legislative intent

 In order to regulate commercial franchising activities to promote commercial franchise healthy and orderly development, safeguarding market order, the enactment of this Ordinance.

Definition

this is related to the Outset that franchise development, but by building integrity and fair market order and promote the commercial franchising activities towards a healthy direction.

franchise known as the 20th century's most successful business model. In the U.S., the 20th century, the booming 60's franchise to create the climax of the

present in the United States, Japan, EU and other developed countries, has been the universal realization of business chain, franchise of. Because, chain, franchise management can make all the stores shared brand, business model, management know-how, practices standards, training, logistics and other production factors, not only through group procurement and distribution reduce operating costs, but also Through the standardization of the operating efficiency of business objectives to provide consumers with quality products and services.

franchise began in the 19th century, 60's U.S. Singer (Singer Sewing Machine) sewing machine company sells its products to create the marketing time. Later to 1900, this mode of operation along with the American automobile, petroleum, Coca-Cola beverage sales and the development of widespread, especially in the 20th century has been to accelerate the development of 50 years, in the 60's, the nation set off the climax of Commercial Franchise , that is, commercial franchise in the United States during this period of great development, business started in 1955 with the

McDonald's development process, can be transmitted out of the charm of the franchise business. April 15, 1955, McDonald brothers for $ 2,700,000 1st Shop of creation started, the second to the 37-year development, the development to 100 stores in 1959, 1961, 228, 1969 to 1000, three years reached after 2000; in 1980 to reach 5,000 stores in the United States in 1987 to 10,000 in 1989 to 13,900 homes; now house more than 23,000 outlets in 115 countries around the world.

in the 1977-1987 decade, the U.S. mode of operation based franchise system provides more than 2,000 chain stores number reached 500,000. 80 20th century, the cause of the United States doubled the franchise period, in the early 80s, franchise sales of 336 billion U.S. dollars business, and to the late 80's to 716 billion U.S. dollars increased. The actual year 2000 has exceeded 1 trillion U.S. dollars.

the other hand, in the United States, every year nearly 60,000 new companies born, there are 30,000 to 40,000 companies go bankrupt. According to the U.S. Department of Commerce statistics, set up the company five years the new bankruptcy rate was 65%, while in sharp contrast, the activities involved in franchising bankruptcy rate was below 5%. Therefore, franchising has been the favor of banks and investors. This is the McDonald's stock April 15, 1965 to $ 22.5 market, 20 years after its stock price increased 175-fold reason.

can be said that McDonald's is a franchise type mode of operation to provide a successful example, but will carry forward the American-style franchise business of honor should be attributed to Japan.

70 years since the beginning of the 20th century, major Japanese companies are willing to spend lots of money to buy U.S. regional franchises, have to import U.S. know-how and the franchise mode of operation, combined with their actual, developed a priority franchise in the U.S. system of business management, so that franchise chain has grown rapidly in Japan. According to October 2006 Japan Patent Association of Chain JFA survey, as of the end of 2005, the number of franchise systems throughout Japan as 1146, the headquarters of wholly owned stores and franchise combined total of 234,489 homes, an increase over the previous year 8532 stores , franchise system, the total sales of 19 trillion 388.8 billion yen, particularly retail, convenience stores, restaurants, or sales in both the number of stores have a larger growth.

especially in recent years in Japan, the mainstream franchise has been displaced from the self-employed business, the independent form of the opening, into a also participated in a number of franchise systems operating more than shop, rather than rigidly adhere to one or two shop operation. Enterprises to adopt this mode of operation the main reason is that business development and management of their own proprietary technology takes a lot of money and time, and through the payment of franchise fee, fees, other companies able to effectively use proprietary technology developed by management in to obtain short-term economic benefits, therefore, from the cost-effectiveness point of view, franchising is cheap, and high success rate.

the charm of the franchise business, even small and medium enterprises can take advantage of the energy accumulation of the franchise system, sought to play a network effect (system capacity). And other ways to expand the scale of business, compared with time short franchise, saving human resources, the three major cost-saving advantages. The advantage of empirical testing can be summarized as follows:

(1) to expand in the enterprise is only the case of wholly owned stores, in order to expand business scale, additional investment must be an additional need a lot of money and manpower; and If the company turned to franchising, it will save the store money and human resources needed for the building, because the franchise, the new store construction investment is entirely borne by the franchisee. In this way, the headquarters without adequate funding and human resources, but also to achieve the purpose of expanding the scale of enterprises, in the short term to construct extensive marketing network. So, franchising is the use of funds of others to achieve their business scale development of the most effective way.

