Franchise is an arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications.
Requirements
Pursuant to the Regulation and the Measures, to be a franchisor eligible to offer franchises in China, the following requirements must be met:
1.The franchisor must be a business enterprise (rather than an individual).
2.The franchisor must have a registered trademark, patent, or any other business resource. (Under current practice, the franchisor may file the franchise registration with a pending IP right, but the registration, when issued, should be accompanied by at least one registered IP right.)
3.The franchisor (or its parent or subsidiary) must have at least two directly-operated outlets and must have conducted business under the franchised brand for more than one year (the “2+1 Requirement”). These outlets need not be in China, but they must be operated under the franchised brand.
Registration
According to the Regulation, a franchisor must, within 15 days after signing a franchise agreement for the first franchised location in China, file an application with the appropriate commercial authority in the MOC to register its franchise. The registration requirement is an administrative measure to regulate franchise activities, and also provides potential franchisees with public access to more information regarding the franchisor and its business.
Documents to be submit
1.Franchisor business registration certificate.
2.Registration certificate of the franchised IP right: Where the franchised trademark is not owned by, but instead is licensed to, the franchisor, the trademark license must first be recorded with the Chinese Trademark Office, and the franchisor must submit the certificate of trademark license issued by the Chinese Trademark Office with the franchise registration application.
3.Franchise agreement: To comply with the requirements of the Regulation and relevant laws, the franchise agreement must include certain language regarding consumer protection, quality guarantee, and training, as well as several other matters. In addition, the agreement must also grant the franchisee a “cooling-off period” during which the franchisee can end the relationship without penalty. The term of the agreement must be at least three years; however, the franchisee can waive this requirement.
4.Certification for the 2+1 Requirement: To meet this requirement, the franchisor must submit a certification from a competent commercial authority or franchising association (such as the International Franchise Association). The certification must contain information about the franchised brand; the opening date, address, and business scope of the two stores; and the relationship between the franchisor and the stores, all of which demonstrate that the franchisor (or, if applicable, its parent or subsidiary) has directly operated two stores operating the franchised concept under the franchise brand/marks for more than one year.
5.Marketing plan for the franchised operation.
Contact Us
If you have further queries, don’t hesitate to contact Tannet anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com.
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