Chartered Legal Regulation, Restriction Of Competition In The Business

Since it appeared in America in the 19th century the 60's, as a successful commercial business model, franchising has made rapid development on the virtue of its unique advantages in the world. Franchise's characteristics decide that a certain degree of restriction of competition in franchising is inevitable, but in practice, the franchisor will easily abuse his intellectual property and economic strengths, enforcing some unreasonable behaviors of restricting competition. In order to maintain competition and make the franchising developing healthy, when protecting the franchisors, it also needs to regulate the behaviors of franchising in order to prevent it. Since 1987 the first Kentucky Fried Chicken build in China, the franchising develops fast in China. However, compared with the fast development of franchising, franchising legislation in China is lagged. So we need to learn from other countries to improve our legal regulation of the behaviors of restricting competition in franchising.Franchising is a commercial business model that franchisor allows franchisee using his trade, patent, know-how and other intellectual property. Franchising is a kind of contact relationship, its core is the transferring of concession, the franchising must maintain the management network identity, and the franchisee's business is controlled by franchisor. In order to maintain management network identity and protect the intellectual property, a certain degree of restriction of competition in franchising is inevitable. However, the franchisor may abuse his advantage to enforce some unreasonable behaviors of restricting competition, this will restrict competition and damage the franchisee's interests, harm the interests of consumers and related competitors. So, in order to protect the freedom of competition, avoid abusing intellectual property, the law regulates the behaviors of restricting competition in franchising. There are several behaviors of restricting competition in franchising, but four typical behaviors may restrict competition seriously, they are tie-in sale,resealing price limits,dividing regional sales and customers and grant-back, through analyzing these behaviors and learning the experience of USA and EU, the paper define the illegality of behaviors of restricting competition in franchising.At present, China lacks the legislation on franchising. The existing legislation for franchising is a regulation of the Ministry of Commerce, although China's "antitrust law" has been enacted, there are only some general provisions, it is not practical when applying it to franchising which is a complex economic phenomena. Therefore, China should make a franchising law to regulate the behaviors of restricting competition in franchising. In this law, some special provisions should be made to establish the standard that which behaviors can be exempted form the antitrust law and which behaviors are banned, it also need to establish the franchising agreements registration system to let the relevant authorities review the behaviors of restricting competition in franchising.