On The Legal Issues Of Franchising Disclosure

Franchising is a low-cost, low-risk method of expanding business, which allows a company to gain national and international trademark and trade name recognition without a huge investment of their own capital. Simultaneously, an entrepreneur can take advantage of the experiences, oversight and recognition of the parent company, thereby giving his business venture a head start. Since its emergence in America in the 19th century, this win-win situation prompted the flood of franchise growth in the world. Proved by more than one hundred years' history of development overseas, franchising has been widely recognized as a lucrative investment choice, which has the highest rate of success.As some world-famous foreign franchisors racing to seize Chinese market, Chinese has known franchising gradually. We have paid more and more attention to its unique fascination. However, compared to more than 100 years' history of overseas development, franchising is still a kind of brand new business form in China. At the same time, we should also make sure that franchising was introduced into Mainland China in such circumstances that relative laws and regulations were imperfect and relative theory was not well established. Among the legal issues on franchising, disclosure is the core one. Establishing and strengthening the legal system of disclosure plays an important role in franchising development in certain countries. And just for this reason, special legislations on franchising around the world are almost centered on disclosure. This thesis sets off a discussion on the legal system of disclosure just from this point of view, focusing on disclosure legislations of different countries around the world, and based on this, the author goes on to discuss the path China should take to improve its disclosure law.This thesis comprises 5 chapters. The beginning part is introduction, making a brief introduction to the concept, characteristics of franchising before comprehensively discussing legal system of franchising disclosure, and going furtherby leading to disclosure--the subject of this thesis. Chapter 1 first introduces theconcept, standard of disclosure and franchising disclosure's relation to stock exchange disclosure, then analyzes the key position that legal system of disclosureoccupies in franchising respectively from two aspects: fact and theory. From macroscopic view, chapter 2 expounds supervision of franchising disclosure, which includes regulation of various governmental legislations and self-control from international and domestic franchise associations. Then turning to microscopic view, in chapter 3, the author illustrates the content of franchising disclosure and the franchisor's civil and criminal liabilities when breaches the disclosure law through comparing legislations of different countries and quoting some cases, and moves on to conclude three trends on disclosure legislation. In the last chapter, the author points out current situation of China's legal system of franchising disclosure and the shortcomings of the current legislation, and based on this, puts forward some suggestions and ideas on perfecting China's disclosure law and regulations, such as the goal, task, orientation of the future legislation and establishing a "true" franchise association in China. Hope to have some benefit to China's future franchising legislation and practice.