QFA Hong Kong publishes non-compete guide: assess work and investment options after leaving a franchise

The Quality Franchise Association (QFA) Hong Kong website published a guide to franchise non-compete clauses on 5 October 2026, reminding prospective franchisees that joining a franchise involves more than opening and running an outlet. The contract may also affect their options for starting another business, investing or finding work after they leave. For those considering a franchise in Hong Kong, understanding post-exit restrictions before signing is an important part of assessing the overall investment.

The guide focuses on options after leaving

Centred on clarifying whether franchisees can start another business after leaving, the guide highlights obligations that may continue after the franchise relationship ends. It notes that non-compete restrictions can affect a franchisee’s future options for opening a business, investing or working, so the decision should not rest solely on operating arrangements during the franchise term.

The guide identifies four key points to check: the restricted activities, geographical scope, duration and people covered. Each needs to be understood separately; simply checking whether the contract contains the words ‘non-compete’ is not enough. Prospective franchisees need to know which choices the clauses actually restrict and for how long, rather than merely confirming that the contract has a relevant section.

This publication is a guide to preparing before signing, not an announcement of new legislation. Its purpose is to encourage franchisees to consider post-exit arrangements early, rather than waiting until they are ready to end the franchise relationship.

No franchise-specific law does not mean restrictions are necessarily enforceable

The guide explains that Hong Kong currently has no legislation specifically governing franchising. Nor does it have a generally applicable statutory franchise disclosure regime, a franchise-specific registration system or a mandatory franchise code of conduct. Prospective franchisees should therefore not assume that a franchisor must separately explain non-compete restrictions, or that they will automatically have a statutory cooling-off period after signing.

At the same time, the guide cautions that the absence of franchise-specific legislation does not mean restrictions are necessarily enforceable. These points need to be read together: the lack of a dedicated franchise law does not make every contractual restriction enforceable, nor does the absence of a specific regulatory framework remove the need to scrutinise the terms before signing.

For anyone comparing franchise opportunities, a practical first step is to identify the relevant restrictions in the contract, clarify what they mean and then decide whether to accept them. Payment or signing should not be based on the assumption that a cooling-off period will be available later.

Turn the restrictions into five questions

The guide’s practical advice is to set out five points in writing before paying: ‘What is restricted? Where? For how long? Who is bound? What exceptions apply?’ These questions can serve as a checklist when discussing the contract with the franchisor.

‘What is restricted?’ concerns the activities that could be affected in future. ‘Where?’ and ‘For how long?’ address geographical scope and duration, while ‘Who is bound?’ requires prospective franchisees to check which people are covered. For ‘What exceptions apply?’, the aim is to establish whether any circumstances fall outside the restrictions, rather than assuming that a particular job or investment will be permitted.

Listing these questions individually helps prospective franchisees identify anything they still do not understand. Those planning to start another business, seek employment or make other investments after leaving should compare those plans directly with the terms, rather than focusing only on the immediate arrangements for opening an outlet.

Factor in the cost of the restricted period

Another key message is to include the cost of any restricted period in the franchise decision. Assessing whether a franchise is suitable should involve not only income opportunities while operating it, but also the potential impact after leaving.

The guide recommends that, if a restriction would block a franchisee’s main source of income, they should first discuss narrowing its scope or obtain an explicit exemption before deciding whether to proceed. This does not mean the franchisor will necessarily agree to changes. Rather, it places the discussion before the investment commitment, allowing prospective franchisees to understand the obligations they are willing to take on.

Practical takeaway: Before paying, draw up a checklist of the restricted activities, geographical scope, duration, people covered and exceptions, then compare it with your work and investment plans after leaving. If your main income options could be restricted, clarify and discuss the terms before deciding whether to join.