Hong Kong Franchise Trade Mark Licensing Guide: Verify Local Usage Rights and the Licensing Chain Before Signing

One of the key benefits of buying a franchise is the right to use the brand’s name and logo lawfully. Yet a franchise agreement alone may not prove that all the necessary permissions are in place. Anyone considering a franchise in Hong Kong should answer three questions before signing: who owns the trade marks, what authority does the other party have to license them, and exactly how may your outlet use them?

1. Distinguish the franchise agreement from trade mark rights

Hong Kong currently has no legislation specifically regulating franchising, nor any generally applicable mandatory franchise disclosure regime, franchise registration scheme or statutory franchise code of conduct. The parties’ rights are governed primarily by their contract and general law, including common law contract principles, the Misrepresentation Ordinance (Cap. 284) and, for brand rights, the Trade Marks Ordinance (Cap. 559). Do not assume that the franchisor is legally obliged to volunteer a complete set of trade mark due diligence documents.

The Trade Marks Ordinance protects the exclusive rights of owners of Hong Kong registered trade marks. Using another party’s registered trade mark without consent may constitute infringement. Registration overseas does not automatically amount to registration in Hong Kong, and neither a certificate of incorporation nor a business registration certificate proves trade mark ownership.

Unregistered marks may also be protected through a common law action for passing off. Finding no identical registration therefore does not mean that a mark is necessarily safe to use. If in doubt, seek an assessment from a Hong Kong intellectual property lawyer.

2. Check registration records, not just certificates

Before paying, ask the franchisor for a list of the trade marks it proposes to license. For each mark, this should specify its name, image, registration number, owner, goods or services covered, and current status. Cross-check these details against the Intellectual Property Department’s trade mark search records rather than simply accepting claims of “global registration” in a franchise sales presentation.

Pay particular attention to:

• Whether the versions match: The English name, Chinese translation and graphic logo may be separate trade marks. Protection for an overseas logo may not cover the Chinese name used in Hong Kong.
• Whether your business activities are covered: Trade mark protection applies to specified goods or services. Do not assume that restaurant services and packaged food fall within the same scope; check the precise descriptions.
• Whether the rights are current: Filing an application is not the same as obtaining registration. Check renewals and any records that may affect the rights as well.

Searches should cover similar names and images, not just identical wording. If an important trade mark is still awaiting registration, assess the risk before deciding whether obtaining the necessary rights should be a condition of payment or of starting to use the brand commercially.

3. Trace the licensing chain back to the actual rights holder

The company signing the agreement with you may be a Hong Kong agent, a regional master franchisee or another company within the brand’s corporate group. Similar names, shared directors or claims of belonging to the same group are no substitute for valid authorisation.

If the contracting party is not the trade mark owner, ask to see documents sufficient to establish the licensing chain. Confirm that the upstream licence permits it to grant sublicences to franchisees in Hong Kong. Where confidentiality is an issue, request appropriately redacted documents or ask a lawyer to verify the relevant provisions. The territory, term and authority to sublicense must not be left vague.

In particular, compare the term of the upstream licence with the term of your franchise agreement. If the franchisor’s licence expires sooner, require provisions covering evidence of renewal, notification obligations and the steps you may take if it loses its rights. Do not rely solely on assurances that renewal is certain.

4. Set out practical usage rights in a schedule

“Permission to use the brand” is too broad. A schedule to the agreement should identify the authorised versions of each trade mark and cover practical uses such as shopfront signs, menus, packaging, staff uniforms, websites, food delivery platforms, social media and messaging app accounts.

Also clarify whether you may use a Chinese translation, change the logo’s size or colours, and what approval process applies to locally produced promotional material. These arrangements protect brand consistency while making clear which day-to-day uses are already approved, avoiding the need to seek approval item by item after opening.

Hong Kong has a procedure for registering particulars of a trade mark licence. Form T11 can be used to apply for, or give notice of, registration of a licence with the Trade Marks Registry. This is not franchise registration and should not be confused with registration of the trade mark itself. Ask a lawyer to assess the legal effects of recording the licence, and specify in the agreement who will submit the paperwork, provide the necessary signatures and bear the costs.

5. Agree safeguards in case trade mark rights are challenged

Even after completing these checks, you still need to address the possibility of third-party complaints or an interruption to the licensing arrangements. Require clear representations from the franchisor about its authority to grant the licence, together with provisions for notification, legal support and handling procedures if an infringement allegation is received.

If use of a logo must be suspended or signage replaced, clarify who makes the decision and who bears reasonable costs, including reprinting packaging, replacing images on platforms and legal expenses. If lawful use of the core brand ultimately becomes impossible, the agreement should also expressly state whether the franchisee may suspend relevant payments, terminate the arrangement or claim repayment of agreed sums. These rights should not be assumed to arise automatically.

Practical takeaway: Before paying, obtain a trade mark list, Hong Kong search records, evidence of the complete licensing chain and a schedule defining permitted uses. Brand recognition without verifiable usage rights is not a sufficient basis for investing in an outlet.