FranchisingInChinaElsewhereinAsia.PPTVIP

Franchising In China Elsewhere in Asia Presented by: Philip F. Zeidman DLA Piper US LLP Laws Applicable to FranchisingAugust 2007 Asia: Relationship Laws Only Kazakhstan Kyrgyzstan Asia: Disclosure Laws Only Taiwan Asia: Disclosure Relationship Laws  Australia China Indonesia Japan Macau Malaysia South Korea Vietnam Asia: Disclosure Registration Laws  China Indonesia Malaysia Vietnam The Development Of FranchisingIn China The Growth of Services  Franchise Law In China:How Did It Come About? Several Agencies involved (MOFCOM, Legislative Affairs Office of the State Council, State Administration of Industry and Commerce) Closed and secretive process The revised “two plus one” rule Franchisor’s outlets do not have to be within China The information provided by the franchisor shall be true, accurate and complete; and Shall not conceal the relevant information; and Shall not provide any false information Name Trademark Fees Prices (products, services, equipments) Training Operations plan Investment Budget Existing Franchisees Financial Reports Litigations/ Arbitrations Illegal Operation Other Provide a more detailed explanation of what is to be disclosed for each of the 12 items Other provisions Cover items which must be covered in the agreement between franchisor and franchisee In general, do not describe provision in detail The provision that the franchisor bear joint and several liabilities for injuries significant, but not included Franchisor is required to register within 15 days after the execution of its first franchise agreement Foreign Franchisors should register with MOFCOM Franchisor must update certain information annually Government is required to register a franchisor within 10 days after receipt “Cooling- off period” Existing franchisors exempted from “two plus one” requirement Interaction with general contract law The status of the franchise measures Cross-border Franchising Trademark law’s effects o