FRANCHISE buyers and sellers should be wary of traps despite the attractions of franchises, warns the Hongkong Franchise Association. ''Potential franchisees have to check if the seller is a bona fide franchisor owning the franchise,'' manager Charlotte Chow Yuk-chun told a franchising conference yesterday. That was just one of the considerations to make before buying a franchise, she said. ''Though franchises involve less risks than ordinary businesses, they are not definitely profitable,'' she warned. Ms Chow suggested that both the franchisor and franchisee check each other's business records to ensure the successful operation of the franchise. Franchisors needed to be careful not to sell franchises to potential competitors. ''If a franchisee, after a short time of operation in which he has learnt the techniques of the business, sets up his own independent business to compete with the franchise, no remedy will be possible,'' Ms Chow said. The franchisors should also make sure franchisees' existing business would not have conflicting interests with the franchise, she said. Ms Chow also said the depreciating yuan was likely to make potential franchisors think twice before venturing into China. But she added that the potential returns from the vast Chinese market could outweigh that worry. In China, the law does not govern franchising. Retail franchises can exist only in the form of joint ventures between a foreign franchisor and a Chinese company - which some people argue are not real franchises. Franchising is an infant industry in China with a few franchise businesses, such as 7-Eleven, which has seven outlets in Shenzhen. Intending franchisors have been complaining about the lack of legal protection for intellectual property. ''But upcoming Chinese rules on service trademarks and on unfair competition, to be effective next month and next year, respectively, will help the development of franchising in the country,'' said Baker & McKenzie lawyer Mabel Ng May-po. A consultancy, China Franchising Services, was founded earlier this year to help develop franchise systems for China, both on the importing and exporting side. The consultancy's franchise expert Carl Carlsson said opportunities in China lay especially in food or restaurant franchises as history had proved food popular in only culture was likely to appeal in another. He cited McDonald's as an example. Jiang Yueming, deputy secretary-general of the People's Government of Guangdong Province, said: ''It is meaningful to promote franchising at a time when we develop our tertiary industry.'' He also called for the franchising of Chinese businesses overseas. The conference is organised by the Hongkong General Chamber of Commerce, Hongkong Franchise Association, China Council for the Promotion of International Trade Guangdong Sub-Council and the Guangdong Administration of Industry and Commerce.