(2) the chain stores to adopt a uniform inside and outside decoration, both consumers and industry on the headquarters of the impression, the evaluation will change, which will increase their visibility; and, the network effect of franchise system is immeasurable, and this has been the successful development of IT industry experience confirm that Microsoft has with the network effect of IE, accounting for the operating system monopoly is not subversive; more and more telecom operators are trying to use the network effect dominate the marketplace.

(3) As a result of uniform distribution and logistics management system, can significantly reduce procurement costs. Common procurement, unified distribution logistics cost reduction brought about, much higher than the franchisee to pay royalties to the headquarters level. Thus, headquarters and franchisees can work together to pursue funding and personnel efficiency, improve cash flow ratio, to achieve good operating efficiency. , And, with the concession system growth, reduces overall operating costs.

(4) franchise fee, royalties and other income of franchise fees, enabling the headquarters focus on product development and management.

(5) mergers and acquisitions, business sale is not only a means of expanding the franchise system, but also strategically adjust their business strategy. In the U.S., mergers and acquisitions between the franchise system, frequent transfer of business, who want to give up the franchise's headquarters, the strategic withdrawal will be possible. Also, the transfer of a business and selling a franchise system, its price has a big difference.

In addition, the business franchise business model compared with the other, the failure rate is much lower, is not difficult to explore the reasons attributed to the following points:

first, before the start of the business , impeding factor in the development and risk management has basically been ruled out, stores should be used in proven business model and proven by experts to build the internal operation and management mechanisms to avoid the blind judgments and actions. Compared with the independent operators, business franchising has to be sustainable due to the maximum, I am afraid to calculate the individual operators to integrate into the franchise system and the use of professional knowledge.

second franchise to use the already established in the market is consumer awareness of the trademarks, logos and the name of franchise system.

Third, the choice of place of business through the franchise headquarters in the shop location survey, district survey screening.

Fourth, the franchise headquarters before starting the system by skills training, and their business by regular guidance and supervision, these measures make up for lack of experience and ability joining defects.

Fifth, the franchise has been continuing support from headquarters, from purchasing to marketing, advertising, network effect is obvious.

Sixth, different companies selling patented products, franchising is the franchise will self-developed intangible assets, in accordance with the concession contract delivery to the franchisee to use. Once the termination, pursuant to a concession contract relating to noncompete and confidentiality provisions, exit the system to join in the same period of time will not continue to engage in business, this legal protection than the mere protection of intellectual property law related to the intensity of more large, this intangible asset that is equal to the funds management and use effects, more inspired more and more companies trying to become franchisees.

With all these favorable factors,UGG shoes, participate in the franchise activities of the practitioners than the other independent operators to look more stable, more sustainable business.

Thus, business franchising has incomparable superiority, proved that it is indeed good, but not perfect.

Along with the reform and opening up, known as To May 2007, China had more than 2,600 franchise systems, involving more than 60 industries, the total number of 200,000 stores, the world's largest national franchise system. Franchise industries, including supermarkets, convenience stores, restaurants, auto parts, telecommunications equipment, pharmaceuticals, tea, video, books, shoes, glasses, bee products, building materials, home, beauty, training, cleaning, car rental, domestic service, decoration and children's education. It can be said, so far, the development of China's commercial history of the franchise is only ten years, from nothing to more than 2600 franchise system development, for a once traditional, closed market, this is definitely a huge change . If the franchise system really can be called if the franchise system, the business services sector will contribute greatly to the prosperity and development.

Unfortunately, however, is the largest commercial franchise system state, has also become the largest selling country garbage franchise. Indeed, a short history of ten years can not be compared with the accumulation of years, the scale is not big enough, business is not sufficiently standardized, the lack of professional knowledge, science and technology content is not high, the system is not well established business in China such as the characteristics of the initial franchise development. In the so-called more than 2,600 franchise systems, with a sound distribution system, operation management practices, business success, and at best 100, and can really bring profit to the franchisee is one of the few to join the project.

make any money, but it would like to say to you,bailey UGG boots, you would surely be his good luck; also a more profitable franchise projects, chief investment can guarantee you one hundred percent as long as the money, and earn ten thousand million investment, but never admitted this and so why not a good thing for themselves; there is more money ... ...

