Hong Kong Franchise Industry

The franchising industry in Hong Kong has been developing slowly but steadily. Less than half of the estimated 75 franchisees operating in Hong Kong, are foreign-owned. There are three major sources of franchise brands: international franchise brands, local franchise brands, and Mainland franchise brands. 

Many well-known global brands such as Pizza Hut, 7-Eleven, Outback Steakhouse, Subway, Keeper Pro Shop, Park Avenue have long been established in Hong Kong. In addition, home-grown products and services have used the franchise model to facilitate growth. Hong Kong businesses are very familiar with franchise systems and have developed extensive business connections throughout the region. 

There are no specific franchising laws in Hong Kong for local or international franchisees. However, American franchisors will find strong competition in Hong Kong due to the maturity of the market. To be successful, franchisors need to understand local preferences and tailor their products and services to local cultures, consumer tastes and packaging. They need to establish a close working relationship with local franchisees to build the business and fine-tune products offerings and services. 

The food and beverage sector is especially mature in Hong Kong; many food and beverage concepts have only lasted a short time before closing their doors. Consumers in recent years have favored Korean, Japanese and other Asian over American cuisines and American-style dining concepts. That said, Shake Shack and Five Guys have recently entered the marketplace and appear to be doing well. 

Mall space is at a premium and this has often been a deterrent for local companies to open new retail stores to operate franchises. However, in the Covid-19 era, commercial real estate vacancies are unusually high, leading to some relatively inexpensive leasing opportunities.

There is a growing trend for master franchisees and area developers in Asia to establish franchise operations in Hong Kong covering Macau and some parts of China. These non-resident Hong Kong franchisees are keen to expand their territory beyond their home country for economies of scale and to explore opportunities in Mainland China.  

As the Hong Kong market is relatively small, the most common type of franchise agreement for U.S. franchisors is area development. A typical Hong Kong franchisee would prefer to operate all franchised units in Hong Kong directly, rather than through sub-franchising.  Hong Kong franchisees are hungry for new business concepts, ideas, and they seek quality and well accepted products/services.

Opportunities for U.S. franchisees are: accredited language and subject courses, children sports academies, computer design/development programs, fitness and healthcare, unique confectionery, and quick-service restaurants that offer healthy food and beverages.

For more information please contact:
U.S. Commercial Service, Hong Kong
Email: office.hongkong@trade.gov
Phone: +852 2521 1467