Le-Huo-Da-Ren Co., Ltd.

Case:

Key Words:

franchise, fail to fully disclose, trade information

Reference:

Fair Trade Commission Decision of January 6, 2010 (the 948th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 099003

Industry:

Wholesale of Fruit and Vegetables (4541)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. The complainant was one of the franchisees of Le-Huo-Da-Ren (in transliteration) Co., Ltd. (hereinafter referred to as Le-Huo-Da-Ren) and entered into a franchise agreement with Le-Huo-Da-Ren in March 2009. However, prior to the commencement of the franchise relationship, Le-Huo-Da-Ren failed to disclose in writing the important trade information on "the relevant qualifications of the responsible person and major business manager of the franchiser in the relevant businesses."

2. Findings of the FTC after investigation showed that the franchise agreement entered into by Le-Huo-Da-Ren and the complainant failed to contain three sets of important information, namely the information on "the start date of the franchiser's engagement in the franchise business," the information on "contents and methods of the franchiser's assistance and training provided to the franchisees," and the information including "names and addresses of all of the franchiser's franchisees in the municipal city or county(city) where the franchisee's place of business is located, and the statistical information, for the previous fiscal year, on the numbers of all of the franchiser's franchisees and numbers of all terminated franchisees nationwide and in the municipal city or county(city) where the franchisee's place of business is located." Le-Huo-Da-Ren also failed to disclose such information via any electronic document. Additionally, though Le-Huo-Da-Ren claimed that it had disclosed these three sets of information to the trading partner 10 days prior to the franchise relationship was contracted, it could not submit any written information to support its statements.

3. Grounds for disposition:
   To ensure the fair competition in the franchise business and prevent franchisers from affecting the trading order by concealing important trade information in the franchise recruitment process, the FTC enacted the "Fair Trade Commission Guidelines on the Disclosure of Information by Franchisers." This Guideline requires that any important trade information related to the franchise shall be provided to the trading counterpart in writing for reference. In the event that a franchiser conceals important trade information or impedes the trading partners from reviewing the agreement, which is obviously an unfair act sufficient to affect the trading order, the franchiser will be considered to have violated Article 24 of the Fair Trade Law. Le-Huo-Da-Ren was therefore imposed with an administrative fine of NT$50,000.

Appendix:
Le-Huo-Da-Ren Co., Ltd.'s Uniform Invoice Number: 80086583

Summarized by Li, Shih-Che; Supervised by Liao, Hsien-Chou