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Licensing or franchising your brand in China

China licensing lawyer

 

One of my US lawyer friend asked me a questions regarding franchising law and practice in China. As an experienced franchising lawyer in China, I gave some practical and professional advice to him. Below is a brief summary of our discussion.

Questions he asked:

I represent a US based franchisor who has no franchisees or operations outside of the states.  They have been approached by a company that wishes to act as their "Licensing Agent" in China, where they will license my clients name/logo in China for use with the same business (retail).  The franchisor will offer little or not services to the licensee, nor will it sell them any product. It will have little to no say over what they sell, prices, advertising, etc.  quite simply, all they seem to want is the franchisor's name.  While I understand the dangers of not strictly controlling the franchisor's IP, is there anything else that I am missing?
Please be gentle!

A China Licensing lawyer's answer:

Foreign or local companies doing business in China must negotiate a complex and opaque licensing system that often requires the disclosure of sensitive information or trade secrets, potentially to competitors.
They are trying to rent your name and to some extent your reputation.
There is an advantage for retailers in China to have a foreign connection.
Who will hold the PRC trademark registration. If you do nothing, they can and probably will file an application.
If you hold it you will probably have some liability for the quality of the product that they sell.
And if you specify some sort of uniform appearance, they will probably fit within the definition of a "franchise" and will definitely have potential liability.

Regarding our licensing or franchising business here in China, We call our jobs ‘franchise matchmaking’ rather than ‘selling franchise’. Franchise sales people are always happy to see who are willing to buy, while we focus more on who are qualified to run our clients’ brands among those who have both commitment and money.

As experienced China franchising lawyer, we frequently represent international clients in their copyright and software licensing matters in China. Please feel free to inquire into us if you have any questions. We provide preliminary free advice.

 

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I am a licensed China lawyer. Most clients are foreign nationals and companies. China Lawyer Blog have associates in Beijing, Shanghai, Tianjin, Guangzhou, Suzhou, Nanjing, Qingdao, Fuzhou, Hainan, Hefei, Wuhan, Xian, Changsha, Xiamen and Hangzhou. Learn More

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