由Gregory · Sy和Currie李

以它的市场和最近连续中国的开头到WTO里，它在过去二十年进行了迅速发展。 交付一部分到这样成长和与它巨型的1.3十亿人口(330百万在单独它的中产阶级与美国的总人口300百万比较)，它的组合代表世界的最大， `未利用的’消费者市场。 为许多享有特许权的人寻求销售可靠性联合品牌，并且系统的组织结构对经常混乱和被分割的消费者区段(特殊食物和个人服务行业)，中国将是两个最大，多数富挑战性机会在21世纪。 

幸运地为两个消费者和那些在特权产业，可争论被达到的2007年这个区段的最大的自由化，自从“开放”改革1979年。 

认为的那，然而，外国享有特许权的人有，从前，看见成功他们的份额和失败，许多谁有`非常突出它’在中国的成为的市场变动中一个消费者家喻户哓的事，例如麦克唐纳， KFC和PIZZA HUT。    

i. 特权市场的发展在中国

1997年，中国的部国内贸易公布了 商业特权规程的管理 (试验实施和“以后给予特权规程”)代表第一套章程指挥了在具体论及问题关于特权区段。 特权规程介绍了特权的二个类型： 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 “How to negotiate a purchase contract with Chinese supplier properly?” Next week we will publish the second part.