Franchising in China is big business. With over 1,000 international and domestic franchises operating in some form and shape in China, the Chinese appetite for successful business modes and models is insatiable. Franchise law, franchise disclosure and franchise compliance are developing areas of law that are often mired in contradictions and incomprehension. At IPO Pang, we advise clients on not only the master franchise agreement (negotiation, drafting and recording), but also assist our foreign franchisors with legal strategies on management of the brand to ensure minimal dilution of the brand, maximization of compliance with corporate or brand rules and simplification of operations so the activities can be audited and remain compliant.
Franchisees are by nature entrepreneurial and IPO Pang often advises franchisors on how to maintain that entrepreneurial spirit and the need for localization in a manner that will follow the confines of the master franchise agreement. As most franchise agreements dictate payment of a franchise fee along with a percentage of the revenue, forensic auditing of the revenue generated by the franchisee is an important component to maintaining the integrity of the franchise relationship as well as generating feedback on the success of a particular franchise location.
At IPO Pang, we subscribe to the principal that if our clients succeed, so will we. Franchises that expand into different provinces in China face additional challenges in complying with local requirements and, hence, we can advise clients on the best strategy to ensure local compliance is adhered to in a fashion that is credible, auditable and defensible.