China Law and Practice The most common legal challenges with a franchise | Page 6

The China Question: Expanding a Franchise

with aspects of the franchise following termination of the franchise agreement, which should enable
you to freely decide whether to purchase back the inventory and close the store, continue operating it
by yourself or appoint another franchisee to take it over.

Filing your franchise business
Do not forget to file your new franchise business with the competent commission of commerce
within 15 days after the first franchise agreement is signed, according to the Measures for the
Administration of Record Filings in Connection with Commercial Franchising (商业特许经营备案管理办法).
Otherwise, you will risk a fine of between Rmb10,000 ($1,600) and Rmb50,000, or between Rmb
50,000 and Rmb 100,000, if you still do not file it after the authority orders you to do so.
Antoine de la Gatinais and Li Kai, Gide Loyrette Nouel, Shanghai

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