Yung Chun Trading Limited Company Reported for Allegedly Signing Unreasonable Contracts with Franchisees of the Konica Photo Express Franchise in Violation of the Fair Trade Law
Chinese Taipei
Case:
Yung Chun Trading Limited Company Reported for Allegedly Signing Unreasonable Contracts with Franchisees of the Konica Photo Express Franchise in Violation of the Fair Trade Law
Key Words:
franchise chain, color photo express developing
Reference:
Fair Trade Commission Decision of March 3, 1999 (the 382nd Commission Meeting)
Industry:
Photography (8992)
Relevant Law:
Article 19(vi) of the Fair Trade Law
Summary:
Franchisees of the Konica Photo Express franchise chain alleged that the franchiser of the Konica franchise system -- Yung Chun Trading Limited Company (hereinafter "Yung Chun") -- requires its franchisees to use only chemicals and film sold by Konica and its sole distributor in violation of Article 19(vi) of the Fair Trade Law (FTL).
It was found that the franchisers of photo development franchise chains in Chinese Taipei routinely provide professional technology, education and training, and interior decoration stipends without charging franchise fees or contract signing fees. The purpose is to promote film, chemicals, and photographic paper of their own brands. It was also found that Article 4 of the Konica Photo Express Franchise Contract stipulating that franchisees may use and sell only photographic paper and chemicals sold by Party A (Yung Chun) and its sole distributor is based on an already existed contract form accepted and used industry-wide.
Yung Chun asserted that in order to maintain the high-quality image enjoyed by the Konica brand worldwide, it encourages its franchisees to refrain whenever possible from using other brands of photographic paper and chemicals to maintain the consistency in the quality of film development by various Konica franchise outlets. Also, according to other Konica franchisees, Yung Chun does not force its franchisees to use only Konica products in practice, and some franchisees do in fact sometimes use other brands of chemicals and photographic paper along with the Konica brands.
In consideration of the aforementioned circumstances and Article 24(2) of the Implementing Regulations of the FTL, which provides that "In order to determine whether the restrictions described in Article 19(vi) are reasonable, factors such as intent, purpose, market power of the parties, structure of the relevant market, nature of the goods and the effect on market competition resulting from the implementation of such restrictions shall be considered in totality,?it is evident that the restrictions imposed by Yung Chun on its franchisees in the franchise contract does not amount to unfair competition. Therefore, it would be hard to find Yung Chun in violation of the relevant provisions of Article 19(vi) of the FTL.
Summarized by Liao Yu-hui
Supervised by Lin You-ch'ing
Appendix:
Yung Chun Trading Limited Company Uniform Invoice No.: 12220654