Chu Shang Realtor's (hereinafter "Chu Shang") franchise stores violated the Fair Trade Law by failing to indicate in advertising materials that the stores were franchise operations and not directly operated by Chu Shang
Chinese Taipei
Case:
Chu Shang Realtor's (hereinafter "Chu Shang") franchise stores violated the Fair Trade Law by failing to indicate in advertising materials that the stores were franchise operations and not directly operated by Chu Shang
Key Words:
industry rectification campaign, franchise participation, misleading presentation
Reference:
Fair Trade Commission Decisions of February 22, 1995 (the 176th Commission Meeting) and September 6, 1995 (the 204th Commission Meeting); Disposition (84) Kung Ts'an Tzu No. 07297
Industry:
Real estate agency(6040)
Relevant Laws:
Article 21(1) of the Fair Trade Law
Summary:
1. Chao-chin Real Estate Agency [hereinafter referred to as the Agency], Chu Shang's franchised store, did not explicitly add "franchised store" on its advertisements, causing consumers to mistake it for a branch store reporting directly to Chu Shang. In order to decide whether such practice violates Article 21 of the Fair Trade Law, it was decided at the 176th Commission Meeting to understand the background and evolution of the following practices: The real estate agency only grants its franchised stores the right to use its service logo, but does not involve itself in the internal operation of the stores. All the franchiser does is to plan the use of the common advertisement funds for all franchised stores, design and standardize their signs, and design standard contracts, business cards and promotional materials. However, none of these standard materials prepared for the franchised stores included an indication that the stores were "franchised stores" in a conspicuous manner. Consumers therefore did not see the fact that their trading counterpart was but a franchised store of certain real estate agency.
The 176th Commission Meeting also decided to invite members of the trade to exchange opinions before the Commissioners decided whether to render a disposition for a particular case or to initiate an industry rectification campaign.
2. On March 24, 1995 real estate agents, consumer groups, the Consumers Foundation, and industry experts were invited to attend a seminar titled "Shall the phrase 'franchised stores' be added to the store signs and advertisements taken out by real estate agencies?" In this seminar, it was commonly believed that franchised stores should add "franchised store" on their store signs, advertisements, and business cards so that consumers can clearly tell who is serving them. However, in view of the enormous number of real estate agencies throughout Chinese Taipei area, the Commission decided to pull together major agencies from northern, central, and southern parts of Chinese Taipei and explain the whole situation and then determine when to start the enforcement.
3. According to the conclusions reached in the aforesaid seminar, a second seminar was held on 28 July 1995, where concerned parties and consumer groups participated and reached four further conclusions: (1) all participating agencies expressed willingness to add "franchised store" on their advertisements, signs and business cards. The Commission would decide and announce when the new policy would come into force; (2) agencies can determine for themselves how to mark "franchised stores" and the Commission will not make specific rules in this regard; (3) some participating agencies suggested that complaint-filing or service hot lines could also be added on the advertisements, signs, business cards and contracts. Interested agencies may decide for themselves whether to follow the suggestions.
4. Based on the aforesaid preliminary conclusions, the 204th Commission Meeting held on September 6, 1995 decided not to punish the real estate agency in view of the following facts: (1) franchised stores' failure to use the indication "franchised store" has been a prevalent practice; (2) all real estate agencies has agreed to add "franchised store" onto their advertisements, signs, and business cards, (3) the franchised store had already added "franchised store" onto their signs, business cards, and advertisements following the first seminar. However, a correction program for the real estate agencies to add "franchised stores" will still be implemented. Furthermore, it was also decided that real estate agencies shall add the words "franchised store" somewhere conspicuous on their advertisements, signs, and business cards before December 31, 1995 in order to help consumers clearly tell who is their trading counterpart. In addition, the agencies could freely decide how to mark the phrase. A letter pertaining to the aforesaid decisions was sent to the Federation of Trade Associations of Real Estate Agencies on September 18, 1995, and asked Federation of Trade Associations of Real Estate Agencies urge its members to cooperate and follow the decisions.
Summarized by Liu, Chiu-ying.
Supervised by Wu, Tsui-feng; Hsu, Chao-ying.
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