Study On Legal Protection Of Franchisees

According to the nature of the franchise relationship, the franchisor and the franchisee are equal and independent market participants. The relationship between the franchisor and the franchisee should naturally be the civil and commercial relationship between equal parties. The franchisor and the franchisee should conduct transactions through negotiations with free will and accordingly achieve the maximum of mutual interests. However, the"continuing control"by the franchisor over the franchising structure, the long-term, incompleteness and adhesion nature of the franchise contract, and the existence of specific assets invested by the franchisee and the opportunism of the franchisor in the contracting process render the relationship between the franchisor and the franchisee unequal in power and unbalance in interests. The franchise relationship of natural equality is changed into the relationship of subordination. The position of the franchisee is in disadvantage and the interests of the franchisee are easy to be harmed.Only in a franchise relationship under which the balance of interests of the franchisor and the franchisee is highlighted can franchise be developed into an efficient method for the extension of enterprises and the accumulation of capitals. Only driven by their mutual interests, will the franchisor and the franchisee maintain cooperation. Therefore, the legislator should initiate the adjustment mechanism for the balance of interests in order to fulfill the values of the law. The protection of the franchisee should be highlighted when adjusting the relationship of the franchisor and the franchisee to fulfill the balance of interests between the franchisor and the franchisee.Although the importance of the protection of franchisees attracts more and more attentions and the legislations act positively to the right way, studies on legal issues concerning franchise from the perspective of the protection of franchisees still remain silent. There are gaps and defects in the current laws and regulations on both theretical and practical levels. This article will study the legal issues concerning franchise from the perspective of the protection of franchisees based on the factual situations of the provisions under current laws and regulations and the successful experiences from countries and regions with mature franchising legislations, such as the United States, European Union, Japan, Australia and Malysia. This article proposes that to fulfill the balance of interests between the franchisor and the franchisee, the idea of the protection of franchisees should be highlighted and the system of mechanisms of the protection of franchisees should be established, which shall include but not be limited to the information disclosure by the franchisor, the regulation on the anti-competitive clauses in the franchise contract, the restriction on the right to rescind the franchise contract by the franchisor, and the vicarious liability of the franchisor.