Taiwan Franchise Law Checklist: Distinguishing Current Disclosure Rules from Outdated Guidance

Before buying a franchise in Taiwan, you may encounter conflicting advice: must the franchisor disclose seven categories of information or eight? Does a failure to disclose breach Article 24 or Article 25 of the Fair Trade Act? These differences may reflect rules from different periods, rather than deliberate attempts to mislead. If you are new to franchising, first check whether the legal information applies to your situation. This will help you make precise requests and avoid overestimating your entitlement to a refund after signing.

1. Check the name of the guidance, not just the article’s publication date

Taiwan does have rules governing franchising, but the Fair Trade Commission’s administrative guidelines should not be described as a standalone ‘Franchise Act’. For disclosure of important information during franchise recruitment, consult the Fair Trade Commission’s Disposal Directions (Guidelines) on the Business Practices of Franchisors alongside the Fair Trade Act. Contract performance, validity and civil liability also involve general legislation, including the Civil Code.

Historical materials titled the Fair Trade Commission’s Guidelines on the Business Practices of Franchisors are still available online. They can help explain how the rules have developed, but should not be your sole checklist when signing a contract today. Even a recently republished article may still rely on outdated provisions.

For each source, record three things:

• Full title: Is it the current set of guidelines, historical guidance or an author’s legal commentary?
• Version details: When was it amended? Is the page marked as historical legislation or guidance?
• Quoted provisions: Do the article numbers and disclosure items cited match the current official text?

Assess a new franchise transaction against the rules applicable at the time. If you are reviewing an earlier dispute, ask a lawyer to establish which rules applied when the conduct occurred. Current article numbers cannot simply be applied retrospectively to every older case.

2. Separate the seven required disclosure categories from additional due diligence

Point 3 of the current guidelines lists seven categories of important franchise information: costs before operations begin; costs during operations; intellectual property information; operational assistance and training; plans or proposals for other outlets in the same franchise system within the relevant trading area; restrictions on the franchise relationship; and the conditions and procedures for amending, terminating or rescinding the agreement.

Some older materials also list ‘the number and addresses of outlets in the same franchise system in each city and county, and the proportion of contracts rescinded or terminated in the previous year’, producing an eight-item checklist. This information is not a separately listed eighth category under the current Point 3. If a franchisor does not provide it, an old checklist alone is not a sound basis for concluding that the current disclosure rules have been breached.

However, information can still matter to your investment decision even if it is not separately listed as a mandatory disclosure item. You can ask the franchisor to supply it as a condition of continuing discussions. Whether other legal liabilities arise will also depend on the specific facts.

When organising your documents, use two columns: ‘Information listed in the guidelines’ and ‘Additional information requested by the prospective franchisee’. For each item, note the franchisor’s response, the relevant attachment and any points still requiring clarification. This avoids presenting your own requests as express legal requirements, while ensuring that a claim that ‘all seven categories have been covered’ does not bring your assessment of the brand’s risks to an end.

3. Check the full wording, especially deadlines and delivery methods

Legal summaries can easily omit exceptions or alternative arrangements. Under the current wording of Point 3, important information is to be provided ten days before entering into a franchise or preliminary franchise relationship, or within a period considered reasonable in the particular case or agreed by both parties. There is also an exception where there are legitimate grounds for not providing the information. Reducing this to ‘at least ten days in advance in every case’ is incomplete.

Likewise, do not confuse the disclosure period with the contract review period. The former helps you assess the transaction; the latter gives you time to examine the agreement you are preparing to sign. Receiving a franchise recruitment brochure does not mean you have received a complete contract for review. Receiving a contract does not mean all seven information categories have been adequately addressed either.

Permitted delivery methods also differ between versions. The current guidelines allow paper documents, email, electronic storage devices, social media and messaging apps, among other methods. It is therefore inaccurate to conclude that electronic-only disclosure is necessarily non-compliant. What matters is whether the information was actually provided, whether it was sufficient and whether the delivery date can be established. The franchisor should produce evidence that the information was supplied.

Keep emails together with their attachments, and record the date received and the version. If the franchisor only sends a link to a file that is continually updated, ask for a version you can download and retain, so that you can establish what you saw at the time.

4. Distinguish a regulatory breach from a right to a refund

Older articles and enforcement decisions may cite Article 24 of the Fair Trade Act, whereas Point 5 of the current franchise guidelines refers to Article 25. This does not make every case citing the old article number irrelevant. It does mean you need to identify its date and legal context.

Under the current guidelines, a breach of Point 3 or Point 4 that is sufficient to affect trading order constitutes a violation of Article 25 of the Fair Trade Act. A missing attachment alone does not justify overlooking these conditions and concluding that the franchisor has necessarily broken the law.

More importantly, a finding of a breach by the Fair Trade Commission is distinct from your civil claim. Even where disclosure rules have been breached, the contract is not automatically invalid, the franchise fee is not necessarily refundable in full, and you do not automatically have the right to stop performing your contractual obligations. Whether you can have the agreement set aside, rescind it, obtain a refund or claim damages depends on the facts, the contract terms and the relevant law.

If you discover before signing that the franchisor is relying on outdated guidance, ask in writing for the current legal basis and any missing information. If a dispute has already arisen, preserve the original documents and consult a lawyer familiar with franchise transactions in Taiwan, rather than unilaterally withholding payments.

Practical takeaway: Create a dated, version-controlled checklist that separates current disclosure requirements, additional commercial questions and potential civil remedies. Checking the rules before deciding whether to sign is safer than relying afterwards on the claim that ‘a franchisor’s breach guarantees a refund’.