QFA Hong Kong issues refurbishment and equipment upgrade guide: franchise agreements should specify costs and responsibilities

The Quality Franchise Association (QFA) Hong Kong website published guidance on refurbishment and equipment upgrades on 3 October 2026, focusing on how responsibilities should be divided between franchisors and franchisees when brands introduce changes. The guide notes that brand identities need refreshing, but franchisees should not discover only after signing which costs they must bear. Specifications, costs and approval procedures should all be set out clearly in advance.

Upgrade requirements go beyond an equipment list

The guide recommends that refurbishment and equipment arrangements specify the required standards, intended uses, and acceptable alternative models or performance requirements. They should also identify who owns and pays for the equipment, and who is responsible for servicing, repairs and replacement. Prospective franchisees reviewing an agreement should look beyond what they need to buy and check who will be responsible for it in the longer term.

The guide also highlights the importance of specifying what triggers an upgrade. When a brand requires refurbishment or equipment upgrades, clear terms help both parties understand how those requirements will be implemented, rather than leaving them to negotiate responsibilities item by item once work or replacement begins.

Mandatory upgrades should have a separate change notice

The guide recommends that franchisors issue a separate change notice for every mandatory upgrade, setting out its purpose, the outlets affected, technical requirements, anticipated impact and implementation date.

The notice should also distinguish between confirmed details and matters still subject to quotations or site surveys. This helps franchisees understand which requirements are settled and which arrangements remain provisional, avoiding the risk of treating an initial proposal as a complete set of instructions for the work.

From site checks to completion sign-off

The guide sets out four implementation steps. The first is a site assessment covering power supply, drainage, load-bearing capacity, fire escape routes and lease restrictions, with suitably qualified professionals engaged where necessary. The second is to confirm the plan, specifying the scope of works, allocation of costs, working hours and responsibility for approvals. Orders should only be placed once the necessary consents have been obtained.

The third step is approval of exceptions: outlets may propose alternatives because of space constraints, the remaining lease term or existing equipment. The reasons for approval and the period for which it applies should be recorded in writing. The final step is completion inspection and sign-off, retaining test records, maintenance documentation and a defects list. Brand approval must be distinguished from confirmation of statutory compliance; the two should not be treated as interchangeable.

Hong Kong arrangements must follow the local framework

The guide notes that Hong Kong currently has no franchise-specific legislation, general franchise registration system or statutory franchise disclosure period. The filing and disclosure requirements under mainland China's Regulations on the Administration of Commercial Franchising should not be applied directly to franchise arrangements operating solely in Hong Kong. This publication is practical guidance, not a new statutory requirement.

Practical takeaway: Before signing an agreement or accepting an upgrade proposal, check equipment specifications, payment and repair responsibilities, change notices and exception approval procedures individually. Only place orders for works after completing site checks, confirming the plan and obtaining the necessary consents.