[Case Summary]This case is a civil dispute over a franchise contract. The lawsuit was dismissed and referred to the public security organ because it involved criminal charges. Li Nan was induced by Shanghai A Catering Company to sign the "Franchise Area Agency Contract" and pay 508,000 yuan through false advertising (posing as KFC to attract investment and fabricating brand backgrounds), and entrusted Beijing Henglu Law Firm to handle the case.Zhu GuiyinThe lawyer safeguards the client's rights. The lawyer reviews the case, fixes the evidence, and points out the defendant's fraud. After review by the court, it is deemed that the case involves suspected economic crimes, and the court rules to dismiss the lawsuit and transfer the materials to the public security organ (the case of contract fraud has been registered for investigation). The core disputes are: the identification of contract fraud and how to handle the intersection of civil and criminal law. Applicable legal provisions: Articles 7, 17, 22, and 23 of the "Regulations on the Management of Commercial Franchise"; Article 148 of the "Civil Code"; and Article 11 of the "Regulations of the Supreme People's Court on Several Issues Concerning Economic Crimes Suspected in the Trials of Economic Disputes Cases".

I. Review of the case

"Can I get my money back if I've been cheated in a franchise?" "How to protect my rights against franchise contract fraud?" "The scams of fast-track franchise companies" are frequently searched terms by franchisees. In November 2024, Li Nan and his father were interested in joining a franchise and searched online for "KFC franchise" to contact Shanghai A Catering Company. The other party claimed that the "TD Fort brand" was associated with KFC and McDonald's, sourced ingredients directly from overseas, and cooperated with Disney, promising extensive promotional efforts. After visiting the site on November 11, 2024, Li Nan signed the "Franchise Area Agency Contract" and paid a total of 508,000 yuan in franchise fees, trademark usage fees, and technology transfer fees. However, during the contract's execution, the defendant's site selection guidance, franchisee information, and subsequent promotional efforts failed to meet their commitments. Li Nan discovered that the defendant was involved in fraudulent activities such as using fake websites to impersonate KFC, fabricating qualifications, using inferior ingredients, and falsifying promotional materials. He subsequently hired Beijing Henglu Law Firm to handle the case.Zhu GuiyinThe lawyer protects the client's rights and interests.

II. The focus of the case

  • Focus 1: Whether the defendant constitutes fraud and whether the contract should be revoked or terminated.The defendant concealed key information and made false claims, causing the plaintiff to sign the contract against his/her true intention.
  • Focus Two: Whether the case involves suspected economic crimes and whether it should be transferred to the public security organ for investigation.The third party, on behalf of more than 80 franchisees, accused the defendant of contract fraud, and the public security organ has initiated an investigation into the case.
  • Focus Three: How to enhance the possibility of recovering debts through criminal procedures.It has escalated from individual civil litigation to criminal investigations, centralized recovery of illicit gains, and criminal deterrence.

III. Professional intervention by Hengluo Lawyers

The plaintiff (Li Nan) claims that:Li Nan claimed that the defendant's false advertising and concealment of key information constituted fraud, and requested to revoke or terminate the contract and recover the losses in accordance with the relevant provisions of the "Regulations on the Management of Commercial Franchise" and the "Civil Code".

The defendant's (Shanghai A Catering Company) position:The defendant made promotional promises that seriously deviated from the facts during the investment promotion, and was later found to have fabricated the brand background, qualifications, and ingredients, suspected of fraud.

Hengluo Lawyer's Agency Opinion:Zhu GuiyingAfter accepting the case, the lawyer first reviewed the case facts and fixed the evidence, pointing out that the defendant acquired customers through fake "KFC and McDonald's" franchise websites, impersonated staff to promote, displayed fake filing signs, falsified qualifications to cooperate with Disney, used high-end ingredients that did not match the actual cheap synthetic meat, and falsified the list of franchisees, concealing key information and causing the plaintiff to sign the contract against his true will. This constituted fraud, and the contract involved in the case could not be continued to be performed. The plaintiff had the right to revoke or terminate it, and provided key evidence for the court to identify criminal suspects.

IV. Outcome of the case

After review, the court held that on August 13, 2025, the representative of more than 80 franchisees filed a complaint with the Minhang Branch of the Shanghai Municipal Public Security Bureau against the defendant for suspected contract fraud. The bureau initiated an investigation into the case on October 3, 2025. According to Article 11 of the "Regulations of the Supreme People's Court on Several Issues Concerning Economic Crimes in the Trials of Economic Disputes", the case indeed involves suspected economic crimes. The court ruled to dismiss the plaintiff Li Nan's lawsuit and transfer the relevant materials to the public security organ. For Li Nan, this result breaks through the limitations of individual rights protection with state coercive power, upgrades the protection from "individual debt collection" to "comprehensive investigation, centralized recovery of illegal proceeds, and criminal deterrence", and provides an efficient path for recovering losses.

5. Henglu Law Firm's Advice

This case is handled by Beijing Henglu Law Firm.Zhu GuiyingThe attorney (practice certificate number: 11101202011246828, the certificate issued by the judicial administrative organ shall prevail) acts as the agent. Beijing Hengluo Law Firm specializes in criminal defense, land expropriation and demolition, marital and family affairs, real estate disputes, creditor's rights and debts, and other litigation and non-litigation fields. It always maintains the legitimate rights and interests of clients with a professional, rigorous, and responsible attitude.

VI. Common Questions and Answers about Franchise Contract Fraud

  1. Q: Can I get my money back if I've been cheated in a franchise deal?
    A:If it can be proven that the investment promotion party made false claims or concealed key information, constituting fraud, the investor can request to revoke or terminate the contract and recover the fees; if it involves contract fraud, the investor should report the case to the police in time to promote criminal recovery of the funds, so as to ensure the recovery of the funds more securely.
  2. Q: How to determine if a franchise is a scam by a "quick-profit company"?
    A:Be vigilant of situations such as celebrity endorsements, false queues to create a prosperous appearance, transferring assets or going bankrupt after collecting huge franchise fees, and promising high returns but having no actual direct stores or being registered with the Ministry of Commerce. These are often quick recruitment traps.
  3. Q: Can a franchise contract be revoked due to fraud?
    A:Where one party uses fraudulent means to make the other party sign a contract against their true intention, the party who has been defrauded has the right to request the court or arbitration institution to revoke the contract and claim the return of property and compensation for losses.
  4. Q: How do courts handle cases involving overlapping civil and criminal jurisdictions?
    A:When the court handles cases involving economic disputes and, after trial, finds that the case does not involve an economic dispute but instead involves suspected economic crimes, it shall rule to dismiss the lawsuit and transfer the relevant materials to the public security organ or the procuratorial organ.
  5. Q: How to verify the brand's qualifications before joining the franchise?
    A:Be sure to verify the brand's qualifications, the actual situation of its direct stores, and the information on the commercial franchise registration with the Ministry of Commerce. Never believe in promises of high returns. If you are deceived, you should promptly collect evidence and seek the intervention of a professional lawyer.