Franchising, how to protect your franchise system with law!

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Article source: Published by Alibaba Time: 2006-3-29 Number of clicks: 345 times

Lawyer Wang Hongyan is a franchise lawyer. He has participated in the consultation of the State Council’s “Franchising Regulations” and participated in CCFA legal seminars many times. He is well versed in franchise management models and legal applications, and has participated in the construction of multiple franchise brand consulting project systems. Served as legal counsel for a number of foreign brands and provincial brand franchises. Provided franchise legal services for 20 brands in Japan, Hong Kong, Taiwan, Singapore, etc.

How to establish and improve the franchise system?

In which industries do franchising do more?

Franchising does not need to be registered with a certain state department?

Is there any content to safeguard the interests of franchisees?

Many alliance leaders will formulate overlord clauses?

Franchise Trap

(14:06:21) The host said: The topic we are discussing today is "How to use legal means to protect franchising". Say hello to all of us. ?

(14:06:26) Wang Hongyan said: Hello everyone, I am very honored to come to Alibaba to communicate with you "How to use legal means to protect".

(14:06:31) The host said: How to have the right to franchise?

(14:06:39) Wang Hongyan said: If you want to carry out a franchise, we will give you legal advice. According to the "Commercial Franchise Management Measures" implemented in 2004, there are seven conditions for a franchise. The most important condition is a threshold, which is the 2+1 threshold. The second is two directly-operated stores. The first is operating for more than one year. You must have two self-invested direct-operated stores and operate them for more than one year to have the basics to develop a franchise. qualifications. If you cannot achieve this, as a franchisee, it can be considered that you do not have the qualifications to develop and absorb franchises. I just talked about the legal prerequisites. From a management perspective, you must have your own unique model that can be copied by others. If you don’t have this, you will not have commercial resources from a management perspective, and no franchisee will be willing to take his funds. Buy your franchise.

(14:06:57) The host said: What models does this model include?

(14:08:30) Wang Hongyan said: The concept of model is relatively vague. The characteristic of franchising is that the franchisor authorizes the trademark, trade name, brand, and business model to his franchisees in a contractual manner. The experience of running his original successful store in the way of business existence has formed a prescribed model, which is called franchising. Franchise can be understood from two perspectives, one is special and the other is Xu. Special is something unique for others to copy, and Xu is permission. Others use your stuff. Here I can explain to you some basic knowledge about franchising.

(14:08:55) Wang Hongyan said: The common people’s understanding of franchising is the same as chain. Let’s distinguish the concepts of chain and franchise. There are three types of chains. The first one is direct-operated chain. , it’s all my investment, my human and financial resources, I open stores that I fully control, which is called a direct chain. The other is a franchise chain, which is the franchise we are talking about today. A franchise chain is a contract between both parties. For the franchise transfer, there is no investment in the store from the headquarters, and the two parties are in a cooperative relationship.

(14:09:08) Wang Hongyan said: Another type of chain is voluntary chain. Chains are divided into three categories, namely direct chain, franchise chain and voluntary chain. The one we talk about more is The first two types of direct-operated chains and franchises, that is, franchise chains, once this concept is distinguished, it will be helpful for us to understand the rights, obligations and legal relationships of franchisees in the future.

(14:09:25) The host said: We know that according to a survey by the China Chain Store and Franchise Association, there are more than 1,900 Chinese Chain Store and Franchise Associations, ranking first in the world in terms of the number of franchise companies. Such a huge number scale, how to establish and improve the franchise system?

(14:09:31) Wang Hongyan said: Although the number is relatively large, from a quantitative perspective we say that although we are number one in the world, from a quality perspective I think it is truly number one in the world. There are no well-known franchise brands. KFC and McDonald's are all from abroad. They are the first or second best brands in the global franchise industry. We in China rank first in the world in terms of quantity, but the quality does not reach the top brands in the world. At the same time, I think the number you told about 1,900 is actually not included in the statistics of many companies. This number is an official number. As a private sector, many figures are not included in the statistical survey, so it is very possible to break through the system of more than 2,000 in real terms. , this number should be said to be much larger than that of other countries.