conviction due to lack of business integrity, mechanisms and regulation, commercial franchising in China, the gradual development of derivatives for the small number of enterprises and individuals in the Some people use false, fraudulent means to lure investors to join, once the initial fee to a considerable amount of fraud, it evaporates quickly, disappeared. Have been media reports of the all fulfilled the

deceived again and again and after a media education, franchisees generally as Because of its falsity is obvious, however, for those

listed in the Investment during the franchisor, the prevalence of exaggerating the problem of return on investment, this approach is the penetration rate of almost one hundred percent, and once the franchisee believed, to take investment actions, ranging from operating losses, while in the drain.

listed in the , to avoid the obligations of the franchisor shall, to disguise the purpose of misappropriating. Such as occurred in recent years End up joining a just a few seemingly idle money, but how to control operating costs franchise, the occurrence of operating losses, who should bear the responsibility, but not clearly defined. Anyway franchise headquarters is infallible, even if the franchise loss, the management fee is not wrong according to income, the result is a business franchise by the franchisee gains access to a million, but it came to a franchisee operating loss of several million dollars. This is the Just think, if the

listed in the direct consequences of the situation is not licensed to provide services to people just collect the money.

listed in the In the absence of successful experience in localization license, also This phenomenon stems from the mainland of China extraordinarily high franchise fees. Shouted the foreign brands, China's high initial fee concession, people raspberry, but also foreigners envy. Profits, trapping the

above, China's commercial franchise markets, the chaotic situation is worrying. Although the Chinese government has long taken a variety of regulatory measures, but the market order to improve the situation is not satisfactory.

(1) Franchise Law Control of

the same way as with the business franchise, franchise and the franchisee trap fraud, not derived from or exist only in China.

franchise flourish in the United States, on the social, economic, had a tremendous impact. Meanwhile, the boom in franchising, franchising in the name of several enterprises, malicious fraud, cheating investors (franchisees) of money,UGGs, or some of the concessions did not operate proprietary technology based on the franchise can not be business guidance, resulting in join those who suffer economic losses, and therefore, the franchisor and the franchisee dispute between frequent. In this context, the legal regulation of franchising the voice gradually rising.

legal theory, the relevant concession legal control methods, focus on the following aspects:

① entrance in franchise regulation and dispute prevention. Mainly in the franchisee recruitment, franchise pre-contract phase of the legal regulation. Specifically, information disclosure and publicity through the sound system, and strengthen the franchisor's disclosure obligations. This is the first increase the franchisee's method of contractual obligations.

② regulation at the exit and the protection of the franchisee. Mainly on the middle of the franchisee refused to renew the contract improper termination, and (to renew the contract) behavior, by special law and contract law and other relevant intellectual property laws specifically applicable to achieve the goal of legal regulation.

③ franchise process in the regulation. Mainly on the normative content of the franchise contract and the performance of the contract, the abuse of dominant position excluded from the franchisor, improper restraint, and restrictions on behavior, mainly by anti-monopoly law to control and adjust.

④ regulation through judicial means to achieve results. Namely the judicial settlement of disputes, franchise, you can apply to civil law, contract law, corporate law, antitrust law, trademark law, patent law, copyright law, unfair competition law, product liability law and other related laws to implement, it is rely on the use of common law judicial means to regulate the franchise method.

in a foreign country, the basic legal relationship between the franchise adjustment and dispute resolution, relying mainly on investment law, contract law, antitrust and regulation policy and franchising of legal precedents, reasoning, etc., while in China is not enacted Under antitrust law, the legal regulation of the franchise system, will rely mainly on the Ordinance and under the designation the application of laws to achieve.

need of special attention, in addition to the above-mentioned laws and regulations, including franchising laws related industries in particular law. For example, food hygiene and catering associated with cigarette sales related franchise regulations, sales of medical devices and drug-related laws and regulations and so on. In the franchise system expansion, mergers and acquisitions, business transfers, etc. is often used methods based license, so, franchising and securities law, trust investment law, financial law, tax law, accounting law into contact.

