Durch Gregory Sy und Currie Schutze

Mit öffnung Chinas seines Marktes und neuen Reihenfolge in das WTO, hat es schnelle Entwicklung in den letzten zwei Dekaden durchgemacht. Passend im Teil zu solchem Wachstum und im Verbindung mit seiner massiven 1.3 Milliarde Bevölkerung (330 Million in seinem Mittelklasse alleine verglichen mit Amerikas Gesamtbevölkerung von 300 Million), stellt es der größten Welt dennoch `unangezapften' Absatzmarkt für Konsumgüter dar. Für viele wahlberechtigte, die suchen, die Zuverlässigkeit zu vermarkten verbunden ist mit Markenbewußtsein und systematischen Organisationsstrukturen zum oftmals chaotischen und zersplitterten Verbrauchersektor (besonders die Nahrung und persönliche die Dienstleistungsindustrie), ist China beide die größte dennoch meiste schwierige Gelegenheit im 21. Jahrhundert. 

Glücklicherweise für beide Verbraucher und die in der Franchisingindustrie, 2007 die größte Liberalisierung dieses Sektors diskutierbar hervorgebracht seit das „Erschließen“ von Verbesserungen von 1979. 

Dieses besagt sein jedoch fremde wahlberechtigte haben, im letzten, gesehen ihrem Anteil von Erfolgen und Ausfällen, vielen von, haben wem das `, das heraus ihm' während der Marktänderungen Chinas gehaftet wird, zum ein Verbraucherhaushalt Name, wie McDonald's, KFC und Pizza Hut zu werden.    

I. Entwicklung des Vorrechtmarktes in China

1997 verkündete Ministerium Chinas des inländischen Handels Leitung der kommerziellen Vorrecht-Verfahren (Probeimplementierung und im folgenden „genehmigen Verfahren“), verwies das Darstellen des ersten Satzes von Regelungen an Punkte spezifisch ansprechen Betreffend den Vorrechtsektor. Die Vorrecht-Verfahren stellten zwei Arten Vorrechte vor: direct franchising and sub-franchising. The Franchise Procedures provided for the basic structure of current franchising laws, which requires the disclosure of material information to prospective franchisees and includes the following: basic information about the franchisor; operational results of the franchisor; financial results of its franchise outlets; fees and payment obligations; and, terms and conditions for goods and services provided to franchisees. The Franchise Procedures also established the quasi-governmental China Chain Store and Franchise Association (“CCFA”). (Note that the Franchise Procedures were interpreted as not being applicable to cross-border franchise operations.)

In 2004, as part of China’s accession into the World Trade Organization (WTO) and  commitment to the principles therein, the Ministry of Commerce issued the Measures for the Administration of Franchise Operations (“Franchise Measures”) effective February 1st, 2005.  The Franchise Measures were promulgated shortly after the Measures on the Administration of Foreign Investment in the Commercial Sector, which liberalized foreign investment in the retail and wholesale distribution industry. Unlike the Franchise Procedures, the Franchise Measures not only permit foreign investment in the franchising sector but also contain an entire chapter drafted exclusively for this purpose. 

Much like the Franchise Procedures, the Franchise Measures focused largely on franchisor disclosure, but also included the “two-plus-one” requirement, which mandated franchisors to operate two company-owned stores in China prior to commencing franchising activities. Obviously, this has prevented many start-up franchisors from immediately commencing operations in China and was a disincentive for market entry. Moreover, the promulgation of the Franchise Measures and the requirement that all franchising operations be conducted only by PRC entities has effectively removed the alternative measures being used by foreign franchisors for many years, including licensing arrangements and international franchising agreements.  

There have, however, been recent modifications to the franchising framework with the promulgation of a number of new laws in 2007 which will be further discussed below.

II. Current Legal Framework and Franchising Structures in China

In May of 2007, MOFCOM replaced the Franchise Measures (2005) with the Regulations on the Administration of Commercial Franchises (“Franchise Regulations”). The Franchise Regulations, together with the MOFCOM-issued Administrative Measures for the Information Disclosure of Commercial Franchises (“Information Disclosure Measures”) and the Administrative Measures for Archival Filing of Commercial Franchises (“Archival Filing Measures”) currently govern franchising structures in China and set out the following requirements:

1. Definition and Applicability Scope of Commercial Franchises
Article 2 of the Franchise Regulations states that the regulations are applicable to all investors engaged in commercial franchise operations in China.

“Commercial Franchise” is defined in the Franchise Regulations as “business activities whereby a franchisor, through execution of agreements, allows a franchisee to use operational resources, such as a trademark, logo, patent, know-how and others which are owned by the franchisor [refers to legal (not natural) persons], and the franchisee conducts business under the unified business model in accordance with the provisions of the contract and pays franchise fees to the franchisor.

2. Qualifications and the Two-Plus-One Rule
Franchisors must own a well-developed business model, and be capable of providing continued operational management, technical support, business training and other services to the franchisee. 

Additionally, franchisors must own at least two company-owned stores for a period of at least one year. Noticeably missing is the phrase “in China”, which allows for new foreign entrants to immediately commence franchising activities in China.

Gregory M. Sy is a partner / foreign counsel with Grandall Legal Group. His practice includes general business advisory for SME’s in China, particularly in the areas of international corporate structuring and transactions. Representative clients include the Consulate of the United States of America in China (Shenyang), Embassy of Brazil, various publicly listed companies (NYSE, LSE, DAX, and BSE), along with numerous other SME’s operating in a wide range of industries. Mr. Sy obtained an LL.B. from the University of Victoria, and is admitted to the New York bar. Gregory publishes extensively on a variety of China legal issues for international and local publications, and has recently acted as chief editor for Martindale’s China Law Digest. You can contact Gregory at gregsy@grandall.com.cn or learn more about the firm at www.grandall-profile.com.

This is the first part of “Guide to franchising in China” Here you can find part 2 and part 3.