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Following is a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, to a question by the Hon Wong Ting-kwong in the Legislative Council today (May 9):
Question:
It has been reported that a group of franchisees of the 7-Eleven convenience store (franchisees) have pointed out earlier that they are being treated unfairly (including having no way to know the source prices; accounts lacking in transparency; not being able to know in advance the profit sharing ratio and criteria for adjustment; being forced to accept cooked food stalls operated by a third-party to station at their stores and be responsible for the food safety and maintenance of such stalls; being forced to hire designated maintenance contractors who charge high fees; and being given contracts in English only by the brand licensor, and not being allowed to take away the contracts for detailed study first and being required to sign the contracts right away) by the brand licensor of that convenience store (brand licensor). In this connection, will the Government inform this Council:
(a) whether the authorities have received cases of the franchisees concerned requesting for assistance; if they have, of the number and contents of such cases, and the follow-up measures taken by the authorities as well as the outcome; if not, whether the authorities will find out the truth from the franchisees and brand licensor concerned;
(b) as it has been reported that only the English versions of the franchise contracts of the aforesaid convenience store are available, and that franchisees are required to sign their contracts right away, whether the authorities will follow up such cases and require the brand licensor to provide the Chinese versions of the contracts, so as to prevent intended franchisees who are illiterate in English from signing contracts that may contain provisions which are unfavourable to them;
(c) whether the authorities will facilitate the provision of a platform to encourage frank discussion on an equal footing between the franchisees and brand licensor of the aforesaid convenience store;
(d) whether the authorities will consider attracting more brands of convenience stores to come to Hong Kong to promote competition so that on the one hand, more options are available in the market for intended franchisees to improve their position in negotiation, and on the other hand, the public are provided with more choices in consumption; and
(e) whether the authorities will draw reference from the practices of the Mainland or other countries to legislate on the administration of commercial franchise to protect franchisees; if they will, of the details; if not, the reasons for that?
Reply:
President,
The case referred to by the Member in the question apparently involves a commercial dispute and the commercial transactions between a brand licensor and its franchisees. In reply to parts (a), (b) and (c) of the question, apart from a letter from a District Councillor on similar matters referred to us by the Complaints Division of this Council, we have not received any request for assistance from the franchisees. The Administration is not empowered to intervene in or follow up on commercial operations and disputes by, for example, sanctioning the substance or format of contracts entered into by the two sides or imposing specific arrangements for co-operation. In relation to part (e), we do not intend to establish a specific regulatory regime regulating co-operation between brand licensors and franchisees, in the light of the principle of free trade being a cornerstone of Hong Kong's free economy. In reply to part (d) of the question, we have all along, through the work of Invest Hong Kong, strived to assist foreign direct investments in setting up or expanding business in Hong Kong. The Consumer Products Sector Team, a dedicated team under Invest Hong Kong, provides advisory services and practical support to retail businesses, including convenience store projects, that involve foreign direct investments in Hong Kong. We stand ready to provide assistance to any brand of foreign convenience stores that plan to enter the Hong Kong market.
Ends/Wednesday, May 9, 2012
Issued at HKT 11:31
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