Monday, August 6, 2007

Franchising Regulations in Macau, SAR

Rivaling Las Vegas in grandeur, Macau is poised to be a major tourist attraction in Asia for those eager to try their fortune. Critical to the formation of a tourist hot spot is the growth of complementary service industry, and a proven method of growth in the service industry is franchising. I want to introduce the basics of franchising regulations in Macau in a few posts.

I. Introduction

Franchising is permissible in Macau, and an entire Title in the Macau Commercial Code (“MCC”) is devoted to the regulation of franchising. (Title VIII). Compared to franchise regulations in mainland China and other Asian countries, such as South Korea and Malaysia, Macau’s regulation seems pretty straight forward. The regulation can be roughly divided into three sections: franchisor disclosure, franchise contract, and franchisor-franchisee relationship.

II. Definition of Franchising

Franchising in Macau, in essence, is a form of expansion through a contract, and, under the MCC, a franchise contract is defined as:

A franchising contract is that by which one of the parties, against a direct or indirect payment, grants to the other, in a certain zone and in a stable manner, the right to produce and or to sell certain goods or services under his entrepreneurial image, according to his know-how, with his technical assistance, and subject to his control. See Article 679

A commercial franchise contract bears three basic features, a grant to use intellectual property of the franchisor, control by the franchisor, and a fee element. From the above definition, one can easily spot the IP and control elements (“entrepreneurial image”, “know-how”, “subject to his control”). Article 692 provides the fee element, as it states: “A franchiser is obliged to adequately compensate the franchisee for new experience gained, in accordance with article 697, in the running of the franchise.”

III. Mandatory Pre-sale Disclosure

(to be continued…)


Unknown said...


I'm a law student and I came across your blog..this isn't really relevant to your article but given that your blog is very informative about the developments in China Business law, I was wondering if you know what is the Chinese translation to "consideration "(as in the concept of offer, acceptance and consideration) .. please excuse my impertinance for asking...


Brad Luo said...

Will let you know as soon as I find out. Please check back in one day.

Brad Luo said...

First of all, "consideration" is not a prerequisite to the creation of a valid contrac as it is in the U.S. (not sure about other common law jurisdiction; I assume they might be the same with respect to consideration).

Second, however, it is not to say that the idea of "consideration" does not exist. Put it simply, "consideration" exists in Chinese contract law, but it stands on other general civil law principles, i.e. fairness and equality as found in Contract Law and the General Principles of Civil Law of P.R.C.

Third, as to translation, it is commonly referred to as "对价".

I hope this answers your question.