Study On The Legal Risk-controlling System Of Franchise

Business Franchise, known as “the dominant business-model in the21st-century",originated in the United States a hundred years ago. It brought huge economic benefits forboth sides, therefore all walks of life rushed to emulate the economic model. With the reformand open-up, successfully copied Business Franchise was imported into China. And in thefollowing twenty years, it developments rapidly and keeps in the ascendant.“To May2009,China had had more than2,700franchise systems—industry over60and franchisee a total of200000, becoming the country with the largest ones in the world." It brings out lots ofbusiness opportunities, meanwhile, operation chaos， non-standard systems and other issuesmay produce risks, which can be a destabilizing factor in the market economy.Taking the biggest legal risk of Business Franchise as the setting，combining experienceof foreign legislation and the actual situation in China, this thesis will study on franchisor andthe franchisee’s legal risk-controlling System from the following two aspects: protection ofTrade Secrets and Information Disclosure. This thesis will be divided into three parts.The first part will take an overview of the legal risks in the franchise and will analyze thecauses of risk, the contents of risk and the significance of risk controlling.The second part will analyze the franchisor’s Legal Risk-controlling System based on theprotection of Trade Secrets. Firstly, this part will in theory analyze the protection measuresfor the Trade Secrets from these three stages: before the establishment of the franchisecontract, the franchise contract in effect, after the termination of the franchise contract.Followed, by a assessment of the situation of China’s legislation, the final legislativeproposals will be brought forward.The third part will analyze the franchisee’s Legal Risk-controlling System based on theInformation Disclosure. Western countries have a strong theoretical precipitation in theInformation Disclosure. Firstly, combining with the results of foreign legislation, this part willsort out the contents of Information Disclosure. And then by consulting China’s "FranchisingInformation Disclosure Act"(draft), this part will table a proposal for improving our franchiseInformation Disclosure Regime.