[Direct answer]In the Beijing area, can providing false operating data by the headquarters help to terminate the franchise contract? This is a practical issue of widespread concern among parties involved. According to the Contract Chapter of the Civil Code of the People's Republic of China (effective from January 1, 2021) and the Civil Procedure Law of the People's Republic of China (amended on December 24, 2021 and effective from January 1, 2022), when handling such matters, it is necessary to grasp the core elements and evidence and assert rights in accordance with the law. Whether a favorable outcome can be achieved depends on the clarity of the facts, the sufficiency of evidence, and the choice of procedures, rather than the promise of results. It is recommended to sort out the materials and fix key evidence as soon as possible, and to formulate a plan with the assistance of a professional lawyer to avoid losing rights due to exceeding the statutory time limit or insufficient evidence. For more details, please refer to the following link:Corporate commercial legal services.

1. Problem background and typical scenarios

Can providing false business data by the headquarters terminate the franchise contract? Such cases are also quite common in the Beijing area. When handling such matters, it involves both substantive rights and procedural choices. Taking this into account, the following analysis will focus on the legal implications of providing false business data by the headquarters and its potential impact on the termination of the franchise contract.Legal services for contract disputesBased on my practical experience, I suggest that the parties first clarify their legal relationships before deciding on the path of protecting their rights or negotiating with the other party.

II. Key points of contention

The disputes in such cases often focus on three points: firstly, the validity and establishment of the contract, and whether the subject qualifications and expressions of intent are genuine; secondly, the performance and determination of breach of contract, who constitutes a breach of contract and the degree of the breach; thirdly, the calculation of liability and losses, the adjustment of the breach of contract penalty, and foreseeable rules. Each of these points requires written evidence to support them.

III. Professional analysis by Hengluo Lawyers

Based on a related case handled by our firm, it can be seen that this case involves a contract dispute concerning the validity of an agreement to evade household registration policies through "sham marriage". The plaintiffs, Zhang Na and Wang Xiaoyong, signed the "Beijing Household Registration Marriage Settlement Agreement" with Zhao Chenyang to obtain a Beijing household registration for their child, agreeing to register their marriage through sham marriage and paying 100,000 yuan. However, due to the failure of the policy, the two entrusted Xue Shuhua's legal team from Beijing Henglu Law Firm to sue for the invalidation of the agreement and the recovery of the payment. The court ruled that the agreement was invalid from the outset due to evading household registration policies through false marriage and violating public order and good customs, in accordance with Article 152 of the Civil Code. Zhao Chenyang, as the direct recipient of the payment, was ordered to return the 100,000 yuan within a specified period. Applicable legal provisions: Articles 152 and 157 of the Civil Code. Henglu Law Firm advises that in handling such cases, it is necessary to focus on the core issues and organize evidence and legal arguments around the disputed focal points. This case was handled by Beijing Henglu Law Firm.Xue SuhuaThe attorney (practice license number: 11101201211769926, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis mainly includes the provisions on the conclusion, effectiveness, performance, breach of contract and termination of contracts in the Contract Chapter of the Civil Code of the People's Republic of China (effective from January 1, 2021) (starting from Article 463); the provisions on shareholders and transactions in the Company Law of the People's Republic of China (amended on December 29, 2023 and effective from July 1, 2024); and the provisions on jurisdiction and preservation in the Civil Procedure Law of the People's Republic of China (amended on December 24, 2021). Practical suggestions: Review the subject and creditworthiness before signing the contract; specify the subject matter, payment, and breach of contract in the clauses; fix the evidence of performance and communication when disputes arise; and apply for property preservation in a timely manner. For debt recovery, it can be combined with other legal provisions.Creditor-debtor relations and enforcement case servicesAdvance.

5. Henglu Law Firm's Advice

In commercial contracts, the terms and evidence determine the outcome of the dispute. There are three key points: reviewing the other party's creditworthiness and performance capability before signing the contract; clearly defining the subject matter, payment terms, breach of contract provisions, and jurisdiction clauses; and preserving communication and delivery records during the performance of the contract. If a dispute arises, it is necessary to secure evidence in a timely manner. If professional support is needed, you can seek assistance from relevant professionals.Special services and other case servicesThe docking team.

