Compared with the direct operation mode, brand joining is a very dynamic business operation mode. On the one hand, the brand joining model can realize the rapid improvement of brand awareness, the rapid expansion of market scale and the rapid accumulation of goodwill; On the other hand, the brand franchise model for those entrepreneurs who have limited funds and lack of experience can use a business model and business guidance that has been tested in practice, thus greatly reducing the risk of immature investment and entrepreneurship. Brand joining is widely favored in the market, involving a wide range of industries, including cosmetics, food, clothing, shoes, hats, bags and other consumer goods industry, but also including catering, education, fitness, beauty salon, supermarket and other service industries, such as Guerlain beauty, Heilan Home, 711 convenience store, home and so on. However, at the same time of the rapid expansion of brand franchise, the number of disputes between brand parties and franchisees is also surging, and there are even many mass litigation cases of franchisees. Brand franchise disputes not only disturb the normal operation of the brand, bring serious damage to the brand reputation, but also cause significant economic losses to the franchisee. This article will discuss the relevant legal issues in the brand franchise for reference.

What is brand affiliation? Brand franchise is a business term, and its legal concept is "commercial franchising". "Brand Joined" in English refers to the ongoing contractual relationship between the brand company and the brand franchisee. According to the agreement, the brand company provides unique brand authorization, personnel training, organizational structure, operation management, supply chain management and other business resources support and guidance; Brand franchisees pay relative franchise fees to obtain the authorization and business resources support, with minimal risk and maximum opportunity to succeed. According to China's Regulations on the Management of Commercial Franchise, brand franchise refers to an enterprise (i.e., brand party) that has registered trademarks, corporate logos, patents, proprietary technology and other operating resources, and licenses its operating resources to other operators (i.e., franchisees) in the form of contracts, and franchisees operate under a unified operating mode in accordance with the contract. Business activities in which franchise fees are paid to the brand owner. Through the establishment of the brand franchise relationship, the brand rapidly expands the business scale and brand influence at a lower cost, and the franchisee quickly enters the market and smoothly conducts business with the help of the brand's mature operating resources and management support.

What are the requirements for brand joining? According to relevant regulations, the brand party engaged in brand franchise activities should have a mature business model, and have the ability to continue to provide business guidance, technical support and business training services for franchisees. The brand party engaged in brand franchise activities should have at least 2 directly operated stores, and the operation time is more than 1 year. To engage in brand franchise activities, the brand party and the franchisee shall conclude the brand franchise contract in written form, and the brand party shall file the signed contract with the competent commercial department. The brand shall provide the franchisee with the brand franchise operation manual, and continue to provide the franchisee with business guidance, technical support, business training and other services in accordance with the agreed content and method. If the brand requires the franchisee to pay the fee before entering into the brand franchise contract, it shall explain to the franchisee in writing the purpose of the fee and the conditions and methods of refund. The promotion and publicity fees charged by the brand to the franchisee shall be used in accordance with the purpose agreed in the contract. In the promotion and publicity activities, the brand shall not deceive or mislead, and the advertisements published by the brand shall not contain the content of promoting the income of the franchisee engaged in brand franchise activities. In addition, the brand should also disclose the subject qualification, operating resources, costs, investment budget and other relevant information to the franchisee. At the same time, franchisees should also accurately recognize the brand franchise model. On the one hand, the current brand is mixed; On the other hand, although the brand franchise model is an effective development of the business of the market model, the brand provides a successful method and shortcut, to join a good brand can create a business involved in the risk to minimize, but the key to the success of the business is still the franchisee itself, to fully understand the opportunity and risk of joining.