From a global perspective, regulation of commercial franchise activities, protection of the interests of franchisees and legal measures on the way there are two types, one is the legislative, judicial, administrative or contractual relationship directly involved in the franchise method the franchise contract that the state can be regarded as inappropriate in terms of remedy to be declared invalid; the other is to make the franchise franchisee franchising system to know beforehand the actual status and investment risks, and the creation of the information disclosure system and the publicity system. The former is called regulatory law franchise or license Relations Act (Franchise Relationship Law), which is known as the information disclosure law, or disclosure requirements method (Disclosure Requirement Law).

view from the foreign legislation in the United States, 20th century, 60 years after the franchise been flourishing in the United States, but the absence of legal regulation, leading to confusion in the market franchise. Therefore, the U.S. federal and state governments are beginning to realize the interests of safeguarding the potential need for the franchisee. Since 1971, the U.S. Federal Trade Commission (FTC) to develop a uniform application of federal rules and information Franchise Disclosure Act included in the plan, and implemented since 1972, held a series of hearings on the franchise issue. Later, in 1978, the U.S. Federal Trade Commission (FTC) has finally worked out trade rules (Trade Regulation Rule), 1979 年 10 月 21 official implementation of disclosure requirements and prohibitions, FTC rules listed franchisor to the investor (the franchisee) should be the minimum disclosure matters.

in the United States receive a higher evaluation of the Midwest Securities Commission (MSCA) promulgated the disclosure issues, more stringent than the FTC rules, the content of legislation in 15 states were absorbed.

only in the United States has a federal law disclosure system, and no registration system. Legislation in 15 states, 13 states also have information disclosure system and registration system, the only information disclosure system in two states.

since the 20th century began in the mid 90s, with the franchise market and the development of science and technology, franchising laws and regulations on economic activity proposed new requirements, and therefore, the community began to call for amendments to the United States franchise disclosure rules ; October 1999, the U.S. Federal Trade Commission announced amendments to the Ordinance, the target is to modify the rules to form a unified federal franchise rules and federal franchise disclosure laws, the focus of concern is licensing issues. However, since then modifications continued until January 2007, the U.S. Federal Trade Commission formally announced the amendments to press, and in March 2007, promulgated the amendment for up to 398

revised franchise rules took the form of step by step, from 2007 to July 1, the franchisee may choose to apply the revised rules, you can also choose to apply to the original regulation; but In July 1, 2008, the U.S. federal license all people must abide by new rules to carry out the revised franchise activities.

addition, as the industry, especially France, the United States in 1976 and 1978, respectively, the car developed Relations Act (Automobile Dealers' Day in Court Act) and oil Relations Act (Petroleum Marketing Practices Act); as state law, 1971 In California, to develop a

as franchise law, information disclosure regulation system means the system the franchisor to the actual operation of their franchise contract and the important content in the franchise contract before joining the system of advance notice. The system can be broken down into a narrow disclosure system and registration system. The so-called narrow disclosure system, is the franchisor will be with their conclusion to the franchise contract to join the applicant in advance to provide the franchise contract and their own information. Registration system sucked the above information stored in government agencies or industry associations, so that the public search, access the system. Registration system with the information disclosure law can be called public system, if the franchisor for contract disclosure of information relative only to the object,UGG boots clearance, but still the information disclosed.

franchise known as the contractual operations, franchisor and franchisee relationship between human mainly by the laws of the franchise contract concluded between both parties to identify, and once started commercial operation, commercial franchise activities will involve contract law (Civil and Commercial Law), antitrust (Market Circulation Legal), and other aspects of intellectual property law, and therefore, it is difficult to a special law (Law Department) in the form to adjust the complex legal relationship between the business franchise. Throughout the franchise

developed countries, the legal regulation of franchising is mainly reflected in the franchise at the entrance, during the three stages of the exit. As mentioned earlier, at the entrance of the main measures taken to regulate the establishment of information disclosure and public system in the franchise process and the method of regulation at the exit mainly through contract law, antitrust and intellectual property laws related to the specific application of to achieve the goal of legal regulation.

However, in the 20th century, 90's, when accompanied by reform and opening up the universalization of the franchise business, the laws of the market economy (civil law, contract law, company law, trademark law, patent law, copyright law , unfair competition law, antitrust, product liability law) is still in development and continuous improvement.

Thus, 90 years since the 20th century, the Chinese government made concessions to the business of legal regulation efforts are and then adapt the legal environment, business franchising authorities in regulating the market order established rules and regulations, the level of China's legal system is accompanied by a gradual increase and gradual. This is what we see by the