(14:11:05) The host said: The quantity is very huge, but in terms of quality, there is no famous brand?

(14:11:11) Wang Hongyan said: From a global strategic perspective, there is no such level as KFC and McDonald's.

(14:11:17) The host said: For our franchisees, is it less risky to join a foreign brand?

(14:11:22) Wang Hongyan said: This is not necessarily true. I think any foreign brand coming to China will definitely have to adapt to the local environment. He does not understand China’s legal environment and investment environment. As a Chinese investor, Business owners should consider comprehensive factors when choosing an investment brand. Judging from the current situation, KFC is relatively more responsible for franchisees. It absorbs franchisees through skilled transfers, and is relatively responsible for franchisees. a little. From a domestic perspective, there is no shortage of excellent brands. From a long-term perspective, excellent brands are produced in our country. Now many domestic operators are very interested in franchising. It should be said that they are also optimistic about this business model. As long as we follow a formal and standardized model , can cultivate excellent local brands.

(14:13:16) The host said: You just mentioned KFC and McDonald's. Can KFC and McDonald's join in China? Just pass the skilled transfer form?

(14:13:23) Wang Hongyan said: As far as I know, KFC has created a certain business district through one store and has been operated by KFC headquarters. It has its own mature store source and the entire store has been transferred. This is a franchise model, but its model is different from ordinary ones. Some franchise owners let you operate independently at the beginning. KFC is different. It cultivates a business circle and cultivates you The value is transferred based on the understanding of the Chinese market. I am not very clear about McDonald's. KFC is like this. McDonald's started franchising earlier than KFC.

(14:13:28) Wang Hongyan said: McDonald’s and KFC did not immediately enter into franchising when they entered China, because China’s intellectual property protection is not very strong. Based on the understanding of China’s legal situation, they are not in real China. It took three years after China joined the WTO to slowly start franchising. In the past, all stores were directly operated because the protection of intellectual property rights was relatively weak. It was only in 2001 that China began to slowly liberalize franchising after joining the WTO.

(14:13:34) The host said: There is also a Pizza Hut for fast food. What is the model of Pizza Hut?

(14:13:39) Wang Hongyan said: Pizza Hut is also recruiting franchisees. It should be said that Pizza Hut also belongs to Yum! Brands. I know that Yum! Brands has more than six brands in China. Pizza Hut is One of the brands, Yum Brands, has a strong understanding of the market, market development capabilities, new product research and development, and the ability to introduce excellent brands from abroad to develop new markets domestically.

(14:15:19) The host said: Can domestic franchisees consider foreign brands?

(14:15:26) Wang Hongyan said: These foreign brands have very strict requirements when choosing franchisees and partners. You don’t have to be rich just to be a franchisee. They attach great importance to the brand and are very concerned about the franchisee. The selection of franchisees is very strict.

(14:15:32) The host said: What are the strict requirements for franchisees?

(14:15:37) Wang Hongyan said: They have an inspection process. It does not mean that you can become my franchisee if you have funds. It has a hard threshold and a specific set of procedures. We went through Various information channels know that foreign brands, especially well-known brands, are very cautious in choosing franchisees. When engaging in franchising, we can call the relationship between franchisees a marriage relationship. The marriage relationship means that the cooperation between both parties must be happy, and at the same time** * Consistent with the concept, some business methods, business models, and business processes must strictly abide by the operating rules of the headquarters. If there is any violation of law or you feel that you do not meet its conditions during the inspection process, you can choose more franchisees, such as KFC and McDonald's. There are more franchisees, in order to ensure that the brand image is not discounted.

(14:16:45) Wang Hongyan said: There are many good franchise brands in Zhejiang Province. If they are well cultivated and supported, they will do well throughout China.

