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New China Franchise Regulation
The world's most populous country, China, is opening its door to foreign franchisors, in accordance with its WTO commitments. To accommodate this new reality, the Chinese government has published a new franchise regulation. On Dec. 31, 2004, the Ministry of Commerce (“MOFCOM”) published Measures for the Regulation of Commercial Franchise Operations (the “Measures”).
The Measures will take effect on Feb. 1, 2005, and they will completely replace the previous regulatory system, under which a regulation issued in 1997 applied to domestic (Chinese) franchisors (the “Interim Measures”), with somewhat uncertain impact on foreign franchisors. The Measures also will supersede proposed Provisional Measures that were published for comment in Nov. 2004, which were to have applied to non-Chinese franchisors offering franchises through foreign-invested enterprises (“FIEs”). The new Measures will thus be the sole legal framework under which franchisors will operate in China, and they will apply to foreign and domestic franchisors.
The Measures are primarily presale disclosure obligations imposed on the franchisor. These obligations are not particularly onerous, but they are quite ambiguous and raise many practical issues. The franchisor's obligations include disclosure of, among other things:
- its registered capital, audited financial statements, and information regarding tax payments;
- services or goods the franchisor can supply to the franchisees, and related restrictions or conditions;
- the “operational results” of the franchisees, including the initial investment required for a franchised unit and information about terminated franchisees; and
- any information “requested by a franchisee.”
This last requirement is particularly troublesome because it suggests that existing franchisees, in addition to prospective franchisees, may have disclosure rights. Moreover, it potentially expands the disclosure obligations of franchisors to an unlimited number of items. This open-ended category could be highly disruptive to franchising in China and introduces an element of risk because the Measures grant franchisees a private right of action for economic losses caused by a franchisor's misrepresentation or omission.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?