What are the common brand franchise disputes? At present, the frequent brand franchise disputes, the author consulted in recent years in Beijing, Shanghai brand franchise dispute cases, found that the common types of disputes are roughly as follows: (1) the contract agreement is unclear, called the franchise contract, is actually a sales contract dispute. (2) Disputes over the invalidity of the franchise contract. Such disputes are mostly on the grounds that the brand party has not filed the contract, does not have "two stores for one year" or does not have the qualification to join the brand, and requires confirmation that the contract is invalid. (3) Cancellation of franchise contract disputes. Most of these disputes require the franchisee to revoke the contract by suing the brand for false publicity and fraud. (4) To terminate the dispute over the franchise contract. Most franchisees require termination of the contract for reasons such as the failure of the brand to disclose information. (5) Disputes over damages for breach of contract. So how to deal with the common disputes of brand joining in judicial practice? The author summarized the relevant cases as follows:

1. What is the difference between brand affiliation relationship and sales and distribution relationship? The business model of the brand franchise relationship is similar to that of the sales and distribution relationship. Some brands also avoid the administrative management such as business filing and do not fulfill the obligations of the brand, so they change the name of the contract to the sales contract, distribution contract and other contents, resulting in more disputes between the two sides on the nature of the contract in practice. In practice, the identification of the nature of brand franchise is mainly based on whether the contract content reflects the basic characteristics of brand franchise, regardless of the specific contract name, mainly from the following aspects of the review: (1) Whether the brand has registered trademarks, corporate logos, patents, brand names, trade secrets, the overall business image with a unique style, and the pre-used and influential unregistered trademarks and other business resources that can form a certain market competitive advantage. (2) Whether the Franchisee uses the business resources of the brand under the brand franchise mode according to the authorization of the brand. Franchisees need to operate in their own name under the brand's business model. For the smooth development of franchisee's operation and the maintenance of its own brand value, the brand needs to guide and manage the franchisee. (3) Whether the franchisee pays the franchise fee to the brand as agreed. Franchise fees can be reflected in franchise fees, security deposits, management fees, can also be agreed through the form of loan rebates, profit commissions, can be paid in one time, can also be paid in installments.

2. Does the brand party fail to comply with the "two stores for one year" or fail to record the franchise contract? "Two stores for one year" and contract filing belong to the mandatory management provisions of administrative regulations, so the brand does not meet the above-mentioned conditions, does not of course lead to the invalidation of the franchise contract. However, if the brand makes a false representation of the "two stores for one year" by fraudulent means or deliberately concealing the lack of "two stores for one year", the franchisee makes a wrong expression of intention, which violates the true intention of the franchisee, the franchisee can request the cancellation of the contract.

3. Does the brand's false commercial publicity lead to the cancellation of the franchise contract? Management resources are the core competitive advantage of brand owners in brand joining activities. Franchisees are most concerned about the economic benefits that the operating resources of the brand can bring to themselves. In practice, franchisees are often individuals with no experience or legal entities established by individuals. It can be seen from multiple cases that many franchisees do not know the relevant business resources and experience before signing the contract, and their way of contract performance and the contract purpose that contract performance can achieve. Most of them can only rely on the introduction of the operating resources and experience owned by the brand, and in this process, some brand parties cause disputes due to the existence of false publicity. According to relevant laws and regulations, if the brand exaggerates or provides false business resources, which is enough to cause the franchisee to sign the franchise contract, the franchisee can request to cancel or terminate the franchise contract according to law.

4. Does the brand's concealment or false disclosure of information lead to the termination of the franchise contract? Information disclosure system is the fundamental means to solve the problem of obvious information asymmetry between the two sides in brand joining. Some brand owners tend to ignore the importance of information disclosure because of their weak legal awareness. China's "Commercial franchise Management Regulations" and "Commercial franchise Information Disclosure Management Measures" have clarified the information that brands should provide to franchisees. If the brand party conceals information that affects the performance of the franchise contract and fails to achieve the purpose of the contract or discloses false information, the franchisee may terminate the franchise contract. Therefore, before signing a franchise contract with the franchisee, the brand should truthfully disclose to the franchisee the subject qualification, operating resources, costs, product prices, support services, investment budget and other relevant information.