(14:16:51) The host said: Which other industries have done more franchising?

(14:16:57) Wang Hongyan said: Franchising became very popular in the 1990s. Certain industries, such as fast food, car beauty, and education, also adopted this model. Baby products , coffee, clothing, household products, bedding, with the economic development in the past two years, industries that did not enter the franchise industry are also penetrating into this aspect, such as logistics and express delivery. Originally we stayed in the field of pure consumer goods, but now it is slow Slowly penetrating into the means of production, consumption materials are directly oriented to consumers, and now it is slowly penetrating into the field of means of production.

(14:17:56) The host said: Including car beauty, education, baby care, coffee, clothing, home furnishing, etc., can we see these franchises in the city?

(14:18:07) Wang Hongyan said: Yes, franchising requires stores, and stores are directly facing consumers. As a franchise brand with many stores, if it can closely follow consumers It will be easier to succeed if you build loyalty between them.

(14:18:14) The host said: Mongolian guy: Which franchises are better in China at present? Are Suning, Trust-Mart, Little Sheep, and Gome considered franchises?

(14:18:18) Wang Hongyan said: Little Sheep is in the catering industry, and Suning is in the retail industry. In terms of domestic independent brands in the retail industry, Gome and Suning are in the home appliance retail sector, and they should be said to be relatively successful. , Carrefour, Trust-Mart are still mainly direct sales, I think Gome Suning is also mainly direct sales, it is not easy to become their franchisee.

(14:19:44) The host said: They like to watch it themselves and will not let others join.

(14:19:53) Wang Hongyan said: There are many Little Sheep franchise stores across the country now, but we have encountered a situation where there are many series of Little Sheep, including Inner Mongolia Little Sheep, Shanxi Little Sheep, Xinjiang Little Sheep, and many Little Sheep series. system, because Inner Mongolia Little Sheep has done relatively well and has obtained a well-known trademark, it has a certain degree of exclusivity across the country and the trademark can be stably protected. However, judging from the current situation, Little Sheep in other regions believe that such a trademark is exclusive It is unfair to attribute it to Inner Mongolia Little Sheep, and it hopes to revoke the well-known trademark through other channels. Its intellectual property status is still in an unstable situation.

(14:20:02) The host said: For example, the intellectual property rights of Little Sheep are not stable. What are the prospects of joining Little Sheep?

(14:22:38) Wang Hongyan said: My personal opinion is only as a reference. Three years ago, Little Sheep was very popular in China. Every product has a life cycle. Maybe this product will be used in three or four years. If there are no improvements to maintain the original position, it is difficult to say whether it can obtain such a large market share. This depends on the management of Little Sheep and whether the taste can be improved and perfected. There are currently so many franchise stores across the country. We don’t know whether Little Sheep’s market share is as big as before. How is this system managed? Is it perfect? ??If the support for franchisees cannot keep up, I think there are too many franchisees, and the rights and interests of franchisees cannot be kept up. Then I suggest that the support for franchisees be improved. It provides follow-up services and you have a full understanding of this before joining, and you still recognize the brand.

(14:22:43) The host said: Our choice of franchisee depends on how he provides follow-up support services.

(14:22:47) The host said: The rain has passed by: What specific content does a franchisee need to consider when choosing a franchise brand?

(14:22:54) Wang Hongyan said: This question was asked when I was interviewed by the media. I think we should pay attention to the following issues. First, does the brand already have popularity and market? Secondly, does the brand already have two direct stores of its own and has it reached the 2+1 threshold? If you have experience in managing your own store, you can only help if you have experience. The franchisee opens his store.

(14:22:58) Wang Hongyan said: The third issue that needs to be considered is whether the brand already has a trademark. Of course, it is best for this trademark to be a registered trademark. If it is a trademark issue that is under application It is not very big. The current trademark management methods do not strictly require registered trademarks. It is best to have a registered trademark. At the same time, the fourth consideration is whether the brand has its own unique patents. It cannot be limited to design patents. Design patents are relatively Put it simply. The fifth question he needs to pay attention to is whether the brand can help franchisees provide continuous support and training to help franchisees improve their management and support their operations.

