Restaurant Partnership Agreement (Hong Kong)

A Restaurant Partnership Agreement (Hong Kong) is a legal contract between two or more partners who agree to jointly establish and operate a food and beverage business in Hong Kong. Governed by the Partnership Ordinance (Cap. 38), the agreement defines each partner’s rights, obligations, capital contributions, profit share, and operational responsibilities within the specific regulatory framework that applies to restaurants and food businesses in Hong Kong.

Hong Kong’s food and beverage industry operates under a detailed licensing and compliance regime administered primarily by the Food and Environmental Hygiene Department (FEHD). Every restaurant must obtain a food business licence under the Food Business Regulation (Cap. 132X) before opening. The licence application requires submission of architectural plans, fire safety certification under the Fire Services Ordinance (Cap. 95), building compliance confirmation under the Buildings Ordinance (Cap. 123), and a pre-opening inspection by FEHD officers. The Restaurant Partnership Agreement should clearly allocate responsibility for obtaining and maintaining these licences between the partners to avoid disputes when renewal deadlines approach or compliance issues arise.

If the restaurant serves alcohol, a separate liquor licence is required from the Liquor Licensing Board under the Dutiable Commodities (Liquor) Regulations (Cap. 109B). The partnership must also register under the Business Registration Ordinance (Cap. 310) within one month of commencing business. Restaurants that import food directly must register as food importers under the Food Safety Ordinance (Cap. 612). Failure to comply with any of these licensing requirements is a criminal offence carrying fines and potential imprisonment.

Hong Kong’s food and beverage industry is one of the most competitive in the world, with more restaurants per capita than almost any other city. A well-drafted Restaurant Partnership Agreement prevents the disputes about management authority, profit distribution, working hours, and exit rights that commonly cause restaurant partnerships to collapse — often at the worst moment, such as during a busy period or when the business is growing. The agreement governs the relationship between partners from the day the business opens until any dissolution, providing a clear framework for handling new partners joining, existing partners retiring or dying, and the valuation and allocation of goodwill on exit.

The default rules of the Partnership Ordinance (Cap. 38) allocate profits equally, give each partner equal management rights, and impose unlimited joint and several liability on all partners — regardless of how much work each partner contributes or how much capital each invested. A written Restaurant Partnership Agreement overrides these defaults with terms that reflect the actual commercial arrangement, protecting each partner’s investment and defining their role clearly.

Under Cap. 38, partners are jointly and severally liable for all debts and obligations of the partnership. This means each restaurant partner is personally liable — including with their personal assets, home, and savings — for the debts of the business if the partnership assets are insufficient. A well-drafted agreement addresses this risk through insurance requirements, spending controls, and clear authority limits. Download a free Restaurant Partnership Agreement template on forms-legal.com, compliant with Hong Kong’s Cap. 38 and food industry regulations.

A Restaurant Partnership Agreement (Hong Kong) is needed before two or more individuals commence operating a food and beverage business together in Hong Kong. Several specific circumstances require this document.

New restaurant partnerships should execute the agreement before applying for any food business licences, signing any premises lease, or making any capital expenditure. The FEHD food business licence application under Cap. 132X may require identification of the licence holder — the partnership agreement clarifies who that is and the partners’ respective roles and responsibilities. Under Cap. 38, a partnership without a written agreement is governed entirely by the default rules of the Partnership Ordinance, which allocate equal profit shares, equal management rights, and equal liability regardless of the actual contributions made — terms that rarely reflect the parties’ true intentions on profit sharing, management authority, or exit rights.

Existing informal restaurant partnerships that have been operating without a written agreement should formalise their arrangement as a priority. Informal partnerships are common in Hong Kong’s food and beverage industry, but disputes about working hours, roles, or profit division are far easier to resolve when a written agreement exists. The agreement also establishes a clear mechanism for admitting new partners — for example, when a skilled chef or front-of-house specialist is brought in as a working partner — and for buying out a partner who wishes to leave, retire, or has died.

