Franchise Agreements in China: Keeping a Complete Record of Verbal Promises, Contract Schedules and Payments

When signing a franchise agreement, prospective business owners often focus on fees and opening dates, overlooking another question: a few months later, will they still be able to prove what the franchisor promised, what they paid and which version of the documents both parties ultimately agreed to use? In the franchise sector, clear records protect franchisees and help both sides resolve misunderstandings promptly. This guide focuses on building a signing file. The aim is not simply to take more screenshots, but to connect promises, contract terms and records of performance.

1. Start with an index and link each document to a specific matter

Commercial franchising in mainland China is specifically governed by the Regulations on the Administration of Commercial Franchises. The Civil Code of the People’s Republic of China also applies to the formation and performance of contracts. Under the Measures for the Administration of Information Disclosure in Commercial Franchising, franchisors are generally required to disclose specified information in writing at least 30 days before the contract is concluded. Keeping disclosure records means retaining not just an acknowledgement of receipt, but also the documents actually received and their versions.

Start keeping four categories of records from the first formal discussions:

• Franchise marketing and communications: brochures, quotations, emails, chat records and details of the people making specific promises.
• Disclosure and verification: disclosure documents, acknowledgements of receipt, supporting evidence supplied by the franchisor and your own verification notes.
• Contracts and schedules: drafts, revised drafts, the final signed version, supplementary agreements and an index of schedules and annexes.
• Payments and delivery: payment notices, transfer confirmations, invoices, goods lists, and records of receipt, inspection and acceptance.

For each document, note the date received, the sender, the outlet concerned and the matter it relates to. Keep quotations for different cities and outlets separate so that an offer for another location is not mistaken for a term of your own agreement.

2. Move key promises from chats into formal documents

Phrases such as “free on-site operational support”, “full assistance throughout the opening” and “all equipment included” may sound clear, but they lack a defined scope and completion criteria. Chat records can help establish what was discussed, but not every sales statement automatically becomes an enforceable contractual obligation.

Before signing, draw up a checklist of promises. For each one, record who made it, what was promised, the deadline for delivery, whether the cost is included and where it is to appear in the contract. For example, rather than simply stating “opening support provided”, specify how many staff will attend the outlet, how many days they will stay, the work they will do and what happens if the support is not provided.

If a promise comes from a franchise recruitment representative, ask the company entering into the agreement to confirm it through a document bearing its company seal, a verifiable company email address or another clear method. A business card, a group-chat display name or a statement such as “I represent head office” is not a reason to overlook the limits of that person’s authority.

Mark any matter the other party refuses to put into the contract as unresolved. This is particularly important if the contract states that earlier communications no longer form part of the parties’ agreement. Check for omissions item by item rather than paying on the assumption that “if it was said in a chat, it must count”.

3. Fix the contract version and make sure schedules contain real commitments

Before signing the final version, match every schedule or annex named in the contract to the material you have actually received. If a fee schedule, service list, operating manual or equipment specification determines what you must pay or the standards to be met, it should not merely be named in the main contract without any content you can check.

Ask for each schedule or annex to have a title and a date or version number, and for the contract to make clear that it forms part of the agreement. Both parties should confirm handwritten amendments, deletions and additions by signing, applying their company seals or another appropriate method. Avoid being left with only a scanned copy amended by one party.

Also watch for rules incorporated by reference to a website or online portal. Saving a login link does not prove what the page displayed on the signing date. For rules affecting your fees and principal obligations, try to obtain a fixed version that you can download and retain, and agree how subsequent amendments will be made. A later update by the franchisor does not necessarily make every new obligation automatically binding on the franchisee; that still depends on the contract and applicable law.

If signing electronically, download the complete signed document and retain any signing logs, verification information and other records the platform provides. Printed copies are useful for reading, but should not replace the electronic originals. Do not wait until your account expires to discover that you can no longer download the contract.

4. Connect payments and delivery in the same record trail

Every payment should answer three questions: who was paid, why they were paid and which agreement the payment relates to. Where possible, include the contract number, outlet and fee item in the transfer reference, and retain the franchisor’s payment notice and related confirmations. If the recipient is not the other party to the contract, first obtain written authorisation for them to receive the funds and confirm whether the payment will satisfy your payment obligation under the contract.

Bank statements show that money moved, but may not, on their own, establish its purpose. An invoice is no substitute for a complete record of contractual performance either. Keep payment evidence together with the relevant fee clauses, payment notices and confirmations of receipt.

For deliveries of equipment, supplies or services, record the itemised list, receipt date and time, quantity discrepancies and any quality objections as they arise. If you have received only part of the goods, do not sign a statement confirming that everything has been inspected and accepted without noting the discrepancies. Retain the original files of photographs showing problems, alongside the order, delivery date and written feedback, so that it is clear which delivery the photographs relate to.

For chat evidence, retain the original device and the full context, including account identities, timestamps and attachments. Screenshots make information easy to find, but should not be limited to a single favourable statement. Back up important records where lawful and necessary, while avoiding disclosure of unrelated personal information. Whether the material is sufficient to prove a disputed fact will still depend on its authenticity, relevance and completeness.

Practical takeaway: Before paying, cross-check the whole file: every key promise should map to a contract provision, every schedule should have an identifiable version, every payment should have a documented basis and every delivery should have a record. If any link is missing, ask for it to be completed in writing first, rather than trying to recall what was said after the outlet has opened.