(14:23:06) Wang Hongyan said: The sixth point is about the stability of the company. If the company does not have a long-term strategic plan and just wants to open more stores and attract more franchises, Business, the company's culture is not based on long-term business strategy, so I don't think such a company should consider franchising at present. The current laws and regulations are not perfect. In 2004, fraud occurred in the franchise industry, and some franchisees deceived consumers. , this aspect needs to be fully investigated before signing a contract.

(14:25:00) The host said: These six points need to be considered comprehensively.

(14:25:04) Wang Hongyan said: This is the most basic.

(14:25:09) The host said: You just mentioned appearance patent intellectual property rights, what else is there?

(14:25:14) Wang Hongyan said: Intellectual property rights are the first trademark issue. Trademarks are the most basic for franchise companies. If there is no trademark, how can franchisees promote their brands and publicize them to the outside world? This is the most basic issue. The second intellectual property issue is patents. Some brands have patents, and some brands do not necessarily have patents, but they must have their own unique technology or proprietary achievements for franchisees to copy. . The third aspect is copyright. If the franchise headquarters has not summarized some of its unique things into a set of written documents, then the franchise is insufficient. Yupiaogui: Does the state now have assessment conditions for franchisees? Do those who are approved have any certificates?

(14:26:07) Wang Hongyan said: Although there are some basic requirements according to the "Commercial Franchise Management Measures", in fact, when we study the Franchise Management Measures, we can see that In fact, this management method is a departmental regulation, which means that it is a departmental regulation that is less efficient than national laws and regulations. Departmental regulations have a reference value in law, so they can be used as a basis for law enforcement by administrative departments, but As a reference in the judicial field, the state has a requirement for headquarters in franchising, which is information disclosure. That is, before developing franchisees, the franchise headquarters will provide basic information to potential franchisees and convey information, such as franchise operations. How many stores does the headquarters have, store operating conditions, and trademark status?

(14:27:18) Wang Hongyan said: Whether you have been involved in some lawsuits recently, and the questions that franchisees have asked you within a reasonable range should all To answer, from this perspective, the franchisee has a basic right to know during the contact process between the two parties, which is a more important aspect. During the advertising issuance process, the franchise headquarters is not allowed to have untrue information, such as giving you high promises, such as recovering costs in two or one month. Ads like this will be banned in the future.

(14:30:33) Wang Hongyan said: The third franchise headquarters has a filing requirement in accordance with the requirements of the regulations. In fact, at present, I think that in terms of implementation in various places nationwide, it is still an after-the-fact filing requirement. At present, pre-approval is still done. Pre-approval and post-recordation are matters of the two sessions. Pre-approval requires government permission before recruiting franchisees. This is not currently done. The market economy is relatively free. The market economy is relatively free. The emphasis is on market freedom and active market, so I think it is not very reasonable to require the government to implement pre-approval for all franchised headquarters. The government should have certain supervision over the entire process to avoid dishonest behavior.

(14:30:39) The host said: Just now you mentioned those alliance leaders. There are many advertisements like the ones that say you can recoup the cost in one month and make a huge profit. Is it illegal?

(14:30:47) Wang Hongyan said: Such similar advertisements conflict with the "Commercial Franchise Management Measures". If there are such promise advertisements, it will cause losses and mislead franchisees. If so, compensation will be required according to regulations.

(14:30:59) The host said: The rain is passing: operators need their own unique patents, how to say this?

(14:31:05) Wang Hongyan said: Patents may not be owned by every franchised headquarters, but as a franchised headquarters, it should have its own results. For example, let’s use an analogy with patents. For example, KFC’s ovens have their own patents, and Quanjude’s roast ducks have their own patents for this equipment. Such products are not generally available in the market. This is a set of things that attracts you to join. Generally speaking, these things are .

