The establishment procedures are the same as those for foreign-invested wholesale enterprises. Under existing policies, FIEs engaging in commercial franchising are treated in the same way as domestic enterprises with regard to establishment requirements, rights and obligations, information disclosure, advertising and publicity etc, but are different in terms of establishment procedures. Approval procedures carried out by the examination and approval authorities are merely a matter of formality.

FIEs that are qualified to engage in franchising should apply to their original examination and approval authorities for permission to add "engaging in commercial activities in the form of franchising" to their business scope and submit the necessary documents, including information disclosure document, sample of franchising contract and operation manual of franchising. The examination and approval authorities will make a decision in writing on whether or not to approve the application within 30 days after receiving the complete set of application materials. Upon obtaining approval and completing the necessary formalities in respect of change of registration details with the industry and commerce administration, the FIEs may start their franchising business.

The following documents must be submitted when applying for permission to add "engaging in commercial activities in the form of franchising" to a company's business scope:

1. Application letter and resolution of the board of directors.
2. Corporate business licence and Certificate of Approval of Foreign-Invested Enterprises (photocopy).
3. Agreements on the modification of contracts and articles of association (for foreign enterprises, only the modified articles of association are required).
4. Relevant documents showing compliance with Article 7 of the Measures.
5. Basic information reflecting the provisions of Article 17 of the Measures.
6. Sample of franchising contract.
7. Operation manual of franchising.

FIEs are not allowed to engage in any business under the prohibited category as specified in the Catalogue for the Guidance of Foreign Investment Industries in the form of franchising.

Where patent licensing is involved in franchising, patent licensing contracts should be signed in accordance with the related provisions of the Patent Law of the PRC and its implementation rules, and record filing formalities should be completed in accordance with the provisions of the Measures for the Administration of Record Filing of Licensing Contracts for the Implementation of Patents. Before conducting franchising activities, the franchiser should handle matters relating to the trademark licensing contract in line with the provisions of the Trademark Law of the PRC and its implementation rules.