商业特许经营管理办法 Administration of Commercial Franchise Procedures

type； register an enterprise trade name with wordings that are identical or similar to the registered trademark of the franchisor； or use a mark identical or similar to the registered trademark， trade name or shop decoration of the franchisor for identical or similar commodities or services.

　　PART FOUR　INFORMATION DISCLOSURE

　　Article 17　The franchisor and franchisee shall disclose the relevant information in a timely manner prior to the conclusion of the franchise contract and in the course of franchising.

　　Article 18　The franchisor shall provide to the applicant true and accurate basic information related to franchising in writing and the text of the franchise contract 20 days prior to the formal conclusion of the contract.

　　Article 19　The basic information to be disclosed by the franchisor shall include：

　　1. the name， domicile， registered capital， scope of business and the term of franchise of the franchisor， and basic details such as the contents of financial reports audited by an accounting firm and details of tax payments；

　　2. the number， location， business status and budget for investment in the franchise outlets of the franchisee， and the ratio of franchisees that have dissolved the franchise contract to the total number of franchisees；

　　3. registration， use of licence and litigation concerning the trademark， and relevant details of other business resources such as the trade name and business model；

　　4. type， amount and method of collection of franchise fees， and method of refund of deposit；

　　5. details of any litigation in which it has been involved during the most recent five years；

　　6. various goods supply or services that can be provided to the franchisee， as well as the supplementary conditions and restrictions， etc.；

　　7. proof of ability to provide training and guidance to the franchisee， and the actual details of training or guidance provided；

　　8. basic details of the legal representative and other principal responsible persons， and whether they have been subject to criminal penalty or have borne personal liability for bankruptcy of enterprise， etc.； and

　　9. othe

r information and details that the franchisee is required to disclose by the franchisor.

　　If the information disclosed is incomplete or false， thereby causing economic loss to the franchisee， the franchisor shall bear the liability for compensation.

　　Article 20　The franchisee shall truthfully provide information on its business capabilities in accordance with the requirements of the franchisor， including proof of principal qualification， creditworthiness， property rights， etc. In the course of franchising， it shall provide in a timely manner information stipulated in the contract such as the true details of the business status in accordance with the requirements of the franchisor.

　　Article 21　In the course of franchising and after a franchise contract has terminated， the franchisee and its employees may not， without the consent of the franchisor， disclose， use or permit others to use the trade secrets of the franchisor that have come to their knowledge.

　　Article 22　Persons and applicants that have not yet verified a franchise contract with the franchisor but have knowledge of the franchisor‘s trade secrets through information disclosure of the franchisor shall be obliged to maintain confidentiality. Without the consent of the franchisor， they may not reveal， disclose or transfer the trade secrets of the franchisor to another party.

　　PART FIVE　ADVERTISING AND PROMOTION

　　Article 23　The advertising and promotion information provided by franchisors during promotion， sales promotion or sale of franchise rights shall be accurate， truthful and lawful， and there may not be fabrication or omission of important facts， or statements that may possibly be misleading.

　　Article 24　Records and figures of business income and profits of the franchisor or other relevant information referred to directly or indirectly in the advertising and promotion materials of the franchisors and franchisees shall be true， and the area and time involved shall be specified.

　　Article 25　Franchisors and franchisees may not imitate the trademark， advertising scenes and terms， or other distinguishing marks of another party by any method that may be misleading， fraudulent or create confusion.

　　Article 26　In franchising promotion activities， a franchisor may not exaggerate the profits from franchising or deliberately conceal circumstances that may objectively affect the profits of others.

　　PART SIX　SUPERVISION AND ADMINISTRATION

　　Article 27　Departments in charge of commerce at all levels shall strengthen administration and coordination of franchising activities within their administrative area， and shall guide the work of local industry associations （or chambers of commerce）。

　　Departments in charge of commerce at all levels shall establish credit files for franchisors and franchisees， and shall announce the names of enterprises in violation of regulations in a timely manner.

　　Article 28　Franchise industry associations （or chambers of commerce） shall formulate industry standards in accordance with these Procedures and exercise self-regulation to provide relevant services to franchising parties and promote the development of the industry.

　　Article 29　Franchisors shall， in January each year， submit the franchise contracts concluded in the previous year to their local department in charge of commerce and the department in charge of commerce at the place where the franchisee is located for record filing. Local departments in charge of commerce shall report the details of record filing to the department in charge of commerce at one level above.

　　Article 30　Where franchising activities involves patent licensing， a patent licensing contract shall be concluded in accordance with the provisions of the PRC， Trademark Law and its implementing rules， and record filing matters shall be handled in accordance with the Administration of the Record Fili

ng of Patent Licensing Contracts Procedures.

　　Article 31　Prior to engagement in franchise activities， the franchisor shall handle record filing of the trademark licensing contract in accordance with the provisions of the PRC， Trademark Law and its implementing rules.

　　PART SEVEN　SPECIAL PROVISIONS GOVERNING FOREIGN-INVESTED ENTERPRISES

　　Article 32　Foreign-invested enterprises shall not engage in the types of business prohibited under the Foreign Investment Industrial Guidance Catalogue in the form of franchising.

　　Article 33　Foreign-invested enterprises engaging in commercial activities in the form of franchising shall apply to the original examination and approval authority for addition of “engagement in commercial activities in the form of franchising” to the scope of business， and shall submit the following materials：

　　1. application form and resolution of the board of directors；

　　2. enterprise business licence and approval certificate for foreign-invested enterprises （photocopy）；

　　3. amendment agreement for the contract and articles of association （in the case of foreign-invested enterprises， only amendments to articles of association shall be submitted）；

　　4. documentary materials in support of compliance with Article 7 hereof ；

　　5. basic information and details that reflect the provisions of Article 19 hereof；

　　6. a sample of the franchise contract； and

　　7. franchise operation manual.

　　The examination and approval authority shall issue a written decision on whether or not to approve the application within 30 days of the date of receipt of all the aforementioned application materials.

　　After an applicant has obtained approval， it shall handle the procedures for change of enterprise registration with the administration for industry and commerce within one month of receipt of the Approval Certificate for Foreign-invested Enterprises from the examination and approval authority.

　　Article 34　Where a foreign-invested enterprise engages in commercial activities in the form of franchising upon approval， it shall submit the franchise contract concluded in the previous year to the original examination and approval authority and the department in charge of commerce at the place where the franchisee is located for record filing in January each year.

　　Article 35　When a foreign investor establishes a foreign-invested enterprise that specifically engages in commercial activities in the form of franchising， it must comply with the provisions of relevant laws， regulations and rules on foreign investment in addition to these Procedures.

　　Article 36　Foreign-invested enterprises already engaged in commercial activities in the form of franchising before the implementation of these Procedures shall file a record of the details of the operation of business with the original examination and approval authority. Those continuing to engage in commercial activities in the form of franchising shall complete the relevant formalities in accordance with the procedure stipulated in this Part.

　　Article 37　Engagement in commercial activities in the form of franchising by Hong Kong， Macao and Taiwan investment enterprises in the mainland shall be handled with reference to the provisions of this Part.

　　PART EIGHT　LEGAL LIABILITY

　　Article 38　In case of violation of Article 7 or 8 hereof， the department in charge of commerce shall order rectification and may also impose a fine of not more than Rmb 30，000. Where the c

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