kong in 2026. We cover the model, business structure, incorporation costs and sector licences. We also cover the franchise agreement and post-launch tax and compliance duties.
What Is Franchising and How Does It Operate in Hong Kong?
A franchise in Hong Kong is a contractual licence to trade under another business's brand, systems and supply chain — governed entirely by general commercial law rather than any franchise statute.
Under a franchise, one business (the franchisee) pays for the right to operate a proven model under another party's brand, while the franchisor keeps ownership of the trademark, systems and supply relationships. The franchisee owns the outlet and its day-to-day profits, but operates inside boundaries the franchisor sets.
Hong Kong is unusual in Asia for the absence of a franchise-specific statute. There is no franchise register, mandatory disclosure document or government filing for granting a franchise. This differs from the commercial franchise filing regime in China. Malaysia has registration requirements under its Franchise Act 1998. Instead, the relationship rests on general contract law, supported by ordinances covering trade descriptions, personal data and competition.
For investors, the appeal is straightforward: a recognised brand, lower product-development risk and lower profits tax than most of the region, with the Greater Bay Area on the doorstep. The absence of a franchise statute means the entry work sits almost entirely in company registration, permits and the contract.
1. Product distribution franchises
The franchisee resells the franchisor's goods under its brand. Controls are lighter, and the franchisor's interest lies mainly in the supply chain.
2. Business format franchises
The dominant model in Hong Kong food and beverage and retail: the brand, product lines, operations manual, training, marketing and supply terms arrive as one package.
3. Management franchises
The franchisee runs a business-services operation, such as recruitment or logistics, using the franchisor's systems, marks and client standards.
Which Business Structure Should a Hong Kong Franchise Use?
Most franchisees and franchisors in Hong Kong operate through a private limited company, because limited liability protection and clean branding outweigh a modest set-up cost.
Structure determines who carries the risk if the franchise fails, how profits are taxed and how the brand is held. In practice, most franchisors we work with require the franchisee to incorporate a private company limited by shares, often with a personal guarantee, before the licence is granted.
Set-up costs are modest. The 2026 Companies Registry fee for incorporating a company limited by shares is HK$1,545 electronically or HK$1,720 in hard copy, with a partial refund of HK$1,280 or HK$1,425 where an application fails. Business registration, which the Inland Revenue Department administers, is additional and applies to every structure in the table below.
1. Private limited company
A separate legal person with limited liability protection. A single shareholder is permitted, making it the standard vehicle for franchisees and local franchisors.
2. Registered non-Hong Kong company
An overseas franchisor can register its existing company with the Companies Registry instead of incorporating. The same 2026 electronic fee of HK$1,545 applies.
3. Partnership
Two or more owners share profits but carry unlimited joint liability, which rarely suits a long-term franchise commitment.
4. Sole proprietorship
The cheapest route, but the owner bears unlimited personal liability. Both franchisors and banks tend to be cautious where the licence term runs for years.
Comparing Business Structures for a Hong Kong Franchise
| Structure | 2026 set-up fee (HK$) | Liability | Best suited to |
|---|---|---|---|
| Private limited company | 1,545 electronic / 1,720 hard copy | Limited to the company | Franchisees and local franchisors |
| Registered non-Hong Kong company | 1,545 electronic / 1,720 hard copy | Sits with the overseas parent | Overseas franchisors entering Hong Kong |
| Partnership | Business registration only | Unlimited, joint | Small ventures with two or more owners |
| Sole proprietorship | Business registration only | Unlimited, personal | Owner-operators, rarely for franchises |
How Do You Register a Franchise Company in Hong Kong?
Registration runs through a single electronic portal, and most applications clear within a few working days once documents and fees are in order.
First, run a free Hong Kong company name check for conflicts with existing company names. A trademark search is a separate check. Company-name registration does not grant trademark rights. A refused name costs time, and the franchisor's own naming rules often narrow the options further.
The Companies Registry publishes the full fee schedule on its website, and the 2026 figures below come from those current tables. We also handle the whole sequence through our Hong Kong company incorporation services, from name check to first annual return.
Step 1: Check the company name
Confirm the proposed name against the Companies Register and the trademarks database. Registering a name that conflicts with the franchisor's marks can breach the agreement before trading starts.
Step 2: Prepare the incorporation documents
Prepare Form NNC1 (the Incorporation Form), the Articles of Association, and the Notice to the Business Registration Office (Form IRBR1). Set out directors, shareholders, the registered office address and share capital.
