china law
Lehmanlaw

Is Governmental Approval Required to Franchise Know-how, Technology and Other Intellectual Property Rights?

In general, the answer is "yes". However, to clarify the issue, it is necessary to divide it into the following conditions:

If a foreign franchisor franchises IP rights, including patents, know-how, technology and trademarks to a Chinese entity, such licensing contracts are subject to governmental examination and approval.

If a licensing trademark does not relate to any sort of technology, then it is not necessary for the trademark license contract to be examined and approved by the government. However, such trademark licensing contracts must be recorded at the State Trademark Office and the State Administration of Foreign Exchange Control.

Recording the trademark license agreement is only available to registered trademarks in China. That means the franchisor that intends to franchise its trademarks in China should register the trademarks with the State Trademark Office of China.