China is Hot on Franchising
by Mario Herman
There is an effort underway in China by a Government agency that is
encouraging franchise growth. Read this article to learn how China is
encouraging franchise growth.
According to China’s Ministry of Commerce (MOC), at the end of 2010 there were
more than 4,500 registered franchises in China. Recognizing the importance
franchising plays in the economy, the MOC has issued a guideline vowing to
increase the number of franchised outlets, expand the scale of such operations
and standardize the franchise market within the next five years. According
to the guideline, the MOC will revise the regulations relevant to the
franchising industry and thereby standardize the market.
In addition to standardizing the industry through regulation, the guideline
also reported that over the next five years relevant authorities would work to
help build brands and bring brand-building efforts into line with local
governments’ trade development plans, including assisting companies in
developing their information systems and accelerating the establishment of local
logistic systems. The guideline also reported that the authorities
would establish and evaluation system for brands, and would strive to improve
the collection of industrial statistics and credit rating.
Franchising is nothing new in China, and is an important part of its economy.
For example, in 2010, the China division of Yum! Brands, Inc. opened more than
500 new restaurants in mainland China. Yum! Brands franchises under the
KFC, Pizza Hut and Taco Bell brands. KFC is the leading quick-service
restaurant brand in mainland China, with over 3,400 restaurants in more than 700
cities. Pizza Hut is the leading casual dining brand in mainland China with over
550 Pizza Hut Casual Dining restaurants in over 130 cities.
With the standardized regulation and anticipated assistance from the relevant
authorities in brand-building, etc., it will be important for any franchise
company wishing to enter the global market to consider China as a strong and
Mr. Herman based in Washington, D.C., represents franchisees domestically and
internationally negotiation, mediation, arbitration, and litigation.