China's first regulations governing commercial franchises are nearly ready and will be promulgated within five months, China Daily quoted the chairman of the China Chain Store and Franchise Association as saying. The draft is being prepared by the State Economic and Trade Commission and will shortly be submitted for review by the State Council. The new rules, which will replace regulations drawn up in 1997 but which did not have the force of law, will define the rights and obligations of parties engaged in franchising operations, provide a basic framework for franchise contracts and lay down penalties for transgressors.
According to the association, China had 1,000 franchisers in 2001, 40 per cent more than in the previous year. Estimated annual sales growth in the sector was 40 per cent over the past three years, far higher than the 10 per cent for total retail sales. The catering industry accounts for 35 per cent of franchisers, followed by retailing with 30 per cent.