(14:31:09) The host said: Things like equipment and formulas?

(14:31:17) Wang Hongyan said: Yes, there are also some things that can be purchased abroad, which do not necessarily refer to patents.

(14:31:24) The host said: Yupiaoguo: Does this mean that franchising does not need to be registered with a certain department of the country?

(14:31:31) Wang Hongyan said: The "Commercial Franchise Management Measures" have such requirements. In fact, judging from the situation in the first half year of implementation, very few shop owners are willing to register. Regarding the issue of efficiency levels, there will be mandatory requirements in the "Franchising Regulations" promulgated by the State Council. Currently, registration is required, but few actually implement it.

(14:31:55) The host said: Me: What kind of qualifications should chain stores pay attention to as franchisees?

(14:32:09) Wang Hongyan said: Maybe you expressed it incorrectly. As the headquarters, the franchisee can review several aspects, such as whether the franchisee has found a suitable store or store. Also, have franchisees established certain entities to join your business, such as individual industrial and commercial households, companies, or other sole proprietorships? The third is whether the financial capacity is adequate for early investment. Fourth, each company has its own considerations. Whether such a franchisee is eligible for the optional adjustment, for example, if it is engaged in baby care, then the franchisee must have a love for baby care and knowledge of baby care.

(14:35:22) The host said: Is this a question of the quality of franchisees?

(14:35:29) Wang Hongyan said: Yes, franchisees agree with the product concept.

(14:35:33) The host said: Is this the corporate culture identity?

(14:35:38) Wang Hongyan said: Different companies have different ideas. The first three points are general. In other aspects, each brand and each company has its own ideas.

(14:35:43) The host said: Next, let’s ask a question about legal analysis.

(14:35:48) The host said: YEHPO: What is a franchise and which law is it protected by?

(14:35:54) Wang Hongyan said: I just explained that there is a concept in franchising, which is that the franchise headquarters uses its own trademarks, trade names, patents, business models, and other unique Intellectual property rights and successful experience are authorized to franchisees in the form of contracts. Franchisees must pay relevant fees to the franchisor in accordance with the requirements of the contract. We call this "franchising". Franchise laws currently come from the legislative process of our country. See if you can give a brief introduction. In 1997, the Ministry of Trade's Commercial Franchise Management Measures had a trial approach, which was a trial implementation and not officially implemented. In 2001, the country had a commercial franchise legislative plan. So far, this regulation has not been promulgated. A commercial franchise regulation was promulgated at the end of 2004. Management Measures,

(14:36:18) Wang Hongyan said: A management method has been formally introduced. This management method is the only basis for the commercial franchise industry. It is a regulation, not a law, nor It is not a regulation and has limited effect. In addition, there are company law, contract law, trademark law, copyright law, and patent law. In fact, this is a comprehensive system that cannot be solved by simple commercial franchise management methods. This is a comprehensive legal system.

(14:36:24) The host said: Have you participated in formulating this regulation?

(14:36:30) Wang Hongyan said: We have participated in the discussion. If you think that the laws and regulations in some aspects are not perfect, have loopholes or have problems, you can report it to the relevant departments. Provide legal advice.

(14:36:50) The host said: Can you talk about some things that franchisees need to pay attention to? If you want to join, does the contract have to be signed for three years? What should you pay attention to?

(14:36:55) Wang Hongyan said: According to the management method, it has breakthroughs in four aspects, which are improvements compared to the original trial method. The first point is that the information disclosure and advertising release we just mentioned have detailed requirements for the franchisor in terms of information disclosure and advertising release. At the same time, if you cannot do it and the information disclosure and advertising release is fraudulent, there will be some compensation for the franchisee. . The second issue is about foreign investment access. The Commercial Franchise Management Measures for Foreign Investment Access covers the process of application, approval, and registration. In fact, this part has been clearly stated at the Ministry of Commerce’s foreign press conference in the future, because of China’s accession to the WTO. Yes, we must abide by the WTO principle of national treatment. Foreign investment approval is a procedural approval.

