Chapter I General Provisions

       
Article 1: The FANGSHI HEALTH ROOM brand refers to the trademarks “Fangmin” Brand (including graphics) and other business logos. The series of brands possessed by the Head Office are protected by the state laws and violation in any form is no allowed.

Article 2: The interim Regulations apply to all the FANGSHI HEALTH ROOM stores of all levels, agencies and regions.

Chapter II Conditions & Procedures of Joining In

Article 3: The applicant must agree to "corporate culture of Fangmin Pharmaceutical", “Fangmin Green Products”, “Fangmin Business Philosophy”, with a good work ethic, sense of responsibility, sales experience, contacts resources, management experience and ability of organizational coordination.

Article 4: The qualified applicant shall sign the Franchising Contract and fill out the Application Form for setting up a new store at the Market Management Department, and obtain documents and files related to setting up a new store.

Article 5: The Market Management Department shall examine the qualifications, credit and social background of the applicant. Any individual or corporate unit that has violated laws or regulations or has bad social behavior shall not be approved to set up new stores.

Article 6: Upon approval, the applicant shall choose and lease an appropriate business site in compliance with the regulations of regional protection and minimum business area. Then take the Lease Agreement and obtain the advanced amount for initial opening and the Authorization Letter at the Market Management Department.

Article 7: The applicant shall go through all the formalities at the Industrial and Commercial Administration, as well as the Tax Administration within 30days after authorization, and turn to be an independent qualified legal entity (Business License)

Article 8: Within 30days after filling out the Application Form for setting up a new store, the applicant must finish decoration of the business site in compliance with the unified standards of the Head Office, then fill out the Acceptance Form and hand it over to the Market Management Department. The qualified will be granted with the second batch of advanced amount and free picking. No such preference will be granted otherwise.

Article 9: Upon qualification of decoration of the business site, the applicant shall fill out Request Form for Goods at the Sales Department and apply for delivery.

Article 10: With arrival of goods, the applicant shall officially open the store on an auspicious day. The superior store of the newly-opened store shall offer supports in different aspects such as human talents, financial support and material support. The Head Office will send out training instructors with relevant information, gifts and other assistance and supports.

Chapter III Responsibilities, Rights and Interests of Franchise Stores

Article 11: The rights for qualified franchise stores are listed hereunder:

1. Rights to inquire his/her sales figures, policies, regulations and service process;
       
2. Rights (within the scope of granted authorization) to use the trademarks of FANGSHI HEALTH ROOM (including service marks), proprietary technology and business model;
       
3. Rights to propose advice and express opinions to superior store or even the Head Office, and leapfrog to complain;
       
4. Rights to ask for prompt accurate settlement of his/her business fee and services fee, in compliance with the Regulations of the Head Office.
       
5. Rights to ask the Head Office to query on, access to or complain at the settlement by other stores, which infringe upon his/her business fee and services fee.
       
 6. Rights to know incidents, adjustment of policies or newly introduced programs by the Head Office.
        
      
Article 12: The obligations for qualified franchise stores are listed hereunder:

       
1. Obligations to promptly and accurately report, implement and notify the policies, regulations and measures by the Head Office;
       
2. Obligations to manage the work of affiliated departments, the business activities of the administered market and be responsible for the Head Office;
       
3. Unconditional acceptance of supervision, inspection, assessment and integrated management by the superior store and management department of all levels;
       
4. Obligations to coordinate relations with local Industrial and Commercial Administration, Hygiene Administration and Tax Administration;
      
5. Obligations to fast respond to and handle market issues and disputes;
       
6. Obligations to go through operation and sales formalities (Business License) and pay taxes as regulated by laws;
      
7. Obligations to attend training, conferences and meetings held by the Head Office, prepare required information and files for the meetings and keep confidentiality for the content and information at the meetings;
       
8. Obligations to actively and effectively explore the market and sell all kinds of products.

Chapter IV Management of Stores of All Levels

Article 13: Any substantial change such as the adjustment of business site and business scope has to be promptly and accurately reported to the superior store for approval and for file. Any change of significant importance shall be reported to the Head Office for approval and for file.
      
Article 14: Stores of all levels shall report monthly sales turnover and plan for procurement to the superior store; stores of all levels shall clear and settle for sales turnover and fee directly with the superior store.

Article 15: Stores and management departments of all levels shall be law-abiding, tax positive and actively establish sound relations with local Industrial and Commercial Administration, Hygiene Administration, Tax Administration, Government and news media for their support and assistance.

Article 16: Trans-regional operation in the market under planning must be approved by its head, and report to its superior store and Head Office for file; in case of any identified irregular operation, the commission of sales turnover or market management fee enjoyed by the violator’s superior store will be withheld; exploration of new market shall be reported to superior store and Head Office for file; privately developed markets do not enjoy regional protection and other relevant supports by the Head Office.

Article 17: Any external promotional materials of stores, agencies and regions of all levels shall be approved by the Head Office; otherwise, the violator shall undertake all the social and economic responsibilities.