Step 3: File through the e-Services Portal
Submit electronically through the Companies Registry's e-Services Portal. The one-stop route triggers business registration with the Inland Revenue Department at the same time.
Step 4: Pay the 2026 fees
The incorporation fee is HK$1,545 electronically or HK$1,720 in hard copy. If an application fails, HK$1,280 or HK$1,425 respectively may be refunded on application.
Step 5: Collect the certificates and open a bank account
On approval, collect the Certificate of Incorporation and the Business Registration Certificate. Most franchisors ask for both, plus the incorporation documents, before releasing the licence or stock.
Step 6: Map sector licences before opening
Do not sign a lease or fit out premises until the required permits are mapped. The next section sets out the most common ones.
2026 Company Set-Up and Registration Fees
| Item | Amount (HK$) | 2026 notes |
|---|---|---|
| Incorporation fee (company limited by shares) | 1,545 electronic / 1,720 hard copy | Refundable portion: HK$1,280 / HK$1,425 if the application fails |
| Registration of a non-Hong Kong company | 1,545 / 1,720 | Same fee applies for overseas franchisors |
| Business Registration Certificate, one year | 2,350 | HK$2,200 fee plus HK$150 levy, from 1 April 2026 |
| Business Registration Certificate, three years | 6,170 | HK$5,720 fee plus HK$450 levy |
| Annual return, filed within 42 days | 105 | Late tiers rise to HK$3,480 after nine months |
| Indicative first-year total | ≈ 3,895 | Electronic incorporation plus one-year registration |
Which Licences and Permits Does a Franchise Need in Hong Kong?
There is no franchise licence in Hong Kong — permits follow the business activity, not the franchise model, so map them before you sign the agreement.
No register of franchise relationships exists, and no permit is issued for franchising itself. What triggers licensing is the underlying activity: food service, recruitment, travel or money changing each carry their own statutory permissions. Franchisors usually specify who holds each permit, and the franchisee should confirm before signing the lease.
Marketing and data rules also bind franchise outlets. The Trade Descriptions Ordinance polices product claims. The Personal Data (Privacy) Ordinance governs customer lists and loyalty data. The Competition Ordinance can reach exclusivity and tying clauses. Each deserves legal review before signature.
A service franchise has its own considerations — see our guide on starting a hair salon business in Hong Kong for how premises, staffing and customer-facing rules shape a launch. The table below maps the most common sector permits.
Common Sector Licences for Franchise Businesses in Hong Kong
| Franchise activity | Licence or permit | Authority |
|---|---|---|
| Restaurant, café or food outlet | Food Business Licence | Food and Environmental Hygiene Department |
| Premises serving alcohol | Liquor licence | Liquor Licensing Board |
| Employment agency | Employment Agency Licence | Labour Department |
| Money service or remittance | Money Service Operator Licence | Customs and Excise Department |
| Travel agency | Travel agents licence | Travel Industry Authority |
What Should a Hong Kong Franchise Agreement Cover?
The agreement is the franchise’s primary contractual framework, but common-law contract principles and applicable legislation also govern the relationship.
No statute prescribes the contents of a Hong Kong franchise agreement, so the drafting does all the work. Anything undefined — territory, the royalty calculation base or renewal rights — may need to be resolved under general contract law, because Hong Kong has no franchise-specific default regime.
Before signing, verify the franchisor as well as its paperwork. A company registry search in Hong Kong confirms the counterparty's corporate standing, and a check against the Intellectual Property Department's registers shows whether the trademarks are actually registered in Hong Kong. Franchisees who skip this step tend to discover the gaps only when a dispute arrives.
The clauses below are the ones we see negotiated most often in practice.
1. Grant, territory and exclusivity
Defines what rights are licensed, where, and whether the franchisor can open or license a competing outlet nearby.
2. Fees, royalties and marketing levies
States the initial fee, the royalty base (usually gross sales), payment timing, and whether the marketing levy is spent locally or regionally.
3. Intellectual property and brand standards
Licenses the trademarks, restricts alterations, and binds the franchisee to the operations manual and quality audits.
4. Training, supply and support
Covers initial and refresher training, approved suppliers, equipment obligations and the support due at launch.
5. Term, termination and dispute resolution
Sets the term, renewal conditions, exit and post-term restraints, and the governing law and forum for disputes.
