The Difference Between Franchising And Other Similar Business Activities

Although franchising is also known as franchise chain or franchise chain, not all franchise chains or franchise chains constitute franchising.

(1) the difference between "direct chain operation" and "direct chain operation"

Direct chain operation means that the shops of chain corporation are wholly owned or controlled by the company headquarters, and operate under the direct leadership of the headquarters.

Therefore, direct chain stores belong to headquarters rather than independent businesses.

In franchising, although franchisees' business activities are often directly controlled by franchisees, such as market planning, management system, quality standards, location selection, business scope, business hours, etc.

However, the parties to franchising are still civil subjects that are independent of each other and can undertake legal liabilities on their own.

Therefore, direct chain operation does not belong to the scope of franchising.

(two) with "special distribution", "special agent", "exclusive distribution".

Franchising is a package of services provided by the headquarters to the franchisees, such as trademarks, trade names, patents, business know-how and so on.

On the contrary, franchised stores, agencies, and specialty stores are bought and sold on a contract based on a specific commodity with a manufacturer's trademark.

In franchising, we must ensure the unity of the super fine management system and the consistency of product and service quality, that is, the headquarters provide comprehensive guidance and assistance to franchisees; in the special shops, agencies and franchised stores, there are also manufacturers who give guidance and assistance to them, but this is only the two act of the wholesale sale of the goods attached to the manufacturer.

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(three) OEM with "OEM"

The OEM we are talking about is commonly known as licensed production, and its English is referred to as "OEM" (Original Equipment Manufacture).

At present, the more typical way of OEM is that the processing Party (the client) of OEM is entrusted by the OEM demand Party (client) to manufacture and produce the product and attach the trademark of the OEM demand party, so that the processing fee can be obtained, but not the sales right of the product.

Therefore, from the legal point of view, the nature of OEM is part of the processing contract. The relationship between the principal and the trustor in the OEM is the processed product, and the client is only responsible for the processing and production, and has no right to sell the product without authorization in any form.

The main body of external sales and the main body of legal liability are principals, so such disputes should be determined by contract disputes rather than "franchise contract disputes".

However, if the contract stipulate that the principal can not only produce products that are attached to the trademark of the principal, but also enjoy the right of disposing within a certain area, the product can be sold. At the same time, if the principal is the subject of legal liability after the product is sold, the behavior of the client shall be a trademark usage act, and the agreement signed by the two parties shall be characterized as "trademark license agreement".

(four) the difference between "licensing" and "trademark licensing"

Franchising is a comprehensive right to use the right of intellectual property, including trademarks, trade names, business models, service marks, patents, trade secrets and know-how. It includes, but is not limited to, the use of trademarks.

In accordance with the provisions of the trademark law and the detailed rules for its implementation, the Licensor and the licensee must sign the "trademark licensing contract" after the trademark registrant permits others to use their registered trademark, and the copy of the contract must be reported to the Trademark Office for record.

At the same time, the "business franchise management regulations" also stipulates that the franchise contract must be filed with the state commercial department within 15 days from the date of signing.

Therefore, in the process of franchise operation, both parties should sign the trademark licensing contract and the franchise contract respectively. However, we should consider the nature of the whole legal relationship in judging the cause of the case. If an action involves only a mere trademark license, then the trademark licensing dispute is doubtless. But if the license is a combination of operating resources, such as trademarks, patents, business models and so on, the author thinks it should belong to the "franchise contract dispute".

To sum up, in the actual economic activities, franchise chains are diversified and ever-changing. The people's court can not simply sign the so-called "franchise chain contract" simply by the parties. It simply considers it a "franchise contract dispute", and needs to start with its legal characteristics and eliminate its similar business behavior, so as to accurately grasp the essence of franchising.