Franchise Business Competition Law

At the end of the year 1987, when the first KFC came to China, few people realized it is the very beginning of franchise in China. But franchise developed fast in China in the following years. According to statistics, there are more than 2320 franchises in China now, which make China the country of the most franchises in the world. But, The fast development also bought in many legal problems. China's only existing Regulation on Franchise , which is not so flawless, faces many challenges.The regulation of other countries usually focuses on two kinds ofinstitutions--institution of information disclosure and institution ofrelationship coordination, both of which are used to limit the illegal competition. Institution of information disclosure imposes duty of disclosure on franchised dealers legally to prevent false ones, and institution of relationship coordination could prevent authorizers from limiting positive competition of the authorized. This paper is focused on how to rule the illegal competition and competition limits in franchise with the combination of these two institutions and law of competition. Referring to the example and experience of franchise in the EU and America, this paper studies the practical situation of franchise in China, and gives my own proposals.The first part of this paper studies franchise generally, which discusses the definition, origin and distinction of it. Also, the economic advantages and legal characters of franchise are discussed in this part. The unequal relationship of right and duty between the authorizers and the authorized could maintain the advantage of scale effect and standard management of franchise.The second part discusses the necessity of regulating the franchise with laws. Generally speaking, whatever competition of market needs the regulation of laws. And franchise needs it particularly. The characters of franchise mainly generates two kinds of problems--false information and illegal competition, which could be settled only by the regulation of laws.The third part specializes the application the of information disclosure institution. I give my own proposals on the principals and requirements, forms and contents of information disclosure. In my opinion, the best way to settle the problems of information disclosure may be an officially issued model of it.The fourth part mainly studies the regulation on competition limits in franchise. Since some of these limits are permitted by laws, the regulation should be applied discriminatingly. I'll discuss which ones should be allowed and which ones should be forbidden in franchise by law and I'll give my own proposals on how to manage and apply the legality.