Laws of the People's Republic of China

No.15

The Administrative Measures for the Archiving of Commercial Franchises have been deliberated and adopted at the 6th executive meeting of Ministry of Commerce on April 6 2007. They are hereby promulgated and shall enter into force as of May 1, 2007.

Minister Bo Xilai

April 30, 2007

Administrative Measures for Archiving Commercial Franchises

Article 1

For the purpose of intensifying administration on commercial franchises, regulating market order of franchises, these Measures are formulated according to the relevant provisions in Regulations on Administering Commercial Franchises (hereinafter referred to as the Regulations).

Article 2

These Measures apply to commercial franchise activities within the territory of the People's Republic of China (hereinafter referred to as within the territory of China).

Article 3

The competent commercial departments under the State Council and at provincial, autonomous region and municipality directly under the Central Government level are the organs for archiving commercial franchises. Where commercial franchise activities are conducted within a province, an autonomous region or a municipality directly under the Central Government, files shall be archived in the competent commercial department in the province, autonomous region or municipality directly under the Central Government where a franchiser is located; Where commercial franchise activities are conducted in another province, autonomous region, or municipality directly under the Central Government, files shall be archived in the competent commercial department of the State Council.

Commercial franchise archiving shall be operated through internet across China. Franchisers conforming to the provisions in Regulations on Administering Commercial Franchises, shall archive files via government website. (Website: www.mofcom.gov.cn )

Article 4

All organizations or individuals have the right to report to the archiving organs where there are behaviors in violation of these Measures.

Article 5

A franchiser applying for archival filing shall submit the following documents to the archiving organ:

1,

basic information on the commercial franchise,

2,

information on the distribution of all the stores of the franchisee within the territory of China.

3,

the franchiser's Commercial Prospectus,

4,

one photocopy of business license of the enterprise as legal person, or one photocopy of other qualification certificate,

5,

photocopies of registration certificates of trademark right, patent right and other business resources related to franchise activities.

6,

certificates issued by a competent commercial department of a city divided into districts based on the provision in Paragraph 2 of Article Seven; where direct sales stores owned by the franchiser are located beyond the territory of China, the franchiser shall provide business certificates thereof (including Chinese translation ) and the certificates shall be notarized by a local notarization institution and certified by the Chinese embassy and consulate stationed in the local area.

The proceeding paragraph does not apply to the franchiser that does not engage in the franchise activities prior to May 1 2007, but the first franchise contract between the franchiser and the franchisee within the territory of China shall be submitted.

7,

Sample of franchise contract

8,

Catalogue of franchising operational manual (the number of pages of each chapter, and the total pages of the manual shall be noted, where this kind of manual is provided on the internal network of the franchise system, the estimated number of pages printed shall be provided)

9,

As regards the products and services that may not be franchised without approval under the laws and regulations, the franchiser must submit approval documents issued by the competent departments; and

10,

The franchiser's commitment signed and sealed by the legal representative.

The documents as mentioned in items 1 through 3 shall be filled in on the internet, and electronic documents in items 4 through 10 shall be submitted on the internet in the form of PDF.

Article 6

A franchiser shall apply for archival filing with an archiving organ within 15 days after having concluded a franchise contract with the franchisee within the territory of China for the first time. The franchiser that has been engaged in franchise activities prior to May 1 2007 shall archive files with competent commercial department in accordance with these Measures within one year since the Regulations is put into effect.

Article 7

Where there is any alteration in the archival information of a franchiser, the franchiser shall apply for alteration with the archiving organ within 30 days from the date the alteration occurs.

Article 8

A franchiser shall report to the archiving organ the information on the signing, canceling, renewing and altering of franchise contract prior to March 31 every year.

Article 9

A franchiser shall fill in all the information on archival filing, and ensure the authenticity, accuracy and completeness of the content filled.

Article 10

An archiving organ shall archive the files and materials complying with the provision in Article 5 within 10 days from the date a franchiser submit them, and shall issue an announcement on the website of the Ministry of Commerce.

Where the files or materials submitted by a franchiser are incomplete, the archiving organ may demand him/her to submit the remaining files or materials within seven days. The archiving organ shall archive the documents within 10 days from the date the documents are complete.

Article 11

If a franchiser who has finished archival filing has one of the following practices, the archiving organ may cancel the archival filing, and issue an announcement on the website of the Ministry of Commerce:

1,

a franchiser's business license is cancelled by the competent registration organ because of illegal operation.

2,

the archiving organ receives from the judicial organ judicial advice on canceling the archival filing because a franchiser conducts illegal operation.

3,

if investigation on a franchiser hiding relevant information or providing false information is verified, and

4,

if a franchiser cancels the archival filing by him/herself.

Article 12

All competent commercial departments at provincial, autonomous region, municipality directly under the Central Government levels shall provide feedback on archival filing and cancellation of archival filing to the Ministry of Commerce within 10 days.

Article 13

While the archiving organ finishes the archival procedures, it shall archive file and keep the documents on a franchiser's archival filing, and keep commercial secrets for the franchiser according to law.

Article 14

The public may access to the following information via the website of the Ministry of Commerce:

1,

enterprise name of a franchiser, registered trademark of franchise business, enterprise logo, patent, exclusive technology, and other business resources,

2,

time of archival filing of a franchiser,

3,

address and contact of a franchiser's legal business site, the name of the legal representative, and

4,

business address of a franchisee within the territory of China.

Article 15

Where a franchiser fails to archive file based on the Regulation and the provisions in these Measures, the competent commercial department under the State Council and the competent commercial departments of a province, autonomous region or municipality directly under the Central Government where the franchiser is located shall order him/her to archive the documents within a prescribed time limit, and impose a fine of no less than 10 000yuan but no more than 50 000yuan; if the franchiser still fails to archive the documents within the prescribed time limit, a fines of no less than 50 000yuan and no more than 100 000yuan shall be imposed, and an announcement shall be made.

Article 16

Where a franchiser violates the provision in Article Eight, the archiving organ shall order him/her to make an correction, and may impose a fine of no more than 10 000 yuan thereupon; if the circumstances are serious, a fine of no less than 10 000 yuan and no more than 50 000 yuan shall be imposed thereupon, and an announcement shall be issued.

Article 17

An overseas franchiser shall follow these Measures to conduct franchise activities within the territory of China. A franchiser from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan region shall follow these Measures.

Article 18

National Industrial Association shall assist competent department of the government on archival filing, give full play to the coordinating role of the industrial association, and strengthen industrial self-discipline.

Article 19

The Ministry of Commerce of the People's Republic of China is responsible for the interpretation of these Measures.

Article 20

These Measures shall enter into force as of May 1 2007.