Franchising in Taiwan: How to Set Up New Store Opening Checks and Sign-Off

When turning an existing business in Taiwan into a franchise network, one easily overlooked question is who has the authority to confirm that a new store can open. Completed fit-out work and a full team do not necessarily mean the store can serve customers safely and reliably. Before recruiting franchisees, the franchisor should establish an opening assessment process so that prospective franchisees understand the acceptance criteria, assessment procedures and arrangements if opening is delayed. These requirements should not be introduced at the last minute, just before the ribbon-cutting.

1. Divide opening requirements into three checkpoints

An opening assessment should involve more than a checklist confirming that the store’s appearance meets brand requirements. A more practical approach is to divide the requirements into legal compliance, on-site safety and operational readiness, with named people responsible and supporting evidence for each.

The legal compliance checkpoint confirms that the store has completed the registrations, permits and other procedures applicable to its actual business activities, use of premises and location. For a food and drink outlet, for example, this means checking the applicable food business registration requirements, as well as building, fire safety and hygiene matters. Checking business registration alone is not enough to establish full compliance. Matters requiring professional judgement should be confirmed by appropriately qualified professionals.

The on-site safety checkpoint covers equipment installation, electrical loads, escape routes and any applicable refrigerated storage requirements. Each item should have a verifiable result, such as an equipment test record, rather than being judged solely from photographs.

The operational readiness checkpoint confirms whether staff can take orders, prepare products, process payments, hand over orders and close the store. The brand’s assessment is only the franchisor’s internal approval process; it cannot replace permits or inspections by the relevant authorities. Equally, completing registration does not mean a store has met the brand’s operating standards.

2. Assess readiness through a full rehearsal, not just training attendance

Completing classroom training does not necessarily mean a team is ready to run a store. The assessment should involve the manager and staff scheduled to work there, using the actual store and its permanent equipment. Head office support staff should not perform the tasks for them, creating a misleading impression that the team is capable when it can only operate with help.

Arrange a pre-opening rehearsal closed to the public, covering routine orders, order changes, refunds, equipment failures and shift handovers. A drinks shop, for example, could simulate several orders arriving in quick succession to see whether staff can still identify products correctly, handle customers’ allergen questions and keep the preparation area clean.

Record at least four things for each assessment item:

• Standard: What constitutes a pass, and which errors are unacceptable.
• Method: Whether the check involves practical operation, document review or equipment testing.
• Evidence: Test results, assessment records and any necessary on-site photographs.
• Responsibility: Who carries out the check, who reviews it and who has authority to approve opening.

The assessment form should refer to operating requirements already provided to the franchisee. It should not suddenly introduce equipment or staffing requirements that have never been explained. If a standard must be changed on site, record the reason, scope of application and arrangements for costs, rather than allowing personal preferences to become mandatory conditions.

3. Grade shortcomings and agree arrangements for delays and reassessment

Preventing opening because of every shortcoming can turn minor issues into unnecessary losses. Allowing every issue to be resolved later, however, undermines essential safety standards. The franchisor can introduce three risk-based categories, but should make clear that these are internal management categories, not statutory classifications.

Issues that prevent approval to open include incomplete mandatory legal procedures, major safety risks or essential equipment that does not work properly. These cannot be waived simply because publicity has already been released or rent has started to accrue.

Issues requiring corrective action and reassessment include an inability to complete refunds, incomplete handover records or a duty team unable to operate independently. The franchisor should specify the remedial steps and reassessment method, rather than simply writing ‘provide more training’.

Minor issues that can be resolved by a deadline might include display details that do not affect safety, compliance or core service. Even where conditional approval is given, the completion deadline and person responsible for follow-up must be recorded.

The franchise agreement or opening schedule should also explain how to book the initial assessment, request reassessment after corrective work, and allocate the associated fees and costs of delay. Responsibility may differ depending on whether the delay results from the franchisor supplying equipment late, the franchisee failing to finish building work or external approval delays. These costs should not automatically fall on the franchisee. In particular, the franchisor should not be allowed to withhold approval indefinitely without providing written reasons.

4. Incorporate opening checks into Taiwan’s contractual and disclosure arrangements

Taiwan has no single dedicated franchise statute or general franchise licensing system, but this does not mean franchising is unregulated. The Fair Trade Commission’s Disposal Directions (Guidelines) on the Business Practices of Franchisors are an important administrative framework used by the Commission when dealing with franchise business practices. They address matters including disclosure of material transaction information and time to review the agreement. Concealing material information in a way that is obviously unfair and capable of affecting trading order may engage Article 25 of the Fair Trade Act.

If the opening assessment involves mandatory equipment purchases, additional training fees, reassessment charges, operating restrictions or termination arrangements where approval is withheld, these should not be disclosed only after the agreement has been signed. Depending on their nature, they should be included in the relevant pre-contract information and contractual documents, with disclosure and review arrangements meeting applicable legal requirements. Older online sources may still cite article numbers from before legislative amendments and should not simply be copied.

Performance of the franchise agreement and allocation of liability are also governed by general legislation, including the Civil Code. The store itself must comply with applicable registration, fire safety, building and food safety rules. Documents should distinguish between ‘the franchisor confirms that the store meets the brand’s opening standards’ and ‘the store may legally trade’. Avoid suggesting publicly that the franchisor’s assessment amounts to government certification.

Finally, have the opening approval document signed by the designated manager. It should identify the store, assessment date, outstanding items and attachments, with both parties retaining a copy. If essential equipment or the core operating team changes after opening, targeted reassessment can be arranged under trigger conditions agreed in advance, rather than requiring a fresh assessment of the entire store at the franchisor’s discretion.

Practical takeaway: Before formally recruiting franchisees, run the assessment process at your own store. You have only established a workable opening standard for the franchise network when you can clearly answer three questions: ‘What evidence justifies approval? Who makes the decision? How are failures put right?’