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.