(14:39:11) Wang Hongyan said: There is no substantive approval. Domestic and foreign countries are treated equally. In other aspects, this management measure , it is about the issue of legal liability. Legal liability refers to many aspects, such as administrative liability, information disclosure liability, and supplier quality guarantee liability. These can provide a guaranteed legal basis for franchisees. We must serve as a franchisee. When a business owner invests in a brand or a franchise project, he must have a certain degree of research and understanding of the management itself.

(14:39:21) The host said: One is a few breakthroughs, the other is compensation for false information disclosure and advertising, and the access of foreign investment.

(14:39:27) Wang Hongyan said: There is an agreement on foreign investment access, and it has been stated in the subsequent statement of the Ministry of Commerce that this is a procedural requirement and is essentially the same as the domestic requirement. Yes, the approval of foreign investment is only a procedural one, and the national treatment commitments should be fulfilled.

(14:39:34) The host said: Is there anything to protect the interests of franchisees?

(14:39:48) Wang Hongyan said: Because these aspects of progress are beneficial to franchisees, because many aspects were not agreed upon in detail, this management method can basically reflect the franchise regulations. In what aspects are there regulations, we can see some signs that this management method is a requirement for alliance owners in many aspects, that is to say, the establishment of pre-thresholds, as well as information disclosure obligations and advertising requirements in the entire process of developing franchises. , if the requirements are not met, you will be held responsible, which protects franchisees.

(14:42:55) The host said: Is it more a restriction on the alliance leader and a protection for the franchisees?

(14:43:01) Wang Hongyan said: Yes, when we talk about the franchisor’s obligations, it is his rights for the franchisee.

(14:43:06) The host said: Yupiaoguo: What positions should Party A and Party B have in the franchise contract? Does it matter?

(14:43:11) Wang Hongyan said: Party A and Party B have smooth issues. It has nothing to do with each other. In fact, they are both the same. People think that Party A is good, but in fact they are all the same. The law When it comes to express contracts, the status of all parties is equal. There is no advantage if I am ranked first.

(14:43:16) The host said: How to establish and improve the franchise system?

(14:43:23) Wang Hongyan said: How to establish and improve this issue is for the alliance leader. If the alliance leader absorbs franchisees before there is a complete system, this will be dangerous to the entire system. , it is very likely to destroy this brand. How to establish and improve it? This problem is relatively big and complicated. I think it can be considered from several aspects. First of all, you must have a strategic plan for your own brand. This is a plan for absorbing franchisees. Secondly, I think it is very important to absorb franchisees. Before becoming a franchisee, you must have a basic system construction before developing franchisees. The system construction includes the structure of your department. For example, we need the strategy department, brand department, administrative department and R&D department. You can build a complete system on the basis of Then absorb franchisees,

(14:43:30) Wang Hongyan said: In this way, each of them can perform their own duties, and the services for franchisees can also be implemented in a certain department. This will have a complete follow-up support system. It can ensure the sustainable development of the brand. The third aspect I think is very important is the issue of pre-protection of intellectual property rights. Franchising is a system that is constantly copied and expanded. In fact, you support franchisees while expanding. This has another risk. You have a lot of risks. Maybe you support him today, but he may become your competitor tomorrow. You have to ensure that there are no big problems with the intellectual property system. You have your own unique technology and unique intellectual property rights. We talked about this as a matter of control. You can copy many stores, and at the same time you can control your stores so that your stores will not be lost and become competitors, and their brands may even surpass yours.

(14:44:56) The host said: Pre-protection of intellectual property rights is very important to the franchise headquarters.