Article 18: Within the period of partnership, any identified violator of any level or his/her staff participate in similar projects by other companies or take part in illegal activities, shall be dismissed. The Head Office shall reclaim the Authorization Letter and withhold all the management fee and commission of sales turnover that are enjoyed by his/her superior store. And he/she shall be held liable for legal responsibilities.

Article 19: Any request application for change of location of business site due to geological change or other reasons, stores of all levels (including agencies and regions) shall promptly apply to the Head Office for change, and go through formalities by the applicant himself.

Article 20: Stores of all levels shall not raise or lower the commissions of sales turnover, services fee, management fee or market development fee for their supervised stores, for purposes of dumping products, attracting customers or other forms of vicious competition; if any identified violator, he/she shall be severely punished with twice the actual loss that occurs; the Head Office shall cancel his/her qualification if any violator breaks this article thrice.

Article 21: The Head Office will send out operation personnel or market supervisors at any time to stores of all levels, who will direct, supervise and inspect; any unit or individual shall not invite them to dinner, bribe them or present them with gifts.

Article 22: It is regulated by the Head Office that stores of all levels must well preserve the technical operation manuals and other documents which shall be returned right after the termination of the Contract.

Article 23: Stores of all levels shall not slander or do anything that damages the image and reputation of the Head Office or other stores of all levels, or do anything that obstructs business of other stores for his/her own sake.

Article 24: The lawsuit or disputes related to business operations between stores of any level shall be promptly reported to superior stores; disputes related to business operations between stores of all levels but for sake of the cause of “10K Stores Project”, lawsuit shall be filed or other activism adopted for support, and other stores of all levels shall take the initiative to actively cooperate.

Article 25: Stores of all levels shall not transfer the regulated rights to any third party without approval by the Head Office, or nominally operated by self but by others in fact; any identified violator will be severely punished or even disqualified.

Article 26: Stores of all levels shall undertake all social and economic liabilities for the business activities that undermine the interests of third parties; in case that the Head Office shall undertake joint liability, the Head Office shall request the store to shoulder all the responsibilities.

Article 27: Any party of the partners (including the Head Office and stores of all levels) shall not claim for loss due to Force Majeure, such as earthquake, flood, typhoon or other natural disasters, war, measures by governmental administrations and other causes beyond the control of human.

Development & Assistance for Stores of All Levels

Article 28: The Head Office should adapt to social and economic changes, consistently modify and improve product quality to ensure continuous business expansion of stores of all levels; types and specifications should be constantly expanded and innovated, and stores of all levels shall actively offer assistance, co-operation and promotion.

Article 29: The Head Office should actively encourage and assist stores of all levels to explore new markets, and adopt corresponding preferential policies to offer supports in terms of human talents, training and materials.

Article 30: The Head Office encourages stores, agencies and regions of all levels to offer active supports for small and weak stores, in terms of human talents, training and materials.

Article 31: The Head Office emphasizes on the promotional function of education and training; recruits, trains and reserves more outstanding trainers for sake of better market services; spares no efforts to organize market conferences, times the number of market conferences and upgrades the market conference to promote product sales.

Chapter VI Cancellation & Termination

Article 32: If there is any case as listed hereunder, the Head Office has rights to disqualify the stores of any level.
     
1. Serious violation of company policies, regulations and procedures which result in severe social consequences;
2. Serious violation of state policies, laws and regulations which adversely affect the Head Office;
3. Irreparable huge economic loss brought to the Head Office due self reasons (separately specified).

Article 33: If any circumstance as listed hereunder, business operation should be terminated by stores at all levels:

1. Initiative declaration of bankruptcy in compliance of laws by stores of all levels;
2. Force Majeure (earthquake, flood, typhoon, war or other events beyond the control of human)

Chapter VII Special Clauses for Stores of All Levels

Article 34: During business operations of stores of all levels, the superior stores are entitled to make reward (incentive) policies (measures) that meet conditions of their own markets; and shall report to Fangmin Pharmaceutical for file.
      
Article 35: In order to streamline relations and regulate the management, superior stores have rights to make arrangements for marketing and handle disputes; stores of all levels are not allowed to leapfrog to report or consult, but allowed to leapfrog to complain or appeal.

Article 36: Disputes between the stores of all levels or between the Head Office and the stores of all levels shall be handled in accordance with the Regulations; if failed, both parties should file for arbitration for execution.
     
Article 37: Unfinished matters in the Regulations are ruled out separately.

Article 38: The Regulations turns valid since the date of announcement; Fangmin Pharmaceutical reserves the final rights of interpretation.

Unified Terminal Image

1. Image Design of Store Layout / 2. Brand Identity / 3. Business Card / 4. Font of Advertising Slogan / 5. Badge
6. Promotional Bag / 7. Authorization Letter / 8. Waiter Dressing / 9. Waitress Dressing / 10. Image Design on Interior Wall / 11. Store Cashier Renderings / 12. Interior High Shelf Renderings / 13. Interior Low Shelf Renderings / 14. Franchise Store Renderings/ 15. Centre Store Renderings / 16. Flagship Store Renderings