Interpretation of Commercial Franchise Regulations

From the concept of franchising can be seen that the franchise has four basic elements:

First, the franchisor must have registered led beacons, corporate logos, patents, proprietary technology and other business resources of the enterprise.

Second, the franchisor and the franchisee is a contractual relationship between the two sides through the franchise contract, determine the respective rights and obligations.

Third, the franchisee's business model should be carried out under the unified management, unified business model that is reflected in all aspects of large management, marketing, quality control, small interior design shop signs and even settings.

Fourth, the franchisee shall pay the appropriate license fee. Resources of the franchisor generally owns the business for a long time after the development, accumulation, with high commercial value.

Franchise in a foreign country over a hundred years of history, has developed into a mature marketing, in many countries, especially developed countries, are widely used.

To avoid excessive administrative interference impede franchise

Q: The franchise is essentially a civil activities, for this characteristic, the Ordinance on the general idea of ​​what is considered?

A: The franchise contract in the nature of behavior, high power led lights for contract law and other relevant civil laws, engage in franchising activities in the civil rights of the parties. How to administrative regulations on franchising to regulate and manage the formulation of regulations first need to consider. To this end, we have established both the general idea:

First, we must grasp the relationship between the executive power of the degree of involvement of civil law, party autonomy and deal with the relationship between administrative intervention.

Second, based on the useful experience of foreign countries and China's actual situation, as long as the franchisor's code of conduct, and to basically achieve the purpose of maintaining the market order.

In accordance with the general idea, the main provisions of the Ordinance to regulate and manage the activities necessary for the franchise with the management of the nature of some of the systems, measures and requirements, and through strict and clear legal responsibility to ensure its effective implementation; on a civil legal relations, can by the parties through negotiation after the contract or the issue, only to do the necessary to reiterate that emphasis.

To engage in franchising activities shall meet the conditions

Q: engaging in franchise activities, the franchisee should have led lamp manufacturer what conditions?

A: The regulations make clear the franchisor engaged in franchising activities shall meet the conditions. Including its three aspects:

First, as only companies licensed to engage in franchising activities, other units and individuals shall not serve as license to engage in franchising activities;

Second is to ask the franchisor engaged in franchising activities shall have a mature business model, and the franchisee has to continue to provide business guidance, technical support and business training and other services;

Third, the provisions of the franchisor engaged in franchising activities shall have at least two outlets, and business for more than 1 year.

The third condition, which is commonly referred to as the "two stores a year" requirement, the main purpose is to prevent some companies use franchising fraud activities.


Disclosure of information should be provided at least 12 aspects

Q: There are national franchising legislation, regarded as a core system of information disclosure. How the provisions of this Ordinance?

A: The regulations reference to international common practice, a dedicated "Information Disclosure" section led lamp manufacturers, clear that the franchisee shall establish and implement a complete information disclosure system, in the franchise contract at least 30 days prior to the date, in writing to the franchisee to provide relevant information and franchise contracts, and clearly defines the franchisor should provide information, including the legal representative of the franchisor and the basic situation and business credit history, franchise-owned business resources, franchise franchisee human ability to provide services and the franchisee is operating in the management and supervision of, franchise fees and their collection methods, franchise outlets in 12 aspects of the investment budget.

15 days of filing to the commerce department

Q: Why Bill to establish a filing system the franchisor?


A: Because the parties to engage in franchising activities of civil rights, the government should not be imposed administrative license, but need supervision and management of its business activities, this Ordinance, the franchisee has established filing system.

Ordinance, the franchisee shall, for the first time the franchise contract within 15 days, to the commerce department for the record, and provides procedures for filing and the filing should be submitted to the documents and data. Commercial departments submitted by the franchisor receives the required documents, information, should be filed, notify the franchisor and the franchisee record list published on the government website and timely updates.


Franchise period should be less than 3 years

Q: franchising activities occur in practice, many problems and disputes, and not up to standard franchise contracts have a direct relationship. Ordinance, which provisions were made to the contract specifications?

