On Some Legal Problems Of Franchising

In recent years, franchising has gradually become a popular hot-spot topic, which attracts so much public attention. As an important business mode, franchising has firmly rooted in the market economy countries. Concurrently, it has been also playing a more and more significant role in the mixed or state-owned economy countries. Since China implemented the reform and open policy, the reform has reached wonderful achievement in many spheres, as well as in the sphere of circulation. As a freshman in circulation sphere, franchising has poured into the new theoretic nourishment and the brand-new model system for the Chinese commercial structure reorganization and the state-owned enterprise's reform. It can be forecasted, the introduction of franchising is a revolution in China microscopic economic system. It will have a profound impact on the establishment and perfection of the market economy order, as well as the promotion of the Chinese commercial civilization. After the latest ten years'development, the Chinese franchising market is more and more mature/full-blown. In retailing, catering and serving industry, there have already emerged a group of well-known franchising brands such as Lianhua and Hualian (supermarket), Quanjude, Donglaisun, Tongrentang, Fornet, and 5i5J etc. Notwithstanding, due to franchising's entrance of China market for a short period, the public lack basic knowledge of franchising with shallow overall understanding. The degree of commercial modernization in China is relatively low, particularly the legislation concerning franchising comparatively falls behind practice. Some issues emerged during the course of development. Absence of necessary market investigation and hardware preparations, some people hastily plunged into the tide of franchising, as a result, they were kicked out or submerged into the tide. For example, the so-called Chinese MacDonald " Red Sorghum" brand and reputable brand "Shaoezai". Even 800Buy, a Japanese well-known franchising brand has ever met its Waterloo, the rather that the freshman involved in franchising. Therefore, it is imminent and urgent to understand the fundamental principles and objectively treat new issues in franchising practice for enterprises'own establishment of franchising system in favor of healthy development of franchising. To discuss the relevant legal issues in franchising practice is beneficial to the legislation on franchising and establishment of a sound legal environment.