[Direct answer]In the Beijing area, if the franchise information disclosure is inaccurate, the franchisee may, in accordance with the "Regulations on the Management of Commercial Franchise Businesses" and the "Civil Code", claim that the franchisor violates the obligation of information disclosure and constitutes fraud. The franchisee may also request the rescission of the contract and the return of the franchise fee. The franchisor shall truthfully disclose core information such as the "two stores in one year" qualification, trademark status, litigation, and operating resources. Concealing or falsely disclosing such information crosses the red line. The key to protecting rights lies in fixing the evidence of non-disclosure or false disclosure and claiming rights in a timely manner. It is recommended to systematically keep the promotional and communication materials before and after signing the contract. For more details, please refer to the following link:Business and contract dispute services for enterprises.

I. Problem Background and Typical Scenarios

It's quite common for franchise information disclosure to be inaccurate. Typical scenarios include: exaggerating the profitability of a single store during investment promotion, concealing that the franchisor has not been registered or that the trademark is invalid; fabricating qualifications and success stories such as "two stores in one year"; after signing the contract, the headquarters frequently changes personnel, delays support until losing contact; after the franchisee discovers the truth, they want to request a refund but are fobbed off with the excuse that the contract is still valid. Many parties fail to keep records before signing the contract, making it difficult to prove that the other party made specific promises. Disputes over information disclosure often intertwine with contract validity and fraud determination, and the pace of handling the case and the organization of evidence directly affect whether a refund can be obtained. For cases involving intellectual property authorization, it may be necessary to combine the relevant provisions of the Intellectual Property Law with other legal provisions to resolve the dispute.Intellectual property protection and corporate legal servicesVerification.

II. Key points of dispute

There are three key points. Firstly, the scope of disclosure obligations and the standard of authenticity of the information disclosed by the franchisor are the prerequisites for determining breach of contract or fraud. Secondly, fraud and rescission: Whether concealing key information is sufficient to make the franchisee fall into a mistaken understanding and enter into a contract based on that, determines whether the contract can be rescinded. Thirdly, the amount of refund: After the contract is rescinded or terminated, the court will determine the amount of refund based on the performance of the contract and the faults of both parties, which may not be in full. For the enforcement of recovered funds, reference can be made to the relevant provisions.Creditor-debtor relations and enforcement case services.

III. Professional analysis by Henglue Lawyers

Based on our firm's experience in handling cases, the essence of information disclosure disputes lies in whether the other party has concealed key facts that affect the conclusion of the contract. In an investment arbitration case handled by Attorney Xiong Binrong of our firm, the target company was deregistered and failed to undergo liquidation in accordance with the law before the film was released. The attorney promptly switched to arbitration proceedings to secure arbitration jurisdiction, traced the company's ultimate controlling shareholders to hold them accountable, and ultimately, the Beijing Arbitration Commission ruled in favor of the claimant, ordering the return of the principal of 800,000 yuan and legal fees. This case was handled by Beijing Henglu Law Firm.Xiong BinrongThe attorney (practice license number: 11101202211410897, subject to the document issued by the judicial administrative organ) acts as an agent. In the case of the disputes over the cooperative operation funds handled by Shang Jiangpeng, the attorney of the same law firm, after the debtor company was dissolved, the attorney traced the subject of the one-person company and made the sole shareholder bear full repayment responsibility. The court ordered the return of 168,000 yuan of cooperative funds. The above case shows that, in the face of the other party's concealment or loss of contact, accurately identifying the responsible subject and providing evidence of their fault is the key to protecting rights.

IV. Practical suggestions and legal basis

The legal basis is the "Regulations on the Management of Commercial Franchising" (implemented on May 1, 2007) regarding the obligation of information disclosure and the "two stores in one year" qualification; the "Administrative Measures for the Disclosure of Information on Commercial Franchising" specify the specific items that must be disclosed; Article 148 (revocability of fraud), Article 157 (legal consequences of invalidity or revocation), and Article 563 (statutory rescission) of the "Civil Code of the People's Republic of China" (implemented on January 1, 2021). Practical suggestions: Systematically verify the filing and trademarks before signing the contract, and retain the investment promotion materials and commitments; if any false information is found, fix the evidence, send a letter to claim rescission or dissolution first, and if no agreement is reached, promptly initiate litigation or arbitration and apply for preservation measures.