Who Does What: Franchisor and Franchisee Responsibilities
| Area | Franchisor | Franchisee |
|---|---|---|
| Brand and trademarks | Registers and owns the marks | Uses them strictly under licence |
| Site selection | Approves the location | Signs the lease and fits out |
| Permits | Supplies specifications | Applies for and holds the licences |
| Marketing | Runs campaigns | Pays the marketing levy |
| Operations | Publishes the manual and audits | Follows the standards daily |
| Staffing | Provides launch training | Recruits and employs the team |
What Are the Ongoing Tax and Compliance Obligations?
A Hong Kong franchise company pays territorial profits tax, files an annual return with the Companies Registry, renews its Business Registration Certificate, and keeps proper accounts every year.
Hong Kong taxes company profits on a territorial basis. Since the 2018/19 year of assessment, a two-tiered regime has charged 8.25% on the first HK$2 million of assessable profits and 16.5% on the remainder — rates that have applied every year since introduction. There is no goods and services tax, value-added tax or sales tax, which keeps retail franchise pricing simple.
The Inland Revenue Department's business portal sets out current business registration and tax obligations for new companies. The first profits tax return normally arrives around the eighteenth month after incorporation, with roughly three months to file; later returns issue each April. Audited financial statements accompany the return in most cases.
Beyond tax, a franchise company has four recurring duties:
- For a local private company, file the annual return within 42 days after the incorporation anniversary; the fee is HK$105, rising to HK$3,480 when more than nine months late. Registered non-Hong Kong companies file within 42 days after the registration anniversary and pay HK$180 to HK$4,800.
- Business Registration Certificate: Renew before expiry. From 1 April 2026, a one-year certificate costs HK$2,350. A three-year certificate costs HK$6,170, including the Protection of Wages on Insolvency Fund levy.
- Employer obligations: Enrol eligible employees in an MPF scheme within the applicable statutory deadline and operate payroll reporting.
- Records: Retain accounting records for at least seven years, as tax rules require.
Owner-operators also draw salaries or fees from the company, which brings salaries tax into play. Our individual personal income tax services in Hong Kong help founders balance drawings, salaries and personal assessment elections.
Conclusion
Starting a franchise in Hong Kong depends on the right sequence. Pick the structure, incorporate, register with the Inland Revenue Department, map sector licences, then negotiate the governing agreement. The 2026 costs are modest — roughly HK$3,900 to incorporate and register a company for a year. Contractual groundwork is where franchises succeed or fail.
3E Accounting Hong Kong supports both franchisees and franchisors across that journey. We help clients incorporate the operating company and complete Companies Registry and business registration filings. We also maintain statutory registers and registers of charges, and file annual returns. We plan profits and salaries tax positions for owners.
If you are assessing a franchise opportunity in Hong Kong, our team can review the structure, fees and permits against your sector before you commit. Contact us to map your launch.
Launch Your Franchise With Confidence
Tell us your sector and timeline, and our team will map the structure, licences and filings your franchise needs.
Frequently Asked Questions
No. Hong Kong has no franchise-specific statute, register or mandatory disclosure regime. The relationship is governed by general contract law, together with ordinances on trade descriptions, personal data and competition.
The 2026 incorporation fee is HK$1,545 electronically or HK$1,720 in hard copy. Adding a one-year Business Registration Certificate at HK$2,350 from 1 April 2026 brings the first-year total to roughly HK$3,900, excluding licence and professional fees.
There is no franchise licence. Permits follow the business activity — for example, a Food Business Licence from the Food and Environmental Hygiene Department for restaurants.
Yes. An overseas company can register with the Companies Registry as a non-Hong Kong company; the 2026 electronic registration fee is the same HK$1,545. Many franchisors still prefer a local subsidiary for brand and tax reasons.
Profits tax applies on a territorial basis at 8.25% on the first HK$2 million of assessable profits and 16.5% on the remainder, under the two-tiered regime in place since the 2018/19 year of assessment. There is no goods and services tax; owners may also pay salaries tax.
Abigail Yu
Director
Abigail Yu oversees executive leadership at 3E Accounting Group, leading operations, IT solutions, public relations, and digital marketing to drive business success. She holds an honors degree in Communication and New Media from the National University of Singapore and is highly skilled in crisis management, financial communication, and corporate communications.