In commercial contracts, the terms and evidence determine the outcome. It is recommended to review the other party's creditworthiness and performance ability before signing the contract. For major contracts, have a lawyer draft or review the contract to clarify the subject matter, payment terms, breach of contract provisions, and jurisdiction. During contract performance, keep communication and delivery records, and promptly send a letter of default and apply for preservation measures if a breach occurs. The focus of disputes often lies in the validity of the contract, who constitutes a breach of contract, and the calculation of losses. Evidence should be organized around three points: establishment, performance, and breach of contract. Hiring a lawyer can systematically sort out contract and performance evidence, evaluate litigation or arbitration paths and cost-benefit ratios, and avoid the risk of losing the case due to ambiguous terms or insufficient evidence of performance. For clauses setting excessive or insufficient penalties, courts and arbitration institutions may adjust them according to law. The claimant should prepare evidence of actual losses to counter the defendant's possible defense of reducing the penalty and ensure that the compensation request is supported.

VI. Frequently Asked Questions

Q1: If the headquarters reports inflated sales figures, can franchisees terminate the contract and request a refund based on this?

It can be rescinded. If the franchisor conceals important information or provides false information, the franchisee has the right to rescind the franchise contract in accordance with Article 23 of the "Regulations on the Management of Commercial Franchising" (implemented on May 1, 2007); at the same time, he/she may request the rescission on the grounds of fraud according to Article 148 of the "Civil Code of the People's Republic of China" (implemented on January 1, 2021), or claim the statutory rescission according to Article 563. The prerequisite are that the false data belong to the core operating information that should be disclosed before signing the contract and are sufficient to affect the decision to join the franchise. After the contract is rescinded, the franchisee may request the return of the franchise fee and compensation for the losses of decoration and actual investment.

Q2: To prove that Zhaoshang's data is falsified, which promotional and reconciliation materials should be collected?

The following are the five types of materials that need to be collected: 1. Investment promotion brochures, profitability calculation forms, and commitment letters; 2. Signature records of headquarters' information disclosure documents; 3. Actual transaction records, inventory records, and reconciliation statements after the store opens; 4. Operational data or public evaluations of other franchise stores in the same region; 5. WeChat messages, audio recordings, and emails promised by the investment promotion staff. The key point is to highlight the discrepancies between the data provided by the headquarters and the actual operating results, and to prove that these data influenced the contractual decision-making. It is recommended to have the promotional materials notarized to avoid the other party denying their authenticity.

Q3: If we terminate the contract and recover the franchise fee, can the attorney's fees be charged based on the proportion of the recovered amount?

Yes, but subject to certain proportional restrictions. The acceptance fee shall be calculated in accordance with Article 13 (1) of the "Measures for the Payment of Litigation Costs" (implemented on April 1, 2007), with a cumulative amount based on the disputed amount. For amounts below 10,000 yuan, the fee is 50 yuan per case; for amounts between 10,000 yuan and 100,000 yuan, the fee is 2.5% of the total amount. The attorney's fee shall be determined by both parties in accordance with the "Measures for the Management of Lawyer's Service Fees" (implemented on April 1, 2007), which may be charged on a per-case basis, a percentage of the subject matter, or in stages; if a success-based commission is agreed upon, the maximum amount shall not exceed 30% of the total amount of the subject matter. Once the amount of the franchise fee is determined, the total cost can be roughly calculated.

Q4: After discovering the data fraud, how many years can the right of rescission be preserved at most?

There is a statute of limitations for the right of rescission. According to Article 564 of the Civil Code of the People's Republic of China (effective January 1, 2021), if the law does not stipulate or the parties do not agree on the time limit for exercising the right of rescission, the right will be extinguished within one year from the date when the party knows or should have known of the grounds for rescission; if the party fails to exercise the right within a reasonable period after being urged by the other party, the right will also be extinguished. Requests for the return of franchise fees and other claims are subject to a three-year statute of limitations, in accordance with Article 188. The longer the delay in discovering data fraud, the harder it will be to gain support for the claim of termination.

Q5: Today, I want to secure evidence of the fraud. Which pages of the investment promotion materials should I notarize first?

Today, I will first do three things: First, have the investment promotion brochure, profit calculation form, and WeChat commitment notarized or stamped with a trusted timestamp to fix the false statements and the release time; Second, send a written notice of termination to the headquarters, stating the false information items on which the termination is based, the reasons for termination, and the request for a refund. Send the notice by express delivery and keep the receipt; Third, organize payment receipts, renovation contracts, and opening transaction records to form an investment list. After sending the notice, stop using the headquarters' trademarks and materials to avoid being accused of operating beyond the expiration date.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, to avoid missing the statutory time limits. →Business and commercial legal services·Attorney Xue Suhua·Beijing Hengluo Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public 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.