Fair Negotiation Environment for Franchise Owners and Headquarters, Says Fair Trade Commission Chair

Chairman Joo Byeong-ki of the Fair Trade Commission [Photo: Yonhap News]

Joo Byeong-ki, chairman of the Fair Trade Commission, stated on June 9 that the commission will do its utmost to ensure a healthy market order in the franchise sector, which serves as a crucial pillar for domestic consumption and income distribution.
During a meeting with representatives from the Korea Franchise Industry Association, the Korea Convenience Store Industry Association, and the National Franchisee Council, Joo emphasized that "fair distribution and a virtuous cycle of innovation are essential conditions for sustained economic growth in advanced countries."
The Fair Trade Commission gathered industry opinions to prepare detailed operational guidelines for the franchisee association registration system, which is set to be implemented by the end of the year.
This registration system is designed to enhance the negotiating power of franchisees, allowing associations that meet certain criteria to register with the commission and officially request negotiations on transaction terms with franchisors.
Joo stressed the importance of ensuring that franchisees can negotiate fairly with franchisors to prevent unfair practices in the franchise business and to ensure that transaction terms are determined reasonably.
He added, "The newly revised Franchise Business Act must effectively empower franchisees to request negotiations, and we will operate the registration system to guarantee the public representation and rational decision-making of franchisee associations."
While there are expectations for enhanced negotiating power among franchisees, concerns have also been raised about potential side effects during the implementation of the system.
The Korea Franchise Industry Association and the Korea Convenience Store Industry Association mentioned the possibility of weakened representation due to the establishment of multiple franchisee associations, while the National Franchisee Council pointed out that overly stringent registration requirements could hinder the guarantee of negotiation rights.
Joo assured that the system will be designed and implemented to provide franchisees with substantial negotiation opportunities without excessively increasing the burden on franchisors.
The Fair Trade Commission plans to review the opinions raised by the industry and finalize the amendments to the enforcement decree within the year.

* This article has been translated by AI.

AJP