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5 Int'l J. Franchising L. 5 (2007)

handle is hein.journals/intjoflw5 and id is 1 raw text is: LEGISLATIVE UPDATE CHINA: REGULATIONS ON THE ADMINISTRATION OF COMMERCIAL FRANCHISES (Unofficial Translation) By Andrew Halper, Partner, Eversheds, London Chapter One - General Provisions Article I These Regulations are formulated for the purpose of regulating commercial franchising activities, promoting the healthy and orderly development of commercial franchising and safeguarding market order. Article 2 All commercial franchising activities within the territory of the People's Republic of China shall be carried out in compliance with these Regulations. Article 3 The term commercial franchise (hereinafter referred to as franchising) as mentioned in these Regulations shall refer to the business activity where an enterprise (hereinafter referred to as franchisor) licenses a registered trademark, corporate logo, patent, know-how or any other business resources owned by it to another operator (hereinafter referred to as franchisee) by contract and the franchisee carries out the business activities under a uniform business model as stipulated by the contract and pays franchising fees to the franchisor. No unit or individual other than enterprises may carry out any franchising activities as a franchisor. Article 4 Persons who carry out franchising activities shall follow the principles of free will, fairness, honesty and good faith. Article 5 The competent department of commerce under the State Council shall be responsible for conducting supervision over and administration of franchising activities nationwide in accordance with the provisions of these Regulations. The competent department of commerce under the people's government at the level of province, autonomous region or municipality directly under the Central Government and the competent department of commerce under the municipal people's government which has set up districts, shall be responsible for conducting supervision over and administration of franchising activities within their respective administrative area in accordance with the provisions of these Regulations. Article 6 Each unit or individual shall have the right to report any violation of these Regulations to the competent department of commerce. Upon receipt of any such report, the competent department of commerce shall handle the matter in a timely manner according to law. Chapter Two - Franchising Activities Article 7 To carry out franchising activities, a franchisor shall have in place a mature business model and shall be able to provide continuous business guidance, technical support and business training services to the franchisee concerned. To carry out franchising activities, a franchisor shall have at least two direct sales stores that have been carrying on business for more than one year. Article 8 A franchisor shall, within 15 days of the first entry into a franchise contract, report the same to the competent department of commerce for archival filing in accordance with the provisions of these Regulations. A franchisor who carries out franchising activities within a province, autonomous region or municipality directly under the Central Government shall report the same to the competent department of commerce under the International Journal of Franchising Law Volume 5 Issue I 2007 C Claerhout Publishing Ltd.

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