Administrative Measures for the Record-filing of Commercial Franchises

Article 1     For the purposes of strengthening the administration of commercial franchise activities and regulating the commercial franchise market order, these Measures are formulated in accordance with relevant provisions of the Regulations on the Administration of Commercial Franchises (hereinafter referred to as the “Regulations”).


 


Article 2     These Measures shall apply to commercial franchise activities conducted within the territory of the People’s Republic of China (hereinafter referred to as the “within the territory of China”).


 


Article 3     The Ministry of Commerce and the departments in charge of commerce of the people’s governments of provinces, autonomous regions and municipalities directly under the Central Government are the authorities responsible for the record-filing of commercial franchises. The commercial franchise activities carried out within the territorial scope of a province, autonomous region or municipality directly under the Central Government shall be filed for record with the department in charge of commerce of the people’s government of the province, autonomous region or municipality directly under the Central Government where the franchisor is domiciled. The franchise activities carried out across the territorial boundaries of provinces, autonomous regions or municipalities directly under the Central Government shall be filed for record with the Ministry of Commerce.


A nationwide network is adopted for the record-filing of commercial franchises. Franchisors complying with the provisions of the Regulations shall, in accordance with the provisions of these Measures, file for record through the information management system for commercial franchises established by the Ministry of Commerce.


 


Article 4     The Ministry of Commerce may, in accordance with relevant provisions, delegate work related to the record-filing of commercial franchises of franchisors engaging in franchise across the territorial boundaries of provinces, autonomous regions or municipalities directly under the Central Government to the departments in charge of commerce of the people’s governments of the relevant provinces, autonomous regions or municipalities directly under the Central Government. The departments in charge of commerce of the people’s governments of provinces, autonomous regions or municipalities directly under the Central Government entrusted with the record-filing work shall complete such work by themselves, and shall not further entrust any other organization or individual with the work.


If the departments in charge of commerce of the people’s governments of provinces, autonomous regions or municipalities directly under the Central Government entrusted with the record-filing work fail to perform their record-filing related duties in accordance with the law, the Ministry of Commerce may directly accept the record-filing applications submitted by franchisors.


 


Article 5     Any entity or individual may report to the relevant department in charge of commerce any act that is in violation of provisions of these Measures, and the department in charge of commerce shall handle the case in accordance with the law.


 


Article 6     A franchisor applying for record-filing shall submit the following materials to the relevant record-filing authority:


(1) The basic information about the commercial franchise;


(2) The distribution of shops of all franchisees within the territory of China;


(3) The marketing plan of the franchisor;


(4) The enterprise legal person business license or other subject qualification certificates;


(5) Registration certificates on the trademark right, patent right and other operational resources relating to the franchise activities;


(6) Supporting documents in conformity with Paragraph 2 of Article 7 of the Regulations;


The provisions of the preceding paragraph do not apply to the circumstances where a franchisor that started the franchise activities before May 1, 2007 submits application materials for record-filing of commercial franchises.


(7) The first franchise contract signed with the franchisee within the territory of China;


(8) A sample franchise contract;


(9) The table of contents of the franchise operation manual (the number of pages of each chapter and the total number of pages in the manual shall be indicated. Where such manual is provided on the internal network of the franchise system, an estimate of the number of pages in a print-out shall be indicated);


(10) Where laws and regulations of the State require prior approval to offer the product and service involved in the franchise operation, the approval document from the relevant competent department shall be submitted;


Foreign-invested enterprises shall submit the Approval Certificate for Foreign-invested Enterprise. The business scope specified in the Approval Certificate for Foreign-invested Enterprise shall include the item of “engagement in commercial activities by way of franchise”.


(11) The franchisor’s undertaking signed or sealed by the franchisor’s legal representative; and


(12) Other materials to be submitted as required by record-filing authorities.


If the abovementioned documents are prepared outside the territory of the People’s Republic of China, such documents need be notarized by a notary public (with a Chinese translation attached) in the country where the document is prepared, and certified by the embassy or consulate of the People’s Republic of China in that country, or the certification formalities prescribed in the relevant treaty signed between the People’s Republic of China and that country shall be completed. If the documents are prepared in Hong Kong, Macao or Taiwan region, the relevant certification formalities shall be completed.


 


Article 7     A franchisor shall apply with the relevant record-filing authority for record-filing within 15 days from the date on which it signs the first franchise contract with the franchisee located within the territory of China.


