During the trial of A v. B Bodybuilding Co., Ltd. (referred to as Company B) franchise contract dispute, plaintiff A claimed that on July 2, 2004, she signed the "InchbyInchCHINA Franchise Contract" with the defendant ” (referred to as the franchise contract), and paid a franchise fee of 100,000 yuan to the company on July 6. When I was looking for a business location for a franchise store, Company B did not provide me with clear technical and operational guidance for opening a franchise store. In December 2004, she suddenly received a letter from Company B's lawyer, claiming to terminate the contract and confiscate the 100,000 yuan franchise fee she paid. She also subsequently informed Company B that she could not continue to perform the contract and requested the return of the franchise fee collected.

The plaintiff believes that the franchise contract signed by both parties violated the mandatory provisions of my country's laws and administrative regulations that restrict foreign-funded enterprises from engaging in franchise activities in mainland China, and that Company B exceeded the limit when entering into the franchise contract. business scope, and did not have the corresponding contract capacity when the contract was concluded. Its negligence in contracting resulted in the invalidity of the franchise contract, causing heavy losses to the plaintiff and loss of benefits expected from the contract. Therefore, the lawsuit was filed, demanding that the franchise contract be confirmed to be invalid; Company B should return the franchise fee of 100,000 yuan paid by the plaintiff, and compensate the plaintiff for direct economic losses, attorney fees, and investigation and evidence collection fees totaling 60,000 yuan.

Defendant Company B argued that the franchise contract it signed with A was the true expression of intention of both parties and was valid; the fault for not performing the contract lay with A, and the contract stipulated that 100,000 yuan could not be returned; A stated The losses shall be borne by them themselves. Therefore, we do not agree to its claim. Company B was established through industrial and commercial registration on February 18, 2003. The enterprise type is a wholly foreign-owned operation, and its business scope is women's bodybuilding, beauty services, skills training and management services. On July 2, 2004, A (Party B) and Company B (Party A) signed a franchise contract. The contract stipulates that Party A grants Party B the right to use the InchbyInch goods or services provided by Party A and gives positive support to Party B's business activities. Support; Party A agrees to Party B's use of InchbyInch's trademark and trade name; Party B pays Party A a franchise fee of 100,000 yuan, and pays Party A an equipment fee of 344,750 yuan within 1 month from the date of payment of the franchise fee. Party B pays the remaining balance after the equipment installation and debugging is completed. The equipment fee is 296,500 yuan; Party A is not allowed to develop a second franchise store within the administrative area of ??the Asian Games Village, Chaoyang District, Beijing, otherwise Party A shall compensate Party B for related losses; if either Party A or Party B violates the contract, the performing party has the right to demand Terminate this contract; if Party B breaches the contract, all the money paid by Party B shall belong to Party A; if Party A breaches the contract, Party A shall return all the money received to Party B.

During the trial, both parties agreed that the franchise project authorized by Company B to A was: the use of specific instruments and equipment for body shaping. On July 6 of the same year, A paid a franchise fee of 100,000 yuan to Company B. On December 3, 2004, Company B entrusted a lawyer to send a lawyer's letter to A, requiring A to fulfill its obligation to pay the price within 15 days. Otherwise, Company B would terminate the contract and confiscate the 100,000 yuan paid by A as liquidated damages. On the 10th of the same month, A also entrusted a lawyer to send a lawyer's letter to Company B, pointing out that the franchise contract signed by both parties was invalid and demanding the return of the franchise fee paid. On March 28, 2005, Company B was approved by the Trademark Office of the State Administration for Industry and Commerce, and its service items were classified as Category 44: health care; beauty salon; massage; tattoo; manicure (product cut-off). According to another investigation, Company B has not yet obtained approval from my country's relevant approval authorities to engage in commercial activities in the form of a franchise. The above facts are supported by the franchise contract, lawyer's letter, trademark registration certificate, receipts, invoices and statements from both parties.

Legal Basis

"Commercial Franchise Management Regulations"

Article 24 The franchisor does not meet the conditions specified in Paragraph 2 of Article 7 of these Regulations Those who engage in franchise activities shall be ordered to make corrections by the competent commerce department, their illegal gains shall be confiscated, and a fine of not less than RMB 100,000 but not more than RMB 500,000 shall be imposed, and an announcement shall be made.

If other units or individuals other than enterprises engage in franchise activities as franchisors, the competent commerce department shall order them to stop illegal business activities, confiscate illegal gains, and impose a fine of not less than 100,000 yuan but not more than 500,000 yuan.

Article 25 If the franchisor fails to register with the competent commerce department in accordance with the provisions of Article 8 of these Regulations, the competent commerce department shall order the franchisor to register within a time limit and impose a fine of not less than 10,000 yuan but not more than 50,000 yuan; If the registration is still not filed within the time limit, a fine of not less than 50,000 yuan but not more than 100,000 yuan will be imposed and an announcement will be made.