A Research On Business Franchise Disclosure Law

Franchise is one of the most vibrating business forms in modern market economy, but in the promotion of franchise, in order to entice people into franchising, franchisors are likely to conceal or invent some important facts by taking advantage of information asymmetry. Consequently, problems concerning undermining market credibility such as business frauds become more and more serious, which not only badly damage the interest of franchisees, but also terribly disarrange the market order. However, supervised by business franchise disclosure law, franchisors are obliged to disclose some important information, which will reduce the information asymmetry, guarantee franchisees'informed freedom of contract, and keep the proper order of market competition.Business franchise disclosure law is the core of the franchise legislation and there are many relatively mature models in international community. However, legislation on Business franchise disclosure was started later in China and there still exist many weak points. This thesis includes four chapters, starting from a general introduction to the theoretical foundation of disclosure law, then a detailed comparative study of legislation models of some important countries and organizations in the world, and at last some analysis of the problems in the existing laws in China, with constructive solutions suggested.Chapter 1 is an outline about business franchise disclosure law. After introduction to some relevant concepts and features of the law and analysis of its theoretical foundation as well as significance, it is concluded that this law will diminish the adverse selection and moral hazard caused by information asymmetry, lower the transaction cost, increase the efficiency of resource distribution and maximize the social welfare. This law has great value and function in the sense of economic laws, for it conforms to the social justice theory, embodies good faith principle, and guarantees the right of knowledge of franchisees, all of which plays an important role in keeping the balance between individual interest and social interest. At the end of this chapter, the legislation outline on business franchise disclosure law of some major countries and organizations, including China, is briefly introduced.Chapter 2 is an detailed introduction to the contents of business franchise disclosure law. This chapter is the core of the whole thesis, in which such aspects as the principles, subjects, forms, time, items and disclosure exemption of this law of some model countries and organizations, including China are compared and analyzed profoundly and thoroughly, thus a base is established for the suggestions in the following chapters for the perfection of legislation.Chapter 3 is a study on legal liabilities of this law. It makes a comparative analysis on the criminal penalty, administrative punishment and civil liabilities of business franchise disclosure laws in different countries, in which the essence of civil liabilities, liability rule, onus probandi, and punitive damages are the focus. The author suggests that the civil liabilities of the violation of this law should be recognized by the standard of tort liabilities or on the basis of presumptive wrongs, and should apply to the punitive damages law.Chapter 4 is a conclusion, designing the prospect of amending and completing the business franchise disclosure law in China. Based on the above comparative study, the thesis sums up and analyzes the problems in the existing system in China, and put forward some relevant suggestions. It is stated that in our system, the priority of principles to forms, the insufficiency in market adaptability and flexibility, the incompletion of the relevant regulations and the ineffective accountability are all problems to be solved. The law should establish the principle of availability and understandability of the disclosed information , improve the subjects of disclosure liability, set up disclosure exemption system and voluntary disclosure system, and perfect the implementation of the third party media law and credibility assessing system as well as relevant information disclosure laws.