From now on, if 10% or at least 1,000 of all franchise store owners gather, they can form an owners' group and negotiate all transaction terms with the franchisor.
The Korea Fair Trade Commission on the 3rd gave advance notice of legislation for a revision to the Enforcement Decree of the Fair Transactions in Franchise Business Act and a new notice on the registration of franchisee organizations and procedures for negotiating changes to transaction terms. The step follows cases in which, even if multiple franchise store owners gathered to form a group, the franchisor could refuse to negotiate by saying the group lacked representation.
According to the proposed revision to the enforcement decree of the franchise business act, an owners' group joined by 10% or at least 1,000 franchise store owners using the same trade name can register the group with the Korea Fair Trade Commission (FTC). If such a registered owners' group requests it, the franchisor is obligated to hold talks. However, at least 30 members must join for the group to qualify as a registered organization. As a result, franchises with fewer than 30 stores cannot form a registered group.
To prevent a registered owners' group from repeatedly requesting talks with the franchisor, the Korea Fair Trade Commission (FTC) barred duplicate requests on the same topic for 180 days from the date of the initial request. For separate topics as well, talks cannot be requested for 60 days from the date of the earlier request.
An official at the Korea Fair Trade Commission (FTC) said, "We will closely review comments received during the advance notice period," and added, "Implementation could come as early as Dec. 31, in line with the revision to the franchise business act."