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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