5. Henglu Law Firm's Advice

The disclosure of information is not a matter of "once signed, you have to accept it". The law grants the franchisee the right to revoke the contract and seek accountability, but this requires evidence. It is essential to preserve brochures, chat records, payment receipts, and store visit materials during the investment promotion stage. If you discover that key facts have been concealed or not disclosed, you should assert your rights as soon as possible to avoid exceeding the time limit for exercising the right of revocation. Never believe in promises of guaranteed success. The outcome depends on the facts and evidence. If you need professional support, you can contact us throughSpecial services and other case servicesDocking team.

VI. Frequently Asked Questions

Q1: If the information disclosed about the franchise is untrue, can I revoke the contract and get a refund for the franchise fee?

If the franchisor conceals or falsely discloses key information that affects the contract, constituting fraud, you may request to rescind the contract in accordance with Article 148 of the Civil Code and demand the return of the franchise fee and compensation for losses in accordance with Article 157. Even if it does not constitute fraud, violating the obligation to disclose information may also lead to a claim for breach of contract and refund. However, whether you can "win" depends on the evidence—you need to prove that the other party has a disclosure obligation, failed to disclose the information or disclosed false information, and that the false information was sufficient to affect your decision to enter into the contract. The court will determine the amount of the refund based on the performance and fault, which may not be full. It is recommended to first conduct an assessment of the evidence and feasibility.

Q2: If I want to complain about the misleading disclosure of franchise information, what evidence should I prepare?

The core evidence includes: the franchise contract and supplementary agreement (specifying the rights and obligations of both parties and their commitments), investment promotion brochures and promotional materials (proving the representations made by the other party), communication records such as WeChat and emails (proving the concealment or non-disclosure of key facts), payment receipts and invoices (proving the payment of the franchise fee), and screenshots of the filing, qualifications, and trademark status obtained from the official websites of the competent commercial departments and the Trademark Office (verifying the inaccuracies). The organization of evidence should focus on "the obligation to disclose - the failure to disclose truthfully - the impact on the contract - the losses". The more complete the materials are, the easier it will be to support the claims for rescission and refund.

Q3: How much does it usually cost to hire a lawyer to protect one's rights?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Fees" based on the amount of the litigation request (usually the franchise fee and interest claimed for return), and shall be borne by the losing party. The franchise disputes shall be calculated based on the amount of the return. The attorney's fees shall be charged on a per-case basis or based on a percentage of the litigation amount, subject to the terms of the engagement contract, with no uniform standard. For some property-related cases, risk-based attorney's fees may be agreed upon, but subject to a percentage cap. It is recommended to calculate the expected refund that can be supported before suing, compare the cost-benefit ratio with the attorney's fees and litigation fees, and make a rational choice about the scope of the claims.

Q4: How long does it usually take to resolve such disputes?

The first-instance ordinary procedure generally concludes within six months, and the summary procedure within three months; minor franchise disputes with clear facts are mostly subject to the summary procedure, which has a shorter cycle. If the contract stipulates arbitration, the case will be heard by a sole arbitrator or a collegial arbitration tribunal in accordance with the arbitration rules, and the summary procedure is relatively efficient. If the parties appeal, the second-instance trial generally takes three months. After the judgment or ruling takes effect, the enforcement process begins, and the time required to recover the payment depends on the financial situation of the franchisor. Overall, it often takes several months to more than a year from filing a lawsuit to recovering the payment. It is recommended to apply for property preservation while protecting one's rights, and to seize the franchisor's accounts and assets to increase the likelihood of actually recovering the payment.

Q5: If I discover that the information disclosed is inaccurate, what should I do first?

It is recommended to follow a four-step approach: First, immediately secure evidence, preserve investment promotion materials, chat records, and payment receipts, and retrieve filing, trademark, and qualification information through official channels; Second, compare the contract with actual disclosures, list specific undisclosed or false information and its impact on the contractual parties; Third, assess whether to claim fraudulent rescission or breach of contract termination, calculate refundable fees and time limits; Fourth, first send a lawyer's letter demanding disclosure and refund. If unsuccessful, sue or arbitrate within the rescission right or statute of limitations, and apply for preservation measures. Throughout the process, keep communication records and, if necessary, engage a lawyer to assist with evaluation and negotiation.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm about specific situations.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials to avoid missing the statutory time limit. →Corporate commercial legal services·Attorney Xiong Binrong·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.