2. When businesses recruit franchisees, what sorts of information should they disclose in order to comply with Article 25 of the Fair Trade Act?
To maintain trading order in the franchise business market as well as protect franchisees and fair competition, the Fair Trade Commission has established the “Fair Trade Commission Disposal Directions (Guidelines) on the Business Practices of Franchisors” to provide references for franchisors in franchisee recruitment and business management. According to Point 3 of the said directions, 10 days before signature of contracts with franchisees or at a time considered appropriate, franchisors are required to provide in writing important franchise information, including:
- All expenses required before operation begins (such as the franchise fee, training cost, product, material and capital equipment expenses, remodeling cost, etc.)
- All expenses required during operation (calculation and collection of licensing fees, management assistance and marketing and promotion expenses, product or material costs, etc.)
- Matters related to intellectual property rights
- Contents and approaches of management assistance and training
- Business management or schedule plans
- Restrictions on franchisees during the franchise contract period
- Contract change, termination or cancellation conditions and handling approaches
Failure to provide the above-mentioned nine types of important franchise information without justification is considered obviously unfair conduct. If such conduct is deemed able to affect trading order, it is in violation of Article 25 of the Fair Trade Act.
Relevant article(s) of law: Fair Trade Act, Article 25
Updated at：2020-04-13 15:27:23