 


Article 8     Where any changes occur to the following record-filing information of a franchisor, the franchisor shall submit an application for change of registration with the relevant record-filing authority within 30 days from the date of occurrence of such changes:


(1) The information of the franchisor registered with administrative authority for industry and commerce;


(2) The information pertaining to the operational resources; or


(3) The distribution of all the stores of the franchisees within the territory of China.


 


Article 9     Prior to March 31 of each year, a franchisor shall report to the relevant record-filing authority the status of the execution, rescission, termination and renewal of franchise contracts in the preceding year.


 


Article 10     A franchisor shall exercise due care in filling out information about all items required for record-filing, and ensure that the information provided is authentic, accurate, and complete.


 


Article 11     A record-filing authority shall complete the record-filing procedures within ten days from the date when it receives documents and materials submitted by a franchisor which comply with provisions of Article 6 of these Measures, and make the relevant announcement via the information management system for commercial franchises.


Where the documents and materials submitted by the franchisor are incomplete, the record-filing authority may require the franchiser to submit supplementary documents and materials within seven days. Upon receipt of all of the supplementary documents and materials from the franchiser, the record-filing authority shall complete the record-filing procedures within ten days.


 


Article 12     Where a franchisor that has completed the record-filing procedures involves any of the following acts, the relevant record-filing authority may cancel the record-filing, and make an announcement thereon via the information management system for commercial franchises:


(1) The franchisor cancels its registration with the administrative department for industry or commerce, or the franchisor’s business license is revoked by the competent registration authority due to its illegal business operation;


(2) The record-filing authority receives the written judicial advice from a judicial authority proposing the cancellation of the record-filing due to the franchisor’s illegal business operation;


(3) The franchisor conceals the relevant information or provides false information, which causes significant impact;


(4) The franchisor applies for the cancellation of the record-filing, and the relevant record-filing authority approves such application; or


(5) Other situations in which the cancellation of the record-filing is necessary.


 


Article 13     Departments in charge of commerce of the people’s governments of all provinces, autonomous regions and municipalities directly under the Central Government shall report the information pertaining to the record-filing and cancellation of record-filing to the Ministry of Commerce within ten days.


 


Article 14     Record-filing authorities shall preserve complete and accurate records of the record-filing information pertaining to franchisors, as well as relevant materials, and keep confidential the trade secrets of franchisors in accordance with the law.


The department in charge of commerce of the people’s government (at the level of province, autonomous region, municipality directly under the Central Government, or city divided into districts) where the franchisor is located may issue the record-filing certificate to the franchisor that has completed the record-filing procedures.


 


Article 15     The general public shall have access to the following information through the information management system for commercial franchises:


(1) A franchisor’s enterprise name and operational resources such as registered trademarks, business logos, patents, and know-how used in the franchise business;


(2) A franchisor’s record-filing time;


(3) The address of the legal business premises and the contact information of a franchisor, and the name of the legal representative thereof; and


(4) The distribution of all the stores of franchisees within the territory of China.


 


Article 16     If a franchisor fails to complete the record-filing procedures in accordance with provisions of the Regulations and these Measures, the department in charge of commerce at or above the level of city divided into districts shall order the franchiser to complete the record-filing procedures within a specified time limit, and impose thereon a fine of more than RMB 10,000 and less than RMB 50,000. If the franchisor fails to complete the record-filing procedures within the specified time limit, a fine of more than RMB 50,000 and less than RMB 100,000 shall be imposed, and an announcement shall be made.


 


Article 17     If a franchisor violates the provisions of Article 11 of these Measures, the department in charge of commerce at or above the level of cities with districts shall order the franchisor to make rectifications and may impose thereon a fine of less than RMB 10,000. In serious cases, a fine of more than RMB 10,000 and less than RMB 50,000 shall be imposed and an announcement shall be made.


 


Article 18     Overseas franchisors engaging in franchise activities within the territory of China shall be governed by these Measures. These Measures shall apply as the reference for governing franchisors from the Hong Kong and Macao Special Administrative Regions, and Taiwan region.


 


Article 19     The relevant associations shall, in accordance with the provisions of these Measures, strengthen the industry self-regulation, and provide guidance for franchisors on completing the record-filing formalities in accordance with the law.


 


Article 20     The Ministry of Commerce is responsible for the interpretation of these Measures.


 


Article 21     These Measures shall come into force on February 1, 2012. The Administrative Measures for the Record-filing of Commercial Franchises (Decree No. 15 [2007] of the Ministry of Commerce) which came into force on May 1, 2007, shall be repealed simultaneously.

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