A: The Regulations on the norms from the three provisions of the contract were:

First, the franchisor and the franchisee shall enter into a written franchise contract, and clearly a franchise contract shall include the main elements;

Second, learn the practice of other countries, the provisions of the franchisor and the franchisee should be in the franchise contract that the franchisee after the conclusion of the contract within a certain period, can unilaterally terminate the contract;

The third is that except the consent of the franchisee, the franchise term franchise contract shall be not less than 3 years.

Franchisor shall not cheat in the promotion misleading

Q: Bill is how to provide for the franchisor and the franchisee's code of conduct?

A: The regulations for franchising its own characteristics and the main problems in practice, focusing on the franchisor makes provision for a code of conduct. For example, the franchisor shall provide to the franchisee in the franchise operation manual, and the franchisee continues to provide business guidance, technical support, business training and other services; the franchisor requires the franchisee to pay franchise fees before the conclusion of the contract, it shall in writing to the franchisee that the use of the part of the costs and the return of the condition, manner; franchisor should be used in accordance with the agreed service charge to the franchisee marketing, publicity expenses, and use of timely disclosure to the franchisee; Chartered in the promotion activities shall not have any cheating and misleading practices, and its advertisements shall not contain information to be licensed to engage in franchising activities gain the content.

Of the franchisee's code of conduct, the law made by the corresponding provisions, primarily the franchisee without the consent of the franchisor, not the transfer of franchise to others; franchisee may not divulge to others or allow others to use the license person's trade secrets.

Violations of the franchisor to be announced

Q: clear, strict liability is important to the legal system to ensure compliance with, regulations made in this regard which the main provisions?

A: The regulations in violation of the provisions of this Ordinance violations, including the license conditions do not have the appropriate activities to engage in franchising, the franchisor fails to comply with the provisions of the commerce department for the record, the franchisor breach of the code of conduct and violations of disclosure requirements, require a clear and strict liability. From the requirements of the Ordinance to see the types of liability, in addition to confiscation of illegal income, fines and other administrative penalties, constitute a crime, should be held criminally responsible. In particular, the regulations for the characteristics of franchising, the franchisor of the illegal provisions can be announced by public opinion and market pressure to licensees according to the law to correct illegal.


Ordinance, the franchisee prior to the implementation must be filed before May next year

Q: before implementation of the Ordinance, many franchisees have been engaged in franchising activities, this part of the franchisor, the Ordinance apply?

A: The implementation of these Regulations, whether before or after the implementation of the Ordinance to engage in franchising activities, the franchiser, are applicable to this Ordinance. However, considering the actual situation, for the purposes of the Ordinance has been engaged in franchise activities before the filing of the franchiser, the Bill made a special provision that the franchisee should be the effective date of this Ordinance, within 1 year, in accordance with the provisions of this Ordinance to the business department for filing. Meanwhile, the provisions of the applicable regulations do not license second paragraph of Article VII of "two stores a year" requirement. This treatment, in line with the actual situation, also to minimize the restrictions on business activities and impact.

Glossary

Franchise Business

It is a registered trademark, enterprise mark, patent, proprietary technology and other business resources of the enterprise, that is, the franchisor, by contract, its own resources permit these operations is, other operators who are licensed to use, the franchisee In accordance with the contract under a unified business model for doing business, and to pay appropriate license fees to the franchiser.

Related Links

According to statistics, as of the end of 2005, the country has 2,320 franchise systems, such as KFC, McDonald's, Quanjude, Hualian Supermarket, Malan Noodle, Wu Yu Tai Tea, Fornet laundry, Dongyirisheng decoration, involving catering, retail, laundry, interior decoration, leisure and fitness more than 60 industries, format, about 160,000 franchise stores. Franchise development, structure adjustment and improve circulation and promote the development of SMEs, the expansion of employment has played a positive role.

As the core of the franchise intangible asset's output, a number of franchisees tend to have more franchisees, franchisor and the franchisee information asymmetry between, with greater risk potential, the current rapid development of franchising in There are some outstanding problems: some engage in franchising activities do not have the appropriate license conditions; franchise operations are not standardized, the more chaotic market order; the parties involved in franchising, especially the franchisee not effectively protect the legitimate rights and interests; the name of franchising, fraud and other illegal and criminal activities have occurred.