Study On Commercial Franchising Legal Risk Control And Prevention

Franchising is one of the most dynamic business models currently, and its win-win business model has attracted a large number of investors. In the commercial franchising, franchisors use the fund from franchisees to expand business and market share, at the same time, the franchisees reduce the business risks by copying franchisors’ operating model in the franchising system. But win-win result doesn’t mean risks never exist anymore, the franchisors may encounter the risk of commercial secrets leaked; the franchisees may experience the franchisors’fraud because of franchisees information asymmetry and weak position in business and all these problems will hinder the development of franchising. Therefore, the author thinks it necessary to study the risk of franchising, and then present suggestions to take measures of controlling and preventing the legal risks in order to improve the relevant regulations of franchising.The first part makes an overview of commercial franchising, mainly involving the concept and type of franchising, legal characteristics and the cause of the legal risks., in order to make foundation for further study; The second part mainly analyzes the legal risks the franchisors encounter in commercial franchising. The three main problems the franchisors face are:the risk of concession protection in the franchise system, the risk of franchisors’excessive restriction of competition towards franchisees, and the risk that the franchisor may take the responsibility for the franchisees’ mistakes.The third part mainly analyzes the legal risks from the perspective of the franchisees in commercial franchising; based on the previous two chapters content, the author analyses the values and principles of the information disclosure system, examines information disclosure systems available in other countries and regions, and then discuss the information disclosure system’s deficiencies and problems that need to be perfected in our country; the forth part intends to propose appropriate control and preventive measures for franchising legal risks. From the franchisor and franchisee’s point of view respectively, the author uses the method of comparative analysis to explore the overseas franchise relevant legislation, discuss our legislation system deficiencies, in order to propose countermeasures of preventing legal risks of franchising on the basis of foreign advanced legislative system and measures.In the conclusion part, the author points out the importance of controlling franchise legal risks, calls for speeding up the perfect of franchise related systems, strengthens the franchisor and the franchisee’s own risk awareness to balance the interests on both sides, and ultimately promotes the healthy development of franchising.