An Analysis Of Competition-Restriction Terms In Franchising: Taking South East Automotive Dispute Case As An Example

Franchising, as a "win-win" high-level business model in modern marketing, shows strong vitality with its unique operating advantages and is highly respected and welcomed by domestic and international businesses. Franchising is of great help to the social and economic development. However, franchising also has shortcomings, such as limiting competition. Many countries have legal regulations about its disadvantages. Franchising in China has just come into use and is very backward in its specification and management. China doesn't have a comprehensive franchising law and whether the competition-restriction terms in the franchising law is legal can only be based on some relevant laws. In the case discussed in the present thesis, the illegalness of the plaintiff's restricting-competition terms can only be determined on the basis of the relevant provisions of "contract law", "Price Act", "Competition Law", "Antimonopoly Law." Therefore, perfecting the legal systems of franchising in China, has become essential.The thesis, taking South East Automotive disputes as an example, analyses the harms of the restricting-competition provisions in franchising and its causes, adjustment mechanism and legal regulations. And with some classic cases of U.S. and EU and relevant case law doctrines, the thesis systematically reviews competition-restriction terms in franchising.Chapter one first introduces the basic facts and the disputes about South East Automotive case and then gives an assessment about the court judgments. Chapter two presents the harms of the franchising competition-restriction terms. First, A classification of the terms is given and the a discussion on the harms from different perspectives. Chapter three is an overview of franchising and the causes of its competition-restricting terms. The present author first gives a brief introduction about the development and concepts of franchising and then analyses the causes of the competition-restriction terms through the relationship between monopoly and competition and franchising characteristics. Chapter four analyses the nature and the legal regulations of the franchising competition-restriction terms through the South East Automotive case. First, the legal nature of competition-restriction terms is analyzed:the legal and illegal terms. Next, the adjustment mechanism of the terms is discussed in detail from a theoretical point of view. Finally, the law restrictions on the competition-restriction terms is articulated and compared, ranging from the regulations in the United States, European Union to those in China. Based on the above discussions and analyses, the present author contends that China should particularly strengthen the legislation of franchising to ensure its healthy and orderly development.