Fair Trade Commission Guidelines on the Disclosure of Information by Franchisers	Guidelines

Passed by the 395th Commissioners' Meeting of June 2, 1999
Amended by the 628th Commissioners' Meeting of November 20, 2003
Circulated by Letter Ref. Kung Yi Tzu No. 0920010929 of November 25,2003

1. Purpose

These Standards are specially adopted to ensure fair competition in franchise business and to avoid concealment by franchisers of important information during recruitment of franchisees in such a way as to affect the trading order with respect to franchising operations.

2. Definition (1)

"Franchise operating relationship" as used in these Standards refers to a continuing relationship in which an enterprise, through contractual means, licenses its trademarks or operating know-how for use by another enterprise and assists or offers guidance to that other enterprise in its operations, and for which the other enterprise provides specific consideration.

3. Definition (2)

"Franchiser" as used in these Standards refers to an enterprise that, within a franchise operating relationship, provides its trademarks or operating know-how for use by another enterprise and assists or offers guidance to the other enterprise in its operations. "Franchisee" refers to an enterprise that, within a franchise operating relationship, accepts the franchiser's assistance and guidance.

4. Information to be disclosed

A franchiser shall provide written information on the following items ten days prior to entry into contracts with trading counterparts:

(1) The name of the franchiser's enterprise, its operating capital, place of business, business items, date of establishment and date on which it began franchising operations.

(2) The names of the responsible person and the chief management personnel of the franchiser, and information on their relevant business experience.

(3) The franchise fees and other charges collected by the franchiser before the entry into the franchising contracts and duration of the franchising contracts, including their types of fees, amounts, methods of collection, and conditions for refunds.

(4) The intellectual property rights including trademarks, patents, copyrights and so on that the franchiser authorizes the usage to the franchisee, in regard to the time that the intellectual property rights are filed or granted, the content and duration of the rights, plus the scope and any restriction of the authorization to the franchisee.

(5) The content and methods of management assistance, training guidance and so forth to be provided by the franchiser to the franchisee.

(6) The franchiser's management program concerning the franchisee's areas of operation with those of other franchisees or directly operated stores.

(7) All the other franchisees' names and business addresses of the franchiser in the city, county (city) where the franchisee will be located, as well as, within the last accounting year, the statistic data number of other franchisees and terminated numbers of the franchising contracts with the franchiser in the whole country and also the city, county (city) where the franchisee will be located.

(8) Within duration of the franchise contract, the restrictions over the business relationship between the franchiser and franchisee in their operations of business.

(9) Conditions and resolved means to modify, terminate and/or rescind the franchise contract.

5. The review period before the entry into contract

A franchiser, before he signs up a written agreement involving the franchise operating relationship, shall endow his or her trading counterparts with a period of no less than 5 days to review the contract.

6. Legal consequence

Violation of any provision under Article 4 and Article 5 of these Standards by a franchiser during the recruitment of franchising activities involving concealment or delaying disclosure of important trade information that is clearly unfair to the trading counterparts and is sufficient to affect the trading order of the franchising operations would be considered as a violation of Article 24 of the Fair Trade Act.