Measures for the Administration of Record Filings in Connection with Commercial Franchising

Article 3: The State Council's department in charge of commerce and the departments in charge of commerce of the people's governments of the provinces, autonomous regions and municipalities directly under the central government are the authorities for record filing in connection with commercial franchising. If commercial franchising activities are engaged in within a province, autonomous region or municipality directly under the central government, the franchisor shall carry out record filing procedures with the department in charge of commerce of the people's government of the province, autonomous region or municipality directly under the central government where it is located. If commercial franchising activities are engaged in cross-province, in autonomous regions or in municipalities directly under the central government, record filing procedures shall be carried out with the State Council's department in charge of commerce.

Record filing work for commercial franchising shall be carried out through a national online system. All franchisors that comply with the Regulations for the Administration of Commercial Franchising shall carry out record filing procedures through the government website at www.mofcom.gov.cn.

Article 4: Any work unit or individual shall have the right to report violations of these Measures to the record filing authority.

Article 5: When applying for record filing, a franchisor shall submit the following materials to the record filing authority:

(1) the basic particulars of its commercial franchise operations;

(2) details on the distribution of its franchisees' stores in China;

(3) the franchisor's market plan;

(4) a photocopy of its enterprise legal person business licence or a photocopy of another proof of its entity status;

(5) photocopies of the registration certificates for its trademark rights, patent rights and other business resources relating to its franchising activities;

(6) a document issued by the department in charge of commerce at the level of city (divided into districts) evidencing compliance with the second paragraph of Article 7 of the Regulations; if its directly operated stores are located outside China, the franchisor shall provide the proof of operation of the directly operated stores (with a Chinese translation) notarized by a local notary office and certified by the local Chinese embassy or consulate;

the foregoing provision shall not apply to franchisors that were engaging in franchise activities before May 1 2007, but such franchisors shall submit the first franchise contract that they executed with a franchisee in China;

(7) a sample franchise contract;

(8) the table of contents of the franchise operation handbook (which must indicate the number of pages of each chapter and the total number of pages of the handbook; if such handbook is provided on the franchise system intranet, the estimated number of pages if printed must be provided);

(9) for products and services that require approval before franchising thereof may be carried out as specified by state laws and regulations, the approval document from the relevant competent department; and

(10) a franchisor undertaking that is signed and stamped by the legal representative.

The materials specified in Items (1) to (3) shall be provided directly online whereas the materials in Items (4) to (10) shall be submitted online in portable document format (pdf) and electronic form.

Article 6: A franchisor shall apply to the record filing authority for record filing within 15 days after the date of first entering into a franchise contract with a franchisee in China. A franchisor that was engaging in franchise activities before May 1 2007 shall apply for record filing to the relevant department in charge of commerce in accordance herewith within one year from the date of implementation of the Regulations.

Article 7: If there is any change in a franchisor's recorded particulars, an application for the amendment thereof shall be submitted to the record filing authority within 30 days from the date of the change.

Article 8: Each year by March 31, a franchisor shall report to the record filing authority information on its entry into, rescission, renewal and amendment of franchise contracts during the preceding year.

Article 9: A franchisor shall carefully fill in the information for all recorded particulars and ensure that the information that it provides is true, accurate and complete.

Article 10: The record filing authority shall complete the filing within 10 days from the date of receipt of the documents and information complying with Article 5 hereof submitted by the franchisor, and announce the same on the website of the Ministry of Commerce.

If the documents and information submitted by a franchisor are incomplete, the record filing authority may require it to provide the missing documents and information within seven days. The record filing authority shall complete the filing within 10 days from the date on which the franchisor provides the missing materials.

Article 11: If a franchisor that has completed record filing commits any of the acts set forth below, the record filing authority may revoke the record filed and announce the same on the website of the Ministry of Commerce:

(1) the franchisor had its business licence revoked by the competent registration authority due to illegal operations;

(2) the record filing authority receives a judicial recommendation for the revocation of the record filed that is issued by a judicial authority due to illegal operations by the franchisor;

(3) the franchisor is suspected of concealing relevant information or providing false information and the same is ascertained to be true; or

(4) the franchisor itself cancels the record filed.

Article 12: The department in charge of commerce of the people's government of the province, autonomous region or municipality directly under the central government shall report the details of a record filing or the revocation of a record filed to the Ministry of Commerce within 10 days.

Article 13: When a record filing authority completes record filing procedures, it shall record in a complete and accurate manner and preserve the recorded information and materials of the franchisor, and maintain the confidentiality of the franchisor's trade secrets in accordance with the law.

Article 14: The public may access the following information from the Ministry of Commerce's government website:

(1) the enterprise name of a franchisor and the registered trademarks, enterprise logos, patents, proprietary technology and other such business resources used in connection with its franchise business;

(2) the date of filing of the franchisor's record;

(3) the address of the franchisor's legal place of business, the franchisor's contact information and the name of its legal representative; and

(4) the business addresses of the franchisees in China.

Article 15: If a franchisor fails to carry out record filing procedures in accordance with the Regulations and these Measures, the State Council's department in charge of commerce or the department in charge of commerce of the people's government of the province, autonomous region or municipality directly under the central government where it is located shall order it to carry out such procedures within a specified period of time and fine it not less than Rmb10,000 and not more than Rmb50,000. If it still fails to carry out the record filing procedures by the specified time, it shall be fined not less than Rmb50,000 and not more than Rmb100,000 and an announcement shall be published.

Article 16: If a franchisor violates Article 8 hereof, the record filing authority shall order it to rectify the matter and fine it at a maximum of Rmb10,000. If the circumstances are serious, the record filing authority shall impose a fine of not less than Rmb10,000 and not more than Rmb50,000 and publish an announcement.

Article 17: When foreign franchisors engage in franchising activities in China, matters shall be handled in accordance herewith. With respect to franchisors from the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan, matters shall, mutatis mutandis, be handled in accordance herewith.

Article 18: The national industry association shall assist the competent government departments in duly carrying out the enterprise record filing work, fully bring to bear its coordinating functions as an industry association and strengthen industry self-discipline.

Article 19: The Ministry of Commerce of the People's Republic of China is in charge of interpreting these Measures.

Article 20: These Measures shall be effective as of May 1 2007.