Restaurant partnerships that are expanding — opening a second location, taking on a franchise arrangement, restructuring the business, or bringing in an investor — need the existing agreement to be updated or replaced to reflect the new structure. New investors or silent partners who are contributing capital without participating in daily management require the agreement to clearly define their limited role and profit entitlement, to avoid the risk that they could be treated as general partners with unlimited liability under Cap. 38.

The agreement is also needed when applying for business banking facilities in Hong Kong. HSBC, Hang Seng Bank, Standard Chartered, and other Hong Kong banks routinely require a formal partnership agreement as part of the business account opening documentation, alongside the Business Registration Certificate, Business Registration Number, and HKID copies of all partners.

Restaurant partnerships entering into a premises lease should include the partnership details in the lease agreement. Landlords in Hong Kong commercial property — typically governed by leases under the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) — will want to know the identity of all partners who are parties to the lease and jointly liable for the rent obligations.

A Hong Kong Restaurant Partnership Agreement should include the following elements to properly govern the business relationship, comply with the Partnership Ordinance (Cap. 38), and address the specific regulatory requirements of the food and beverage industry.

Partners and roles: Full legal names, HKID numbers, residential addresses, and contact details of all partners. Each partner’s designated operational role must be specified clearly — executive chef and kitchen director, front-of-house manager, business and finance director, or any other defined role. The managing partner’s authority to bind the partnership in day-to-day transactions (purchasing, staff hiring, supplier contracts) should be defined, along with spending thresholds that require majority or unanimous partner approval.

Restaurant particulars: The restaurant’s trading name, principal place of business address in Hong Kong, type of cuisine, seating capacity, and the FEHD licence category required under Cap. 132X — general restaurant licence, light refreshment restaurant licence, or factory canteen licence. Where a liquor licence under the Dutiable Commodities (Liquor) Regulations (Cap. 109B) is required, this should be identified separately.

Capital contributions: The specific HKD amount each partner contributes at the outset, the form of contribution (cash, equipment, fit-out costs, lease guarantee, or intellectual property such as recipes or brand), the date of contribution, and the process for making additional capital calls if the business requires further investment. Partners’ capital accounts should be maintained separately in the partnership accounts.

Profit and loss sharing: The agreed profit-sharing ratio for each partner, the timing of profit distributions (monthly, quarterly, or at the end of each financial year), and how operating losses are to be borne. The agreement should specify whether partners draw a salary, management fee, or drawings from the business in addition to their profit share, and how these prior drawings affect the distributable profit. Under the default rules of Cap. 38, profits and losses are shared equally — a written agreement is essential to override this default.

Food business licence and liquor licence responsibilities: Which partner is responsible for applying for, maintaining, and renewing the FEHD food business licence under Cap. 132X. The agreement should specify the consequences if a licence is suspended, revoked, or not renewed — including whether the business must cease operations and how the financial impact is allocated between partners. Applications to the FEHD for general restaurant licences typically take two to three months.

Food safety compliance obligations: Each partner’s specific responsibilities for FEHD hygiene standards, compliance with the Food Safety Ordinance (Cap. 612), temperature control for cold chain management, pest control, staff food hygiene training, and waste management. Non-compliance with FEHD licence conditions can result in improvement notices, fines, temporary closure, or revocation of the food business licence — with potential criminal liability under Cap. 132.

Staff management and employment law: Obligations of the managing partner regarding employment under the Employment Ordinance (Cap. 57), minimum wage compliance under the Minimum Wage Ordinance (Cap. 608), MPF mandatory contributions under Cap. 485, employees’ compensation insurance under the Employees’ Compensation Ordinance (Cap. 282), statutory holiday entitlements (17 statutory holidays under Cap. 57), and rest day requirements. Restaurant staff employment is closely monitored by the Labour Department.

Dissolution and goodwill: The process for dissolving the restaurant partnership under Cap. 38, including grounds for dissolution, the winding-up process, and the allocation of the restaurant name, brand, recipes, supplier relationships, and customer goodwill. Reinstatement obligations under the premises lease — which can be substantial for restaurant fit-outs — should be addressed. Download this Restaurant Partnership Agreement template free from forms-legal.com in PDF or Word format.