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Provisions of Shanghai Municipality on Commercial Chain Enterprises

Provisions of Shanghai Municipality on Commercial Chain Enterprises
 
(Promulgated by the Shanghai Municipal People' s Government on November 25,1997)
    
     Article 1 (purpose and basis)
     For the purposes of standardizing the operation activities of commercial chain enterprises and promoting the healthy development of the commercial chain trade, the present Provisions are formulated in the light of the actual conditions in this Municipality.
     Article 2 (Definition)
     A commercial chain enterprise (hereinafter referred to as the chain enterprise) mentioned in the present Provisions means an operation organization having a number of retail stores dealing in the same kind of goods, using the unified store name and practicing the unified supply of goods under the management of headquarters.
     Article 3 (Composition of a Chain Enterprise)
     A chain enterprise is composed of a headquarters, a center and 10 or more retail stores.
     Article 4 (Forms of Chain Operation)
     The operation of a chain enterprise may take the forms of direct chain operation, allied chain operation (chartered chain operation), and free chain operation.
     Direct chain operation is the kind of operation form under which the headquarters practices centralized management and united accounting over its wholly owned or stock-holding retail stores.
     Allied chain operation is the kind of operation form under which a chain-operation contract is concluded whereby the headquarters grants the allied retail stores the chartered rights to use its store name, trade mark and operation know-how, and to sell the goods developed by the headquarters while the allied retail stores pay royalties therefor.
     Free chain operation is the kind of operation under which a chain-operation contract is concluded whereby the headquarters cooperates with retail stores having the status of independent legal persons practicing centralized purchasing and unified selling under the guidance of the headquarters.
     The three operation forms, namely, direct chain operation, allied chain operation (chartered chain operation) and free chain operation may be adopted simultaneously within the same chain enterprise.
     Article 5 (Contract of Chain Operation)
     The contract of chain operation concluded between the headquarters and the retail stores shall contain the following items:
     1. Duration of the contract;
     2. Authorization to use the store name and trade mark of the headquarters;
     3. Unified purchase and distribution of the goods;
     4. Supply of operation know-how;
     5. Management and control over the quality of goods and services;
     6. Measures of supervising and controlling financial affairs;
     7. Computation and collection of royalties;
     8. Protection of intangible assets;
     9. Other relevant matters.
     Article 6 (Business Pattern of Chain Operation)
     Chain operation is suitable for various business patterns such as supermarkets, convenience stores, speciality stores, and the like.
     Chain supermarket is the kind of operation organization having a number of retail stores, using the unified store name, dealing in staple food, non-staple food, daily-use articles and/or specialities by way of self-selection sales on open shelves, and practicing electronic settlement and unified payment.
     Chain convenience store is the kind of operation organization having a number of retail stores using the unified store name, dealing in instant food and minor everyday articles by way of self-selection sales on open shelves, and practicing electronic settlement and unified payment.
     Chain speciality store is the kind of operation organization having a number of retail stores, using the unified store name, and dealing speciality in certain brands of goods or certain brands of series goods.
     Article 7 (Conditions for the Establishment of a Chain Supermarket)
     To set up a chain supermarket, its retail stores shall meet the following conditions:
     1. Business floor space exceeds 500 square meters;
     2. Daily business hours exceed 12 hours;
     3. Rate of utilization of bar codes (including self-made codes of the retail store) for nonfresh and nonliving goods reaches over 90%;
     4. Layout of goods shelves meets the requirements of the standardized business pattern;
     5. Electronic settlement system meets the requirements of the relevant provisions.
     Article 8 (Conditions for the Establishment of a Chain Convenience Store)
     To set up a chain convenience store, its retail stores shall meet the following conditions:
     1. Business floor space exceeds 50 square meters;
     2. Daily business hours exceed 16 hours;
     3. Rate of utilization of bar codes (including self-made codes of the retail stores) for nonfresh and/or nonliving goods reaches over 90%;
     4. Layout of goods shelves meets the requirements of the standardized business pattern;
     5. Electronic settlement system meets the requirements of the relevant provisions.
     Article 9 (Conditions for the Establishment of a Chain Speciality Store)
     To set up a chain speciality store, its retail stores shall meet the following conditions:
     1. Deal exclusively in certain brand of goods or certain brand of series goods;
     2. Business floor space is appropriate for its operation activities;
     3. Layout of goods shelves meets the requirements of the standardized business pattern.
     Article 10 (Registration)
     Chain enterprises that meet the conditions for their establishment may apply to the relevant industrial and commercial administration department for registration.
     Any enterprise that has not registered in the name of a chain enterprise is not allowed to operate in the name of a chain enterprise.
     A chain enterprise that has registered in the name of a company shall handle the matter in accordance with the provisions of the relevant laws, rules and regulations.
     Article 11(Provisions Concerning Chain Department Stores, Catering Stores and Service Enterprises)
     Administration of chain department stores, catering stores and service enterprises may be conducted with reference to the present Provisions.
     Article 12 (Department Interpreting Application)
     The Municipal Commercial Commission and the Municipal Industrial and Commercial Administration are responsible, according to their respective functions, for the interpretation of the present Provisions in their specific application.
     Article 13 (Date of Implementation)
     The present Provisions shall become effective on January 1,1998.
     All chain enterprises registered before the implementation of the present Provisions shall get themselves standardized in accordance with the present Provisions within 3 months from the date of implementation of the present Provisions.
    

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