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China relaxes its franchising laws

The Chinese government has relaxed its rules concerning franchising. The new laws which came into force in May means that it will now be easier for foreign businesses to franchise in the country. According to information provided by the Chinese Franchise Association, there were approximately 168,000 franchise outlets active in more than 60 different branches in China in 2006.

The franchising laws had been place in the country since 1997 but it had been unclear whether foreign business people were allowed to operate franchise businesses in China. This had meant that foreign companies had in the past chosen other forms of cooperation rather than franchising. A first amendment to the law was made in 2004 where the position and rights of foreign franchise networks were made clear but the new regulations were very restrictive. The new amendment should relax these restrictive rules and increase the rights of foreign franchise networks active in the country.

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