Franchises generally include three different forms: trademark franchise rights, product franchise rights, and operating model franchise rights. Franchise right refers to an individual or enterprise (the franchisor) that owns the ownership of a unique product, equipment, trade patent or service mark operating system and grants it to other individuals or enterprises (called the licensee) in a specific area and period. The right to conduct business activities in the same industry in a manner specified in advance.

Legal Analysis

Franchising, also known as franchise operation, means that the franchisor transfers its own trademarks (including service marks), trade names, products, patents and proprietary technologies, The business model, etc. are granted to the franchisee in the form of a franchise contract. The franchisee shall engage in business activities under the franchisor's unified business model according to the contract and pay corresponding fees to the franchisor. Enterprises that have established their own brands in this industry, have relatively mature products, and have their own characteristics in production technology and business models are all seeking to expand capital and increase market share. Franchising can help these enterprises introduce various operating resources such as funds from other partners and save the franchisor's own investment to achieve the above purposes. For those businessmen who are starting to start a business or small and medium-sized enterprises that are not yet well-known, through franchising, they can obtain advanced production technology and management experience, produce and operate famous brand products, and can quickly accumulate capital and obtain profits. It is precisely driven by this two-way interaction of interests that franchising has broad room for development.

Legal Basis

Article 3 of the "Commercial Franchise Management Regulations" The term "commercial franchising" as mentioned in these Regulations refers to operations with registered trademarks, corporate logos, patents, proprietary technologies, etc. A resource enterprise licenses its operating resources to other operators in the form of a contract, and the franchisee carries out operations under a unified business model in accordance with the contract and pays franchise fees to the franchisor. Units and individuals other than enterprises may not engage in franchise activities as franchisors.