Stricter law enforcement required for commercial franchise operations

On 6 February 2007, the State Council promulgated the Administration of Commercial Franchise Operations Regulations. On 6 April of the same year, the Ministry of Commerce promulgated the Disclosure of Information in Connection With Commercial Franchise Operations Administrative Measures and the Recordal of Commercial Franchises Administrative Measures.

In the blink of an eye, more than two and half years have passed since the promulgation and implementation of what are often referred to as the “one regulation and two measures”. Through an analysis of the statistical data set out below, we can conclude that the thorough implementation of the “one regulation and two measures” remains an arduous task which is yet to be completed.

Based on a preliminary analysis of the statistics in the Report on the Investigation into the Developmental Status of Franchises in China 2009-2010, published by the China Chain Store & Franchise Association, there were more than 4,000 franchise chains in mainland China at the end of 2009. This represented an increase of almost 15% as compared to 2008, with a total of more than 330,000 franchise stores and an average of 83 stores per franchise chain.

Harry He is a partner of AllBright Law Offices. His main practice areas are foreign direct investment, M&A and labour disputes.