(14:45:02) Wang Hongyan said: The fourth issue is the contract. Everyone knows that the relationship between the franchisor and the franchisee, that is, the franchisee, is a contractual partnership. Then There must be a complete text for the franchise contract between the two parties. The relationship cannot be determined in a simple two-page document. This relationship is very complicated, including intellectual property rights, logistics, daily management and maintenance, etc., which are closer than ordinary contracts. , then the franchise contract system is very complicated. The main contract is the franchise contract, and there are many subordinate contracts, such as distribution contracts, logistics contracts, trade secret protection contracts, business restriction contracts, and even trademark use contracts. Six or seven contracts are actually the most basic contract system. Only when the contract system is complete,

(14:47:38) Wang Hongyan said: Only when the content of the contract system is fully agreed can the contract system be completed. To ensure the stable development of the brand, contracts are also very important.

(14:47:44) The host said: How to sign a complete franchise contract?

(14:47:55) Wang Hongyan said: From the perspective of the alliance leader, we should say that the contract can be divided into two aspects. The first aspect is the general terms. The general terms simply refer to the provisions of our contract law. For example, the parties who signed the contract or the place where the contract was signed, the performance method of the contract, the deadline, liability for breach of contract and the solution. There are unique aspects here, such as we talk about sensitive words such as franchise fees, deposits, business transactions, etc. Circles and stores, these concepts are unique to franchising. So how to sign a complete franchise contract, we may not be able to finish it today, so we can list them,

(14:49: 40) Wang Hongyan said: For example, the franchise fee is considered by the alliance leader to be a one-time contract and a threshold fee, which must be paid in full at once. I will provide you with business opportunities, and the franchise fee cannot be refunded under any circumstances. We can do this Understand, the franchise fee is equivalent to me buying a franchise from you. As a one-time purchase, from the perspective of the franchisee, I pay the franchise fee and you have to provide corresponding services, such as trademarks, training, logistics and distribution. Both parties here There is a dispute. In the case of dispute, if you are the leader, you will have a clear agreement on the composition of the franchise fee and the method of handling the franchise fee. For example, we agree that the franchise fee is a one-time threshold fee, and it will not be charged under any circumstances. Withdrawal, this is a situation,

(14:49:47) Wang Hongyan said: Some alliance leaders have agreed that the franchise fee includes trademark usage fees, training fees, and management support fees. From this perspective, it is similar to The one-time entry concept we talked about earlier is different. A very important aspect of the franchise contract is some concepts that are not found in other contracts, such as the concept of franchise fee. There must be a clear agreement between both parties. There are currently no clear laws and regulations. There are very authoritative explanations of these concepts, so it is recommended that both parties make an agreement on the concepts that may cause disputes, and agree on some handling methods for some sensitive expenses, such as under what circumstances no refunds will be made, and under what circumstances how refunds should be made. What should be done under what circumstances.

(14:49:53) The host said: Let me ask you to explain the two concepts of franchise fee and deposit?

(14:50:00) Wang Hongyan said: From the perspective of the alliance leader, the franchise fee is understood as a one-time entry fee. I join this system and buy a franchise from you. This is the franchise fee, and I become one of your members. Well, the concept of a deposit is that after I become a member of your company, I have to guarantee my commitment, guarantee your brand, guarantee not to discount, guarantee not to sell other people's goods, that is the deposit, if the agreement is violated, it will be confiscated, or it can be used as a deposit. Arrears.

(14:50:29) The host said: Can it be said to be a mortgage?

(14:50:35) Wang Hongyan said: The deposit is a financial guarantee, and the mortgage has different properties. It can be refunded to you within the contract period, for example, with interest accrued or without interest.

(14:50:57) The host said: Is this guaranteed to be paid?

(14:51:04) Wang Hongyan said: From the perspective of the alliance leader, in order to ensure that the brand image is not compromised, you must ensure that the franchisees operate your system. From the perspective of the franchisees, too You should pay it, and the money should be refundable. It is temporarily placed there as a guarantee. If you follow this system, you can get the money back.

(14:51:31) The host said: These words should be written in the contract?

(14:51:37) Wang Hongyan said: