Franchising in Taiwan: Defining Rights for Online Orders, Delivery Platforms and Cross-Territory Deliveries

When expanding an existing business into a franchise network in Taiwan, franchisors often focus first on physical shops and leave online ordering arrangements until after opening. Yet the same brand may accept orders through its website, delivery platforms and social media at the same time. If permissions are unclear, franchisees may invest in equipment and staff only to discover that they cannot use the channels they had expected. This article focuses on online sales rights, rather than site selection or general territorial protection.

1. Map the channels before defining the rights

Do not simply state in the contract that ‘the franchisee may conduct business online’. Draw up a channel list based on how orders will actually be taken, specifying who may apply, who signs the platform agreement and which products may be sold.

At a minimum, distinguish between the following:

• The franchisor’s website or app: Does the franchised shop merely fulfil orders, or can it list products itself?
• Third-party delivery platforms: Does the franchisor apply centrally, or does the franchisee contract under its own business name?
• Social media and messaging apps: Can franchisees accept orders by private message, or must they direct customers to designated channels?
• Online marketplaces and shops offering home delivery: Do the rights cover only products freshly prepared in-store, or also packaged products and gift boxes?

Each channel should be marked ‘available’, ‘subject to separate approval’ or ‘not currently available’, with the application conditions explained. Platform permissions that the franchisor has not yet secured should not be presented as guaranteed franchisee entitlements. Nor can the franchisor guarantee approval by a platform.

2. Test allocation and delivery rules against order scenarios

Allocating online orders to shops solely by the customer’s home address may not work. A customer might order from work, request delivery to another area or choose to collect from a particular shop. The franchisor should first establish the basis for allocation, then test it with pilot shops, rather than allowing system defaults to replace an agreement between the parties.

Use four scenarios to check the rules: the customer chooses a shop; the system allocates an order by delivery address; the original shop temporarily stops accepting orders; and an order falls outside the normal delivery area. For each scenario, establish who receives the order first, when it may be declined, whether confirmation is needed before reassignment and how the customer will be told about any changes.

For example, if the nearest shop is out of stock, first check that another shop has stock and can fulfil the order, then ask the customer to confirm the reassignment. Another franchisee should not simply be expected to absorb unknown delivery costs. This is one possible operating arrangement, not a legally prescribed method of allocating orders.

For cross-territory deliveries, distinguish between a shop actively advertising to attract orders, a customer choosing a shop independently and a platform allocating an order automatically. These are different situations and should not all be penalised as ‘operating outside the territory’. Any restriction should identify the channels covered, the exceptions and the practical reasons, such as product storage requirements or delivery capacity, rather than merely stating ‘at the franchisor’s discretion’.

3. Include restrictions and associated costs in pre-contract information

Taiwan does not have a single dedicated franchise statute, but franchise transactions are still subject to specific rules. The Fair Trade Commission has issued the Fair Trade Commission’s Disposal Directions (Guidelines) on the Business Practices of Franchisors and addresses relevant conduct under legislation including the Fair Trade Act. Contractual rights and obligations also fall within the scope of the Civil Code.

Under these guidelines, franchisors must provide important franchise information ten days before entering into a franchise relationship or a preliminary franchise relationship, or within a period considered reasonable in the individual case or agreed by both parties. This information includes relevant operating fees, the scope and limitations of intellectual property rights granted, and restrictions on franchise operations during the contract term. The franchisor must be able to prove that the information was provided.

A ban on franchisees opening their own online shops, a requirement to use only designated ordering channels or restrictions on selling certain products online should therefore not be raised for the first time during training or at opening. The actual restrictions, approval procedures and exceptions should be set out in the pre-contract information and the corresponding contract schedules.

Where a designated system or platform involves fees payable to the franchisor or a person it designates, the amount or estimated amount should be stated. If third-party rates are not yet confirmed, clearly identify what remains to be settled and the basis for calculating charges, rather than claiming that ‘going online involves no additional costs’. Under the guidelines, a failure to meet the relevant information requirements constitutes a breach of Article 25 of the Fair Trade Act only where it is sufficient to affect trading order. Equally, disclosure alone does not make a restriction lawful.

4. Use a channel permissions matrix for day-to-day management

Before formally recruiting franchisees, prepare a channel permissions matrix and cross-check it against the contract schedules and ordering system settings. For each channel, record the party authorised to operate it, the platform account holder, permitted products, how orders are accepted, the delivery area and who may approve exceptions. This helps keep recruitment, operations and technical teams aligned.

Also define contingency arrangements if an account is suspended or a platform withdraws: who must notify the relevant parties, which orders will no longer be accepted and how outstanding orders will be handled. If the franchise relationship ends, distinguish between brand pages managed by the franchisor and platform accounts held under the franchisee’s own agreements. Do not assume that the franchisor can simply take over every account; the arrangements must comply with platform terms and each party’s rights and permissions.

Alongside normal orders, testing should cover stock shortages, duplicate order allocations and incorrect delivery areas, to confirm that the written rules can be put into practice.

Practical takeaway: Before offering franchises, create a clear channel permissions matrix showing who can accept orders, through which channels and who will fulfil them. Any arrangement that limits a franchisee’s sources of online revenue or adds unavoidable costs should be explained before they decide to invest.