Dry cleaning franchising requires "legal" franchising
Release Time:
2021-01-21 09:47
Source:
Chain franchise laundries show a mixed state; some laundries, under the banner of franchising, cheat franchisees out of franchise fees, then change their names and addresses, leaving their franchisees to fend for themselves.
Laundry is a sunrise industry with steadily increasing demand. This is evident not only from relevant data but also from our daily experiences. However, to be realistic, the development of the laundry industry is still uneven, and incidents infringing on consumer rights occur from time to time. Because of this, choosing big brands with superior services has become a common consumer preference; consequently, brand franchising occupies such a large market share. The huge business opportunity also provides conditions for some unscrupulous franchisors to commit fraud.
Franchising refers to the franchisor granting the franchisee the right to use its trademark, trade name, products, patents, proprietary technology, and business model through a franchise contract; the franchisee operates under the franchisor's unified business model as stipulated in the contract and pays corresponding fees to the franchisor. Relevant regulations stipulate that the franchisor must have independent legal person status, registered trademarks, trade names, products, patents, and must also possess unique, teachable business management techniques or know-how, along with more than one year of good business performance. However, looking from the laundry industry to the entire franchising business model, many franchisors do not meet these requirements. For example, the recent "earthy" sesame cake franchise fiasco involved a simple production process, low technical content, and easy imitation, lacking the conditions to develop a franchise system, yet it stirred a nationwide franchise "storm."
Terms like "unique, teachable technology or know-how" and "more than one year of good business performance" have significant room for falsification. Since franchisees are not the end consumers, consumer associations find it difficult to mediate. When disputes arise, they can only be resolved through arbitration and appeals, which are costly and laborious, making it hard for ordinary franchisees to bear, often resulting in unresolved issues.
Franchising has truly developed in China for no more than 10 years, but currently, our franchising system has exceeded 2,000 entities with about 2 million practitioners. However, our external legal environment is still inadequate—the legislative level of special regulations is low; general economic and civil-commercial laws do not directly regulate franchising; industry standards are simple and vague, and many important franchising issues are unregulated, leaving a legal vacuum.
According to sources from the Ministry of Commerce, the "Regulations on the Administration of Commercial Franchising" will be promulgated soon, with very specific provisions. During the current legal vacuum period, besides reminding investors to carefully review projects and protect their own interests, the government should also actively promote the prompt introduction of relevant regulations.
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