FOCUS: China franchise market

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China Market Franchise Law. Introduction In order to better protect the legal rights and interests of franchisees and consumers, the Chinese government imposed registration and disclosure requirements on franchisors operating in the country. Key Regulations on Franchising in China: Currently, the key regulations on franchising in China include: the Regulation on Administration of Commercial Franchises (Regulation), the Administrative Measures for the Registration of Commercial Franchises (Registration Measures), and the Administrative Measures for Information Disclosure of Commercial Franchise (Disclosure Measures). The Regulation was promulgated by the State Council, while both of the Measures were issued by the Ministry of Commerce (MOC). Reproduced courtesy of wileyrein.com Robert A. Smith, Fairy Li and Kimberly L. Sikora Panza Franchise Registration: According to the Regulation, a franchisor must, within 15 days after signing a franchise agreement for the first franchised location in China, file an application with the appropriate commercial authority in the MOC to register its franchise. The registration requirement is an administrative measure to regulate franchise activities, and also provides potential franchisees with public access to more information regarding the franchisor and its business. Although the failure to register does not impact the effectiveness of the franchise agreement, a franchisor that fails to timely file the franchise registration could face a fine.
China Market Franchise Law. In connection with the franchise registration application, the following documents must be submitted: 1. Business registration certificate of the franchisor. 2. Registration certificate of the franchised IP right. 3. Franchise agreement 4. Certification for the 2+1 Requirement. 5. Marketing plan for the franchised operation. 6. Other documents required by the Regulation. If there are any major changes to the original filing (e.g., changes concerning the business registration of the franchisor, business resource, and distribution of the Chinese franchisees), the franchisor must, within 30 days, file a notice and supporting documents with the MOC for modification of its franchise registration. An annual update regarding new franchise agreements and those terminated in the past year also must be filed with the MOC by March 31. Disclosure: According to the Regulation, except for a renewal of the franchise agreement on the same terms, a franchisor must disclose to the franchisee in writing all information at least 30 days prior to the execution of another franchise agreement. Enforcement: Thanks to the MOC’s online franchise registration system, information about franchisors and their franchising business in China is available to the public. Where there are any illegal activities committed by the franchisor, any party can file a complaint on the MOC’s franchise system or directly before competent commercial authorities, who will make a decision following an investigation. To read more detail go to: https://franchisemeets.com/repor t/asia/CN/article/17/
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FOCUS: China franchise market

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