A foreign brand's Taiwan store: company, branch, or master franchise

A Korean or U.S. fashion or food brand may own shares in a new Taiwan company, register its own branch, or sign a master franchise with a Taiwan business that will recruit the shops. Article 4 of the Statute for Investment by Foreign Nationals calls the first two, and a loan of one year or more to a business invested in under the first two categories, an investment. A royalty paid to the brand, with no shares, no branch, and no such loan, is outside that definition.

The Fair Trade Commission handles franchise recruitment through a published set of principles and, when the conditions are met, through Article 25 of the Fair Trade Act. Setting up the Taiwan company is covered in company establishment. How a subsidiary differs from a branch is covered in subsidiary or branch.

The license has to match a Taiwan registration

The owner of a registered trademark may grant an exclusive or non-exclusive license for all or part of the designated goods or services, and for a designated territory. The license cannot be asserted against a third party unless it is recorded with the trademark authority. After recordal, a later assignment of the mark does not end the license. A later exclusive license does not disturb a non-exclusive license already on the register. Inside the licensed scope, an exclusive licensee can keep out the owner and everyone else. If the mark is infringed inside that scope, the exclusive licensee may sue in its own name unless the contract says otherwise. Trademark Act, Article 39.

An exclusive licensee may sublicense within that scope. A contrary clause in the contract controls. A non-exclusive licensee may not sublicense without consent from the owner or the exclusive licensee. A sublicense, too, needs recordal before it binds third parties. Article 40.

A mark used at home, with no Taiwan registration, is not a registered right that Article 39 can record. An English license can still be signed. It does not put an entry on the Taiwan register.

A brand that also sells cosmetics has a separate product path, described in cosmetics market entry, company setup, and lawful sale.

Investment filings for shares, branches and business loans

A foreign national under the statute includes a foreign company. Nationality follows the law under which that company was formed. The competent authority is the Ministry of Economic Affairs, which may delegate the work. Its Department of Investment Review publishes the application workflow for investment in domestic businesses. Foreign-company branch applications go to the Administration of Commerce under the MOEA allocation of responsibilities. Article 3, Article 2, application workflow.

The Executive Yuan sets, and periodically reviews, the industries in which investment is prohibited or restricted. Where a statute or a regulation under a statute restricts the industry, the investor needs permission or consent from the authority in charge of that industry. The relevant retail or restaurant activity must be checked against the current list by industry code. Article 7, the list published by the Department of Investment Review.

The investor files an application and an investment plan and receives an approval. A change of plan is filed the same way. After the application formalities are complete, the authority is to decide within one month, or within two months if another industry authority's power is involved. That is the statutory period for the investment decision. It is not a timetable for company registration, trademark prosecution, or the store opening. Article 8.

The approved capital has to arrive in full within the approved period, and the arrival is reported for checking. Whatever is not contributed by the deadline is cancelled at the deadline. For a justified extension, the investor must apply for approval before the deadline. After the contribution, the investor applies to have the invested amount assessed. Article 9.

Capital may be cash, machinery or raw materials for the investor's own use, patent rights, trademark rights, copyrights, know-how or other intellectual property, or other property the authority accepts. Putting the trademark in as capital for shares is both a shareholding under Article 4 and an intellectual-property contribution under Article 6.

The Company Act divides companies into an unlimited company, a limited company, a company with both unlimited and limited shareholders (兩合公司), and a company limited by shares. A limited company has one or more shareholders, each liable only up to the amount contributed. A company limited by shares has two or more shareholders, or a single government or corporate shareholder, and each shareholder is liable for the shares taken. The company name states which kind it is. Company Act, Article 2.

A foreign company may not carry on business in Taiwan in its own name unless its branch is registered. The person who does so anyway faces up to one year of imprisonment, detention, or a fine of up to NT$150,000, and the fine may accompany imprisonment or detention, and bears civil liability. Two or more actors are jointly liable, and the authority must prohibit use of the foreign company's name. A branch has to set aside funds for its operations and name a representative as the responsible person in Taiwan. The responsible person in Taiwan who returns those funds to the foreign company after registration, or lets it take them back, faces up to five years, detention, or a fine of NT$500,000 to NT$2,500,000, and imprisonment or detention may be combined with the fine. Article 371, Article 372. Opening that branch is also an Article 4 investment.

Recruiting shops pulls in the franchise principles

On the Commission's principles, a franchisor licenses trademarks or operating know-how, assists or guides the shop, and is paid for it. A franchisee uses that mark or know-how, accepts the assistance or guidance, and pays. The relationship is ongoing and contractual. Resale or rental of goods bought at or below the wholesale price, and nothing more, is excluded. The payment includes the franchise fee, royalties, training, goods and materials, equipment, and fit-out paid to the franchisor or someone the franchisor names. Full principles. The last amending order printed on that page is the August 1, 2018 order, Gong-Fu-Zi No. 10712604971. Checked on October 1, 2026.

During recruitment, failing to give the counterparty the following information at least ten days before the franchise, or the preliminary franchise, is concluded — or within a period that is reasonable on the facts, or a period the parties set — is treated as obviously unfair, unless there is a justified reason. A preliminary relationship means the counterparty pays something and signs a draft, reservation, or letter of intent before the main contract, and loses that money or owes damages if it walks away.

The information has seven parts: pre-opening amounts, or estimates, paid to the franchisor or its designee for the franchise fee, training, goods and materials, equipment, and fit-out; ongoing royalties and the amounts or estimates for guidance, marketing, and supplies; the name, scope, and limits of the trademarks, patents, and copyrights being licensed; what the training and operating help actually consist of; the plan for other shops of the same system in that trade area; restrictions during the term, such as designated suppliers, minimum orders, specified equipment, and a required contractor or specification for the fit-out; and how the contract may be changed, ended, or cancelled. Paper, email, a storage device, social media, or a messaging app is enough. The franchisor has to be able to prove it was given.

The justified reasons written into the principles are continuation or expansion of an existing franchise, information the franchisor objectively does not have, and other cases with no information gap.

Before signing, the counterparty gets at least five days to read the contract, or a period that is reasonable in that case. The signed contract is delivered within thirty days, unless the delay is not the franchisor's fault. The principles give as examples a shop on an outlying island or in a remote area, a mortgage process the franchisor does not control, and delay caused by the franchisee.

A breach of those disclosure or contract-delivery rules that is serious enough to affect trading order violates Article 25. Article 25 bars deceptive or obviously unfair conduct, beyond the Act's other provisions, that can affect trading order. For a violation of Articles 21 or 23 through 25, the Commission may set a deadline to stop, correct, or take necessary corrective steps, and may fine NT$50,000 to NT$25 million. If the deadline is missed, it may order again and fine NT$100,000 to NT$50 million for each further breach, until the conduct stops or is corrected. Article 42. That is an administrative sanction. The principles do not say the franchise contract is void.

If the foreign brand recruits Taiwan shops itself, the question is whether the brand is the franchisor in this definition. If the Taiwan master recruits them, the master may be the franchisor as to those shops, and the contract between brand and master is tested separately. The Commission's own explanation ties the same seven items to Article 25. FTC explanation.

A clause that fixes the price a shop may charge its customer is read against a different article. An enterprise may not restrict the resale price its counterparty charges a third party, or the price that third party charges on a further resale. A justified reason is an exception, and the rule applies to services as well. Article 19. The enforcement rules tell the authority to weigh pre-sale service, free-riding, entry by a new business or brand, competition between brands, and other economically reasonable grounds related to competition. Enforcement Rules, Article 25.

False or misleading statements, in advertising or another form the public can see, about a matter related to the goods and capable of affecting the decision to buy, are barred by Article 21.

The lease and the food registration name an operator

A lease is a contract under which one party gives the other the use and fruits of a thing and the other pays rent. Rent may be money or the fruits of the thing. Civil Code, Article 421. The tenant named in the lease owes the rent. The master franchise does not, by itself, make the foreign brand that tenant. Whether the brand signs the lease, or agrees to answer for the rent, is a sentence in one of the contracts.

Food service is under the Act Governing Food Safety and Sanitation. A food business's staff, workplace, facility hygiene, and quality system have to meet the good-hygiene rules. Categories and scales announced by the central authority have to register before they operate, and an announcement may also require a food-safety control system or certification. A restaurant’s registration duty depends on the categories and scales covered by the relevant announcement. Article 8. A clothing store's company or business registration is a different filing, covered with company setup.

The company, the branch, and the local franchisee can each be the seller the customer pays. Advertising, the food-registration applicant, and the tenant need to be read against whichever name is actually on that document.

What counsel marks on a master franchise draft

Territory comes first: all of Taiwan, one city, and whether online sales are inside the licensed area. Exclusive or non-exclusive decides, under Articles 39 and 40, whether the brand may appoint someone else and whether the master may authorize the shops. The draft also has to say who records the sublicense, whose name is on the Taiwan registration, and when the shops take the mark off signs and packaging after the contract ends.

If the deal meets the franchise definition, counsel lines the draft up against disclosure at least ten days before the franchise or preliminary franchise relationship, or within the reasonable or agreed period, the five-day or reasonable reading period, and delivery of the signed contract within thirty days. Where the disclosure's figures and the contract's franchise fee or royalty differ, the copy that was actually given to the counterparty is the one to keep.

A fixed consumer price, a required supplier and minimum order, leftover stock and fit-out at the end, and the dispute clause are marked against the article that governs each of them. Enforcing a foreign judgment in Taiwan is a separate question, discussed in enforcing a foreign judgment.

For a contract review enquiry, identify the parties, the proposed investment structure and Taiwan trademark status, and describe the draft. Contact Attorney Wei Tseng (曾雋崴), Hovering International Law Firm, at wei@hoveringlaw.com.tw. Address: 7F-2, No. 35, Sec. 1, Chengde Rd., Datong Dist., Taipei City 103, Taiwan (103 臺北市大同區承德路一段35號7樓之2).

Official sources

• Statute for Investment by Foreign Nationals, Articles 2, 3, 4, 6, 7, 8, and 9. The database shows the statute's amended date as November 19, 1997.
• Department of Investment Review, inbound application workflow and investment rules, including the prohibited and restricted list.
• Company Act, Articles 2, 371, and 372.
• Trademark Act, Articles 39 and 40.
• Fair Trade Act, Article 19, the unfair-competition chapter including Article 21, Article 25, Article 42, and Enforcement Rules, Article 25.
• FTC principles on franchisor conduct and FTC explanation of franchise disclosures.
• Civil Code, Article 421.
• Act Governing Food Safety and Sanitation, Article 8.

Checked: October 1, 2026