The Administrative Regulation on Franchising Operation To Be Launched This Year

August 18, 2003

The Administrative Regulation on Franchising Operation To Be Launched This YearExcerpted from www.ip.net.cn on Aug. 18, 2003

This Friday, Men Xiaowei, director of the Department of Business Reform under the State Ministry of Commerce, said at the Seminar of Guangdong Franchising Enterprises that after two years of extensive research, the Administrative Regulation on Franchising Operation has been completed and rendered to the Law Enforcement Department of the State Council for approval. Considering everything goes smoothly, this regulation should be put into effect this year. Meanwhile, the Exhibition of International Franchising Ally will be held between 28th and 30th of this month. This exhibition will be the largest exhibition on franchising ally ever held in South China. More than one hundred businesses or enterprises plan on attending the exhibition, bringing in various distinctive brands and huge capital to China.

It is inevitable that chain businesses will develop themselves in a franchising format. The headquarters of these chain businesses will not expand by directly contributing investment and tangible assets; conversely, they will expand their business by utilizing intellectual property rights, trademarks, brands of exclusive products, and even intangible patents such as advanced knowledge and skills in operational management. These intangible assets are very difficult to protect, hence, to launch new regulation concerning these will most definitely be very detailed and specific in respect to the requirement and qualification of becoming a franchiser and a franchisee. The new regulation is so detailed that it even covers the formation of contracts including all the detailed descriptions on how to form contracts and how to prevent fraudulent acts in business. The launching of this regulation will take great effects on the standardization of franchising operation.