This article was posted on the ChosunBiz RM Report site at 6 p.m. on Sep. 16, 2025.
A stabbing at a pizzeria in Gwanak District, Seoul, has ignited debate over institutional measures to resolve conflicts between franchisors and franchisees. The issue gained momentum after Joo Byung-ki, chairperson of the Korea Fair Trade Commission (KFTC), expressed at his confirmation hearing that legal measures are needed so franchisees can negotiate with headquarters on a more balanced footing, and said he favored introducing collective bargaining rights, prompting the KFTC to begin discussions on amending the Franchise Business Act.
The government said on the 17th that the KFTC is considering introducing collective bargaining rights. It is expected to participate in institutionalization by offering concrete opinions during National Assembly deliberations. Granting collective bargaining rights to franchisees requires a revision of the law. A bill to amend the Franchise Business Act, originally sponsored by Rep. Min Byung-deok of the Democratic Party of Korea, is currently pending in the National Assembly.
The bill would introduce a registration system for franchisee organizations to institutionally guarantee representation and negotiating power, and would obligate headquarters to respond in good faith if a registered organization requests consultations. It also includes measures to impose sanctions if a franchisor refuses a consultation request that meets set criteria.
The bill is designated as a fast-track measure, so it will automatically be put to the full assembly if the statutory deadline passes even without agreement between the ruling and opposition parties. A KFTC official said the government basically agrees with the purpose of the bill and that it may suggest refinements on specific points, adding that it is reviewing what to adopt.
The timing of the bill's passage will depend on whether the ruling and opposition parties reach agreement, but if only the fast-track procedure is followed it could be automatically scheduled for a plenary session around April next year. Given that the Democratic Party of Korea holds a majority of seats, the chances of passage are seen as high. However, Rep. Min Byung-deok's bill stipulates enforcement one year after promulgation, so if the bill passes as is the collective bargaining rights system would likely take effect starting in 2027.
The KFTC plans to finalize detailed measures and submit the government's position to the National Assembly. At his confirmation hearing, Chairperson Joo said he would work with the National Assembly and the KFTC to create a mechanism that allows franchisees to negotiate with headquarters on more balanced terms.
The Gwanak District pizzeria incident turned tragic when franchisee A wielded a weapon against an interior contractor's staff member and a headquarters executive, killing three people and seriously injuring one. Police are focusing on conflicts with headquarters and the contractor over store renovation costs and repair issues.
According to Seoul's franchise business registration status, the average startup cost for a franchise store is 113 million won, of which interior costs account for 51.5 million won (45.6%). Headquarters often require renovations on a four- to five-year cycle, which inevitably increases franchisees' burden. The current Franchise Business Act allows headquarters to designate business partners only when necessary to maintain brand uniformity, but disputes over interior work have continued to occur.
The KFTC recently handed down successive sanctions against unfair acts by franchisors. Last month, Burger King was ordered to correct and fined 300 million won after designating a cleaning agent unrelated to store operations as a required item and forcing franchisees to buy it. The KFTC also imposed a 80 million won penalty surcharge on pork belly franchise Hanam Pig House for adding 26 items not listed in its disclosure document to required items and cutting off meat supplies to franchisees who did not comply.
In a KFTC written survey last year, 54.9% of franchisees said they had experienced unfair acts by headquarters. Types included not only passing on interior costs but also inflating sales information, forcing advertising expenses, and designating excessive required items. Franchisees have urged institutional reforms, saying that penalty surcharges alone will not change the structure.
Experts note that structural conflicts in franchising are not easily resolved solely by institutional measures. Lee Hwang, a professor at Korea University School of Law, said that franchisors and franchisees should originally have aligned interests, but when business is bad issues of revenue distribution come to the fore. He added that while collective bargaining rights are necessary, headquarters' opposition is strong, so the solution is not simple.
He added that when the KFTC handles cases in the distribution sector, if illegal acts are clear it is important to prevent recurrence through strong sanctions, and emphasized the need to bolster investigative staff so meaningful enforcement is possible.