Study On The Termination Of Franchise Contract And Its Effect

Franchising entered China in 1980 s, and then twenty years later, franchising is developing rapidly. Franchising has been widely used in food, clothing, express hotel and other commercial areas. As the legal text in franchising, franchise contract is the only link in the franchisor and franchisee legal relationship, playing an important role in maintaining legal relationship of franchising, and also is an important basis for the franchise dispute resolution.The termination of franchise contract is a legal method to end a franchise legal relationship, which is related to the interests of the franchisor and the franchisee, and also has a significant impact on the stability of franchise systems. At present, the number of the disputes aroused by the termination of franchise contract, is increasing rapidly. It is necessary to study on the termination of franchise contract and the effect. This paper compares the domestic and foreign legislation on franchise to analyze the deficiencies of the legislation in china and the difficulties to handle franchise contract disputes, and ultimately provide suggestions or solutions.Chapter 1 is on the value of the termination of franchise contract. First, this chapter overviews franchise, introduces the history of its development and its definition. Although the definitions are varies in different countries, the meanings are basically the same. Then, the importance and specific characteristics of franchise contract were analyzed. The value of the termination of franchise contract and the necessity to protect the interests of the franchisor and franchisee were narrated in this chapter.Chapter 2 is on the termination right of the franchisor. The legislations on the termination right of the franchisor in the United States, Australia and Franchise Association were investigated in this chapter to clarify the situations and procedures of the termination, and analyze the legislation of China and its deficiencies. Then, the necessity of the restriction on the termination right of the franchisor were analyzed, according to the theoretical study, legislations and cases.Chapter 3 is on the termination right of the franchisee. The Business Franchise Regulations of china only provides termination right to the franchisee. Cooling-off period, information disclosure and some other subjects were analyzed by comparing the domestic and foreign legislation to summarize their features and deficiencies, and then suggestions and solutions were presented.Chapter 4 is on the legal effect of termination of franchise contract. Three aspects of its legal effect were described in this chapter, including the refund of franchise fees, damages and post-contract obligations. The franchise fees included initial fees, ongoing fees, security deposit and so on.As a conclusion, the difficulties to solve the termination dispute of franchise contract in china are mainly because that the development of Chinese franchise of lack of standardization, and its legations and regulations are insufficient and incomplete. The stable and healthy development of franchise needs perfect legal system. It would be beneficial to balance the interests of franchisor and franchisee, maintain the stability of the franchise system, and promote the development of franchise.