We explore in this project the issues likely to arise in the application of the Fair Trade Law to franchising industry in Taiwan. In particular, we focus first on whether the close relationship between franchisor and its franchisees, which usually is a reflection of the intention by the franchisor to control the principal-agent problem in franchising, should be treated and reviewed under the regulation of merger in the Fair Trade Law. Secondly, how various contractual restraints commonly seen in franchise contracts such as resale price maintenance, tying, and exclusive dealing, should be analyzed under the Fair Trade Law. We approach those issues from theoretical as well as empirical perspectives, in which both legal and economic explanations would be applied. We close the discussion with suggestions to the Fair Trade Commission of Taiwan concerning the enforcement and interpretation of relevant provisions of the Fair Trade Law to franchise relationship.