The Government has no plan to introduce dedicated legislation or regulatory system specific to franchising, Secretary for Commerce & Economic Development Edward Yau has said.

Addressing lawmakers on regulating franchising-related business practices today, Mr Yau said franchising is a business activity involving a number of legal aspects, including contract, intellectual property, provision and sale of products, liability and safety of products, consignment, as well as employment and arrangements for dispute resolution.

He said the co-operation between franchisors and franchisees is a commercial relationship based on the contract agreed between both parties, which is governed by the law of contract, including the common law and applicable legislation such as the Misrepresentation Ordinance.

He pointed out if there is a dispute on the co-operation between parties for a contract, the parties could acquire and enforce rights under the contract.

If one party fails to fulfil its obligations, the other party could recover damages and resolve their disputes through legal means such as litigation, arbitration and mediation.

The Police will follow up if fraud is suspected in the dispute, he noted.

Mr Yau said the current contract law related to franchising in Hong Kong has been functioning effectively.

Under the principle of respect for freedom of contract, it is not appropriate for the Government to intervene in the commercial operations and disputes between franchisors and franchisees by restricting the substance or format of contracts or imposing specific arrangements for co-operation, he added.