Hong Kong - Country Commercial Guide
Franchise Industry
Last published date:


The food and beverage (F&B) market is competitive in Hong Kong as residents have a diverse palate and are eager to embrace new food trends.  Local franchise competition is strong, while international brands are also popular.  U.S. brands such as McDonald’s, Pizza Hut, Starbucks, Subway, Mrs. Fields Cookies etc. have been in Hong Kong for a long time.  U.S. franchises that have found recent success in Hong Kong are trendy urban brands like Shake Shack and Five Guys.

Besides international franchises, local and regional companies have expanded through the franchising model. Homegrown brands like Japan Home Centre, Sam Gor Tam Jai, Kung Wo Tong and Quality Dry-clean are seen throughout the city.  In recent years, the premium coffee and tea trend has captured the attention of regional franchises such as Arabica, Flash Coffee, and Share Tea.  However, the franchising sector has also seen its share of exits from the market. In 2022, due to prolonged Covid-19 restrictions, established franchises like Red Lobster and Emack & Bolio’s shut down their operations in Hong Kong.

Hong Kong does not have any specific law governing the offer and sale of franchises. Any disputes arising from franchise agreements will be subject to the Common Law.  Franchising in Macau is regulated through provisions of the Macau Commercial Code (MCC), in which Article 680 provides a list of information the franchisor must provide in writing to a prospective franchisee.  As to the respective obligations of the parties in Macau, articles 686 of the MCC provides a general duty of good faith and fair dealing.

In the past, the Hong Kong Franchise Association used to keep a record of franchise operators in Hong Kong, but the association is currently dormant and have does not have an exact timeframe of resuming business activities.  The number of franchises has not been updated in the last few years. The majority of franchise operators are in the food & beverage industry, followed by services such as learning institutions, laundry and dry cleaning and retail.

As the Hong Kong market is relatively small, the most common type of franchise agreement for U.S. franchisors is area development under an exclusive franchisee.  The appointed franchisee would normally prefer to operate all franchised units in Hong Kong directly rather than sub-franchising.  There is also a possibility for Hong Kong area developers to partner with U.S. franchisors to jointly develop franchises in China through equity participation from the franchisors.  There is also a growing trend for master franchisees and area developers in Asia to establish franchise operations in Hong Kong covering Macau and the Greater Bay Area.  These non-resident Hong Kong franchisees are keen to expand their territory beyond their home country for economies of scale and to explore opportunities in Mainland China.  

American franchisors will find strong competition in Hong Kong due to the maturity of the market.  They need to tailor products and services to local cultures, consumer tastes, packaging, and to regularly fine tune their product offerings and services.  Most foreign franchise brands prefer well-established local companies with retail and management experience to be their master franchisees in Hong Kong.  Conglomerates such as Maxim’s Group, Dairy Farm Group, and Li & Fung Group operate big brands such as Starbucks, Shake Shack, 7-Eleven and Ikea, on a franchise basis.

Leading Sub-Sectors

  • Urban F&B brands with a large following on social media
  • Entertainment & Leisure
  • Children sports academies, STEAM education 
  • Computer design/development programs (Coding and Robotics) 


Hong Kong investors are very selective with franchise concepts.  They are sensitive to new market trends and demand in the region.  Hong Kong’s consumers favor high-end, innovative, and unique new products.  They do not mind waiting in line for long periods of time to purchase niche brand products with international recognition.

High rents and labor cost are two major considerations when launching in Hong Kong. Since the pandemic, commercial real estate has declined significantly.  According to some published reports, between 2019 and 2022, rentals at high street shops have plummeted by 55 percent while at prime shopping malls, rents have come down by 40 percent. New commercial real estate space has also become available when major development projects were completed such as 11 Skies, Kai Tak Sports Park, The Southside, The Wai and Airside. In total, by 2026, about 5 million square feet of new prime commercial space will be available.  With this amount of new space, landlords are actively looking for new experiential and retail concepts.

Another daunting challenge that businesses face is labor shortage and high staffing costs.  It was widely estimated that 143,000 residents left emigrated after the 2019 social unrest and Covid-19 measures.  This created a talent shortage across all industries and businesses must pay more for staff retention and training.

When Hong Kong removed all its Covid-19 measures in the first quarter of 2023, inbound tourism began to bounce back.  Within five months after the restrictions were removed, 10 million tourists had come Hong Kong, the majority coming from Mainland China.  While many of their consumption habits have changed, experiential travel seems to be a priority for these travelers.

​Current Market Assessment

Hong Kong has a unique edge in serving the growing franchising business in Asia due to its foot traffic, access to produce (Hong Kong is one of the main re-export markets for food items), labor pool, and role as a global cultural and trading hub.  Since the pandemic, many franchisors have started looking for ways to reduce costs, and using locally sourced produce is a popular strategy.  Foreign franchisors may consider starting their franchise in Hong Kong as a base for China and Asia, to finetune operations to fit local tastes and preferences before expanding elsewhere.  U.S. franchise firms are well-perceived, especially in operational procedures, marketing, quality products, and superior customer service.

Market Challenges/Obstacles

Finding a master franchisee is one of the biggest challenges, as Hong Kong is a relatively small market and the Hong Kong dining scene offers plenty of options. Some of the biggest restaurant groups weathered Covid-19 by focusing on high-quality casual dining restaurants and unique dining experiences.  Franchisors interested in the Hong Kong market need to build flexibility into their commercial terms involving licensing fees and royalties and be ready to make changes to appeal to local flavors.  To maximize success, they should carefully its first opening location to test out the market and build brand awareness before expanding the number of stores.


International Franchise Association

The International Franchise Association is the largest membership organizations for franchisors, franchises, and franchise suppliers.  This directory tool allows potential businesses to research and find available franchises to invest into. 

The Hong Kong Franchise Association

The Hong Kong Franchise Association (HKFA) was established in 1992 is a chapter within the Hong Kong General Chamber of Commerce (HKGCC) and has been operating under HKGCC.  The aim of HKFA is to monitor and promote the development of franchising activities in Hong Kong and Mainland China.


Hong Kong Trade Shows:

International Franchise Expo

Dates: May 30-June 1, 2024

Venue: New York City, NY, The Javits Center, Hall 1B and 1C


For more information about this industry sector, please contact:

U.S. Commercial Service, Hong Kong

Natalie Tong, Commercial Specialist

Email: natalie.tong@trade.gov