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China Should Enforce New Laws to Protect Franchisors

By Mario Herman, Esq.

As more franchisors enter China through joint ventures and licensing agreements it’s important for the Chinese Judicial system to enforce laws already in place to protect the franchisor and licensee.

In late October 2011, the Information Office of the State Council in China published a white paper entitled “The Socialist System of Laws with Chinese Characteristics.”  The white paper acknowledges that the use of laws are necessary to safeguard fair and orderly competition among market players, and acknowledges that to assure scientific and economic advancement, "there is a rising demand for more scientific and democratic legislation, as increasingly diversified stakeholders and complicated interest patterns make it harder to regulate social interests through legislation."

According to the white paper, by August of 2011, China had formulated over 60 economic laws, as well as a large number of related local and administrative regulations, including the Anti-Unfair Competition Law, the Price Law and the Anti-Monopoly Law.  The white paper further provides: “The vitality of laws lies in their enforcement. The formation of the socialist system of laws with Chinese characteristics has generally solved the basic problem of having laws for people to follow. Now, the problem of ensuring that laws are observed and strictly enforced and that lawbreakers are prosecuted has become more pronounced and pressing. Therefore, China will take active and effective steps to guarantee the effective enforcement of the Constitution and laws, and accelerate the advance of the rule of law and the building of a socialist country under the rule of law.” 

How these laws will be enforced within the Chinese system is a matter of speculation and debate, and certainly remains to be seen.  However, one thing is for sure:  the eyes of the world are on this growing economy and whether China can truly become an equal player in the larger world-market depends on how these laws are implemented and enforced. 

Mr. Herman based in Washington, D.C., represents franchisees domestically and internationally negotiation, mediation, arbitration, and litigation.

mherman@franchise-law.com
www.franchise-law.com
www.internationalfranchiselaw.com
202-686-2886 (ph)

 

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