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The Franchise Letter of Intent is a crucial preliminary document used in Hong Kong's business environment when parties are considering entering into a franchise relationship but need to establish a framework for negotiations and due diligence. It serves as a roadmap for the development of the final franchise agreement while protecting both parties' interests during negotiations. The document typically includes proposed commercial terms, exclusivity periods, confidentiality provisions, and due diligence requirements. While operating under Hong Kong's common law system, it provides flexibility in terms of negotiation while maintaining certain binding provisions where necessary. This document is particularly important in Hong Kong's dynamic business environment, where franchise arrangements often involve both local and international parties, requiring clear communication of intentions and protection of confidential information during the negotiation phase.

1. Date and Parties: Opening with date and full identification of both parties - potential franchisor and franchisee

2. Introduction: Brief description of the franchisor's business and franchise system

3. Purpose Statement: Clear statement that this is a non-binding LOI to explore a potential franchise relationship

4. Proposed Business Terms: Key commercial terms including territory, fees, and basic operational requirements

5. Due Diligence Process: Outline of the investigation and evaluation period

6. Timeline: Proposed schedule for negotiations and execution of final agreement

7. Confidentiality: Binding provisions regarding confidential information exchange

8. Exclusivity Period: Period during which the franchisor won't negotiate with other parties

9. Good Faith Negotiation: Commitment to negotiate in good faith

10. Binding Provisions: Specification of which provisions are legally binding

11. Termination: Conditions under which the LOI can be terminated

12. Governing Law: Statement that Hong Kong law governs the LOI

13. Signature Block: Space for parties to sign and date the document