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

(Promulgated by the Ministry of Commerce on December 12 2011 and effective as of February 1 2012.)

Order of Mofcom [2011] No.5

Article 1: These Measures have been formulated pursuant to relevant provisions of the Regulations for the Administration of Commercial Franchising (the Regulations) in order to strengthen the administration of commercial franchising activities and regulate the order of the franchising market.

Article 2: These Measures shall apply to commercial franchising activities conducted in the People's Republic of China (China).

Article 3: The Ministry 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 Ministry of Commerce.

Commercial franchises shall be subject to nationwide online record filing. Franchisors that comply with the Regulations shall, in accordance herewith, carry out record filing procedures through the commercial franchise information management system established by the Ministry of Commerce.

Article 4: The Ministry of Commerce may, in accordance with relevant provisions, delegate the completion of record filing work for commercial franchises that operate in more than one province, autonomous region and/or municipality directly under the central government to the department in charge of commerce of the people's government of the relevant province, autonomous region or municipality directly under the central government. The department in charge of commerce of the people's government of the province, autonomous region or municipality directly under the central government to which the record filing work is delegated shall complete the work itself and may not further delegate such work to any other organisation or individual.

If a department in charge of commerce of a people's government of a province, autonomous region or municipality directly under the central government so delegated fails to carry out its record filing duties in accordance with the law, the Ministry of Commerce may directly accept franchisors' record filing applications.

Article 5: Any entity or individual shall have the right to report violations of these Measures to the department in charge of commerce. The department in charge of commerce shall handle the same in accordance with the law.

Article 6: 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 all of its franchisees' stores in China;

(3) the franchisor's market plan;

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

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

(6) a document evidencing compliance with the second paragraph of Article 7 of the Regulations;

(When a franchisor that has been engaging in franchising activities since before May 1 2007 submits the materials for applying for commercial franchise record filing, the provisions of the preceding paragraph shall not apply.)

(7) the first franchise contract entered into with a franchisee in China;

(8) a sample franchise contract;

(9) 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);

(10) 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;

(A foreign-invested enterprise shall submit its Approval Certificate of a Foreign-invested Enterprise, and the scope of business on such Approval Certificate shall include the item “engaging in business activities by franchising”.)

(11) a franchisor undertaking that is signed and stamped by the legal representative; and

(12) other information the submission of which the record filing authority deems necessary.

If any of the aforementioned documents were made outside the People's Republic of China, they shall be notarised by a notary office in that country (and accompanied by a Chinese translation) and certified by the embassy or a consulate of the people's Republic of China in such country, or the authentication procedure specified in the relevant treaty between the People's Republic of China and that country shall be carried out therefor. If made in Hong Kong, Macao or Taiwan, the relevant authentication procedure shall be carried out.

Article 7: 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.

Article 8: If there is any change in the following recorded particulars of a franchisor, an application for the amendment thereof shall be submitted to the record filing authority within 30 days from the date of the change:

(1) the business registration particulars of the franchisor;

(2) details on business resources; or

(3) details on the distribution of all of its franchisees' stores in China.

Article 9: Each year by March 31, a franchisor shall report to the record filing authority information on its entry into, and rescission, termination and renewal of, franchise contracts during the preceding year.

Article 10: 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 11: The record filing authority shall complete the filing within 10 days from the date of receipt of the documents and information complying with Article 6 hereof submitted by the franchisor, and announce the same through the commercial franchise information management system.

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 12: If a franchisor that has completed record filing is involved in any of the circumstances set forth below, the record filing authority may revoke the record filed and announce the same through the commercial franchise information management system:

(1) the franchisor cancels its business registration or has its business licence revoked by the competent registration authority due to its having operated in violation of the law;

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

(3) the franchisor concealed relevant information or provided false information, causing a material impact;

(4) the franchisor applies for revocation of the record filing and the same is approved by the record filing authority; or

(5) another circumstance under which revocation of record filing is required applies.

Article 13: 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 14: A record filing authority 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.

The department in charge of commerce of the people's government (of the province, autonomous region, municipality directly under the central government or at the level of city divided into districts) of the place where a franchisor is located may issue a proof of record filing to the franchisor if it has passed record filing.

Article 15: The public may access the following information from the commercial franchise information management system:

(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) details on the distribution of all of its franchisees' stores in China.

Article 16: If a franchisor fails to carry out record filing procedures in accordance with the Regulations and these Measures, the department in charge of commerce at the level of city divided into districts or above 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 17: If a franchisor violates Article 9 hereof, the department in charge of commerce at the level of city divided into districts or above shall order it to rectify the matter and fine it a maximum of Rmb10,000. If the circumstances are serious, the department in charge of commerce at the level of city divided into districts or above shall impose a fine of not less than Rmb10,000 and not more than Rmb50,000 and publish an announcement.

Article 18: 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 19: Relevant associations shall, in accordance herewith, strengthen industry self-regulation and guide franchisors in carrying out record filing procedures in accordance with the law.

Article 20: The Ministry of Commerce is in charge of interpreting these Measures.

Article 21: These Measures shall be effective as of February 1 2012. The Measures for the Administration of Record Filings in Connection with Commercial Franchising (Order of Mofcom [2007] No.15) implemented as of May 1 2007 shall be repealed simultaneously.