A Study On The Legal System Of Information Disclosure In Franchising

Franchise is called the most successful model of business-running in the 20th century. Its magic power lies in the fact that even small-and-medium-sized enterprises can take advantage of the franchising system to lay down a solid foundation and achieve network effects. Nevertheless, it takes risks for investors to join franchise-running model, and it takes even more risks when the market finds itself in an imperfect legal environment. The phenomena that franchisors take advantage of franchising rules to conduct business fraud are often seen and quite serious. In those cases, franchisees are often cheated and suffer losses because of lack of real, accurate, and adequate information. Other countries'legislation and practices show that the key measure to take to stay away from franchising risks is to establish a system of information disclosure in franchising, and this is the inevitable result of a country's interference in franchising, and it is one of the solutions to restore order to franchising market. In the process of franchising, franchisee (investors) can make the best investment choices only when rules force franchisors to disclose information of vital importance which touches upon investment risks and interests.In 2007, China successively promulgated the"Regulation on the Administration of Franchises"and"Measures for the Administration of Information Disclosure of Franchises", and thus established a relatively sound legal system of information disclosure in franchising. However, these legal documents have more shortcomings and need to be amended, when compared with foreign legal systems which are more complete and feasible. Upon this note, this article concerns itself with the explanation of franchising, and along this line of thought, the author continues to analyze the connotation, meaning, and theoretical basis of franchising. Taking China's current legal system of information disclosure in franchising into consideration, the author has come up with advices which may help improve China's legal system of information disclosure in franchising.This article is divided into five parts:Partâ… : Introduction. This part is mainly to descript some basic issues briefly, such as research background and significance research methods and ideas, research scope and limitations, existing literature research situation, structural arrangements and other issues.Partâ…¡: Summarization of legal system of information disclosure in franchising. This part starts from the concept of franchising, and analyzes the legal characteristics from the view of legal relationship. Basing upon these analyses, the author discusses the produce, meaning, theoretical foundation and principles of the legal system.Partâ…¢: Analysis and reference of foreign legal systems of information disclosure in franchising. This part summarizes the characteristics and advantages of other countries'legislation upon the analysis of the legislative status of the information disclosure of the franchising in some typical countries such as America, Australia, Japan and France, to help improve China's legal system of information disclosure in franchising.Partâ…£: Analysis of the legislative status of the information disclosure of the franchising in china. This part begins with a brief introduction on the legislative evolution of the information disclosure of the franchising in China, following analyzes the concrete content of our legislation, then evaluates the advantages and shortcomings of our current legislation.Partâ…¤: Comprehensive proposal of the current legal system of information disclosure of franchising in China. In this part, the author has come up with advices which may help improve China's legal system of information disclosure in franchising, based on the successful experiences of foreign legislations and our actual situation.