Share your needs with us, get contacted by law firms.
Free. Takes 2 min.
Franchising in Nanjing, like the rest of China, is a growing business model, where a franchiser grants the franchisee the right to operate a business under their brand and system. It is regulated by both national laws and local regulations. These regulations are designed to ensure that franchising activities are conducted fairly and transparently to protect both franchisors' and franchisees' interests. Chinese franchising laws have evolved to encourage foreign investment while maintaining strict control over the market to align with the country's economic goals.
There are several common situations in which individuals may require legal help in franchising. Drafting and reviewing franchise contracts, ensuring compliance with national and local regulations, and protecting intellectual property rights are areas where legal expertise is particularly beneficial. Additionally, in cases of dispute between a franchiser and franchisee, legal intervention is often necessary. A lawyer can also provide invaluable assistance during the negotiation process and offer advice on structuring franchise agreements to mitigate future risks.
The key aspects of local laws particularly relevant to franchising in Nanjing bear resemblance to the national laws but may include local administrative rules and procedures. Potential franchisors must disclose essential information before signing a franchise agreement. The 'Regulation on the Administration of Commercial Franchises' mandates that franchisors must have owned and operated at least two company-owned stores for at least one year before franchising. Compliance with anti-monopoly law, product quality, and consumer rights protection laws are also vital elements of the local legal landscape.
Franchisors must comply with the national rule by having at least two company-owned stores for over a year and provide disclosure documents. The franchisee should also meet the financial and operational criteria set by the franchisor and must comply with local business licensing requirements.
Yes, franchising agreements need to be registered with the relevant government authorities after both parties have signed the agreement. Failure to do so can result in penalties.
Intellectual property in franchising typically pertains to trademarks, trade names, and proprietary know-how. Franchisors must register their trademarks to protect their brands effectively, and both franchisors and franchisees must ensure they do not infringe on the intellectual property rights of others.
Franchising agreements often involve payment-related provisions such as initial franchise fees, royalties, and advertising fees. Both parties must adhere to Chinese financial and tax laws, including issuing proper tax invoices and remitting taxes correctly.
Early termination clauses are usually included in franchise agreements. The consequences depend on the terms of the agreement and whether the termination is for cause or without cause. A lawyer should review the situation to protect your interests.
Franchisees can generally expect operational support, initial training, and sometimes marketing assistance depending on the individual franchise agreement.
Franchise disputes are resolved through the mechanisms provided in the agreement, which often include negotiation, mediation, arbitration, or litigation in accordance with Chinese law.
Without legal assistance, you risk non-compliance with regulations, entering into unfavorable or invalid agreements, and potential financial and legal liabilities. Professional legal advice is critical to navigating the complex franchising landscape.
Foreign franchisors are generally subject to the same laws governing franchising in China, which include having a registered company in China and complying with the disclosure requirements. However, they might also be subject to additional scrutiny under Chinese investment laws.
Aside from regular taxes and business fees, there are no specific ongoing fees that must be paid to the authorities purely for operating a franchise. However, franchises are subject to regular business auditing and must remain compliant with all applicable laws.
Governmental bodies such as the Ministry of Commerce (MOFCOM), State Administration for Industry and Commerce (SAIC), and the local Nanjing Municipal Market Supervision Administration are key resources. Organizations such as the China Chain Store & Franchise Association (CCFA) can also be very helpful.
If you need legal assistance in franchising, you should first gather all relevant documents and information regarding your franchise. The next step is to contact a local attorney who specializes in franchise law to get legal advice tailored to your specific situation. The lawyer can help you with everything from drafting and reviewing franchise agreements to representing you in any legal disputes.
