How Businesses in China Can Set Up Reviews of Franchise Recruitment Advertising and Earnings Claims

When turning an existing business into a franchise network, companies often start by producing recruitment webpages, short videos and prospectuses. But “this outlet has genuinely made money” does not mean “we can use those earnings to recruit franchisees”. If recruitment content goes live before controls are in place, sales promises may exceed both the contract terms and head office’s ability to deliver. Before offering franchises, businesses should establish a system for approving, tracking and withdrawing promotional content.

1. Distinguish advertising from mandatory disclosure

China has specific rules governing commercial franchising. The Regulations on the Administration of Commercial Franchises prohibit franchisors from engaging in deceptive or misleading promotion and prohibit their advertisements from including claims about franchisees’ earnings from franchise operations. Reviews must therefore consider not only whether figures are accurate, but also whether the content itself constitutes prohibited earnings promotion.

Claims such as “earn this much net profit each month as a franchisee” or “expect to recover your investment within a few months”, along with franchisee interviews showcasing financial success, should be priority targets for screening out. Adding “for reference only” or “actual earnings vary” should not be assumed to remove the compliance risk. Material about company-owned outlets’ profits or payback periods must also be checked for implied claims about franchise earnings, rather than simply copied into recruitment advertising.

Advertising and pre-contract disclosure should be managed separately. The Regulations require franchisors to provide the prescribed information and a copy of the contract in writing at least 30 days before the contract is signed. Disclosing business information as required by law does not authorise a business to turn it into public earnings advertising. Equally, a public introduction to the brand cannot replace mandatory disclosure. Franchise recruitment advertising must also comply with general rules, including the Advertising Law of the People’s Republic of China.

2. Build an evidence-backed library of promotional materials

Start by identifying every recruitment channel: the company website, official WeChat account, short-video accounts, live streams, recruitment event presentations, listings on business opportunity platforms, and introductory materials sent externally by staff and agents. Whether content is paid advertising should not be the sole test for review. All content intended to recruit franchisees or promote the opportunity should fall within the internal review process.

Consider dividing materials into three categories:

• Verifiable brand facts: the company name, business activities and support services actually provided, each linked to supporting evidence and the period for which it remains valid.
• Conditional service descriptions: training, opening support and logistics coverage, with their scope, delivery conditions and contractual basis clearly stated.
• Content prohibited or withheld from publication: franchise earnings claims, unsubstantiated rankings and promises of nationwide services that the business cannot yet deliver.

For each item, record its source, responsible owner, approved uses, version and review date. For example, “opening support provided” should be backed by actual service arrangements. If support is available only in certain regions, that restriction must not be removed. Regulatory filing information must not be presented as “government recommended” or an “official earnings guarantee”: filing is not an endorsement of business results.

3. Assign responsibility for approval and publication across channels

A practical workflow is: “drafted by the business team, verified by operations, reviewed for compliance and published by an authorised person”. Recruitment staff explain the promotional purpose, operations staff confirm whether the services can be delivered, and compliance staff check earnings wording, the risk of misleading readers and consistency with the contract. In smaller businesses, individuals may hold more than one role, but authors should not approve their own content for publication.

Reviews should cover not only the main text, but also titles, cover images, subtitles, voice-overs, charts and landing pages. Removing earnings figures from a video does not resolve the issue if its cover still promises “an easy return on your investment”. After approval, retain the final file and screenshots of the published content to guard against differences between the approved and live versions.

For live streams and recruitment events, prepare approved scripts and answers to likely questions in advance. When asked “How long will it take to recover my investment?”, presenters should not improvise a definite forecast. Instead, they should explain that investment outcomes depend on rent, staffing, customer traffic and management, and direct the prospect towards the formal disclosure process and an independent assessment. Such responses set boundaries for the discussion; they are not a script for circumventing the advertising prohibition.

Agent channels must also be managed. Agreements should specify which materials agents may use, who can approve changes, which promises are prohibited, their duty to assist with taking content down, and how breaches will be handled. A statement that “the agent published this independently and head office is not involved” should not be treated as removing head office’s risk.

4. Establish correction, withdrawal and version-tracking procedures

Maintain a publication register recording each item’s reference number, publishing account, channel contact, publication date and current version. If service coverage changes, supporting evidence becomes outdated or a complaint arises, the business should be able to locate every use of the material quickly, rather than merely deleting one file from head office’s homepage.

When inappropriate promotion is identified, first stop further distribution and preserve records, then arrange withdrawal, correction and an assessment of the impact. Prospective franchisees who have already seen the content should receive targeted clarification of the errors and an explanation of the services head office can actually provide. Questions about whether the content affected a decision to sign, or gives rise to liability, require legal advice based on the specific materials. A blanket disclaimer is no substitute for addressing the issue.

Reviews should also examine sales incentives. If rewards depend solely on lead generation and signed contracts, exaggerated promotion is likely to recur. Unauthorised changes to materials and invented service promises can be made subject to internal accountability measures, alongside ongoing checks of agent webpages and older videos.

Practical takeaway: Build an evidence-backed recruitment content library with clear qualifications and traceable versions before expanding recruitment. Trust within a franchise network should begin with every promise made before signing—and the ability to deliver on it.