Franchising issues in China – the story so far

By Richard Wageman and Stacy Yuan

China has now established a regulatory framework for franchising and lifted many of the restrictions on foreign investment. However, franchisors seeking to enter the market still face several challenges when it comes to building their brands in China.

It has been over seven years since China implemented the Regulations on the Administration of Commercial Franchises, as well as two supporting regulations covering franchisor disclosure and franchisor filing. To date, over 2,000 domestic and foreign franchisors have made a formal franchisor filing with the Ministry of Commerce in accordance with the regulations. In addition, many multinational and domestic companies continue to operate as licensors in China, either because they do not meet the regulation’s filing conditions or because they do not want to comply with its disclosure and filing requirements.

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