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Franchising business booms; law required
By Tian Xiuzhen (China Daily)
Updated: 2004-10-20 08:58

A Ministry of Commerce official said yesterday that nation's booming franchising business has entered a rapid development stage, calling for more publicity to be given to a professional law to regulate the industry.

"The nation's commerce has maintained an annual growth of about 15 per cent for 24 consecutive years and the development of franchising is also very optimistic," said Wang Xiaochuan, deputy director of the Department of Commercial Reform & Development with the Ministry of Commerce.

"We are obliged to promote the development of franchising business which shall enhance the business volume, extend it to more fields and train more professional talents," Wang said.

He made the remarks at the ongoing Shanghai International Franchise Forum which is being held as part of the 13th China Consumer Fair.

China currently has 1,900 franchising systems, the largest number in the world, and will introduce more with the approaching conclusion of the three-year transitional period following the nation's entry to the World Trade Organization.

"We are anxious to expand our conventional franchising programme in China where it will be very difficult to operate and manage all restaurants without the support of a network of franchisees," said James M. Kramer, vice-president of the International Franchising Shareholder of McDonalds.

McDonalds, which opened its first restaurant in China in the early 1990s, now has over 600 outlets in the nation.

In autumn 2003, McDonalds' first Chinese franchisee, a woman named Meng Sun from Tianjin, started her business.

Her performance so far has been considered outstanding by the franchiser.

McDonalds will develop about 10 franchisees next year.

The German Franchise Asso-ciation has brought a 12-strong delegation to the forum and exhibi-tion for the first time.

"Our members are interested in the growing market of China and it is our mission to introduce them to it," said Rolf G. Kirst, an executive board member of the association.

The development of the franchising business in China needs to be backed up by a national law, something which has been on the State Council's agenda since 2001 and "will take some time to be introduced," according to Wang Xiaochuan.

Taking advantage of the poor legal environment, some franchisers conduct substandard business or even cheat franchisees of money while franchisees also delay payments to the franchiser or infringe the intellectual property rights of the franchisers.

"The construction of a sound legal environment will efficiently regulate the activities of both franchisers and franchisees, though we have been advocating self-discipline throughout the industry," said Guo Geping, chairman of China Chain Store & Franchise Association.

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