How can brand parties reduce franchise disputes? In the brand joining model, the brand side should cultivate a competitive business model and regulate the brand joining behavior. We suggest that the brand focus on the following: (1) strengthen the innovation of management resources. The key of the brand joining mode is the unique management resources of the brand side. The brand should continue to innovate the business model, supply chain, products and services, raise the moat of its own operation, create value for franchisees, fundamentally avoid the loss of its own business advantages, and increase brand viscosity. (2) Protecting intellectual property rights of business resources. For business resources such as commercial logos, works and patented technologies, the brand party shall protect them by means of registered trademarks and patent applications, ensure the uniqueness and specificity of the above business resources, ensure the effectiveness of authorized behavior, establish a mature and stable business model, and reduce business risks such as being copied. (3) Standardize information disclosure. In the operation of the brand party to guide the healthy operation of franchisees in an orderly manner, establish an honest and healthy corporate image, enhance competitiveness. When conducting brand franchise investment promotion, it should standardize the information disclosure process, properly describe the development status of its own enterprise, truthfully state its own operating resources, and reasonably prompt the franchisee to operate risks, so as to avoid causing disputes such as fraud. (4) Improve the franchise contract. The franchise contract is the guide to promote the franchise affairs. In the contract, the rights and obligations of both parties should be agreed equally, to ensure that the terms are clear and operable, and to reasonably define the breach of contract and responsibilities. Standardize the settlement and refund process of franchise fees, management fees, and deposits, and appropriately increase conditional refund of funds according to different situations of contract performance. A good franchise contract is not only an operational guide for the orderly promotion of franchise matters, but also can provide behavioral criteria for both parties in the event of disputes or disagreements. (5) Actively perform the obligation of guidance and supervision. In the process of contract performance, timely understand the business situation of franchisees, supervise the business behavior of franchisees, and ensure that the brand business model is not out of shape. Once the franchisee's irregular behavior is found, it is necessary to pay attention to the preservation of evidence of performance behavior and protect its legitimate interests.

How can franchisees avoid getting into the mire of franchise disputes? Investment is risky and franchisees should be careful in making decisions. Before joining, franchisees should be fully due diligence, should not be credulous in the franchisor's advertising content, can be through the "national enterprise credit information publicity system" and other third-party platforms to inquire the franchisor's business status; Understand the situation of the franchisor involved in the lawsuit through the "China Judgment Document Network"; Check the situation of the franchisor holding the trademark through the "State Intellectual Property Office Trademark Office China Trademark Network"; Through the "Business franchise Information Management network" check whether the franchisor has filed the brand franchise contract, and you can understand the brand's reputation and investment budget through visits, active inquiries and other ways. At the same time, franchisees should also evaluate their own business capabilities, estimate the capital investment required by the industry to join, the operational risks of the industry, etc., and make appropriate investment decisions. After confirming the franchise, the franchisee should sign a complete contract with the brand, clarify their respective rights and obligations while clarifying the business details, and provide standards and basis for later business promotion and dispute resolution. At the same time, after the contract is signed, once the breach of the brand party occurs, the evidence should be fixed in time to provide support for the later rights protection. If there is a franchise dispute, the franchisee should still be honest and fair as the principle, and strive to communicate to resolve the conflict. If it cannot be resolved through negotiation, the franchisee can solve it through litigation, but it should reasonably consider its own performance, its own loss scope, etc., and rationally defend its rights.

As a cooperation mode with intellectual property rights as an important resource, brand joining has been endowed with good economic prospects with its unique operating mechanism, large-scale and low-cost expansion. Each business model has its own unique advantages, but also has specific disadvantages. In the face of the popular brand franchise model, both the brand side and the franchisee should make rational decisions and regulate management. Only by creating competitive business resources and standardizing their own business behavior, can the brand benefit and market competitiveness be effectively enhanced. Only by rational decision-making and hard management can franchisees obtain greater business success through a good business model.