China Insight - Consumer Products
Improved balance between franchisors and franchisees – New measures on information disclosure adopted
As of 1 April 2012, the Measures for Administration on Information Disclosure of Commercial Franchise (“Measures”) took effect. The Measures were issued by the Ministry of Commerce of the People’s Republic of China on 23 February 2012 and replace the current version, which had been in effect since 1 May 2007.
A draft of the Measures was published for comment on 28 April 2011. Compared to the above draft, several items in the final Measures have been further revised. Same as in the past, the franchisor must disclose certain information to the franchisee at least 30 days before concluding the franchising contract. In the new Measures, the intention of the government to specify the franchisor’s disclosure obligations towards the franchisee is clearly apparent. However, the Measures also impose a number of stricter requirements on the franchisee..
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