Law firm Jipyong held a seminar on the latest court rulings related to price-spread franchise fees and the Korea Fair Trade Commission's regulatory direction for the franchise sector. With recent Supreme Court decisions on franchise cases involving price-spread fees reaching different conclusions, the intent was to highlight the growing need to review franchisors' contracts and systems for managing mandatory items.
Jipyong said it held a seminar titled "Response measures for price-spread franchise fees and the Korea Fair Trade Commission's law enforcement direction in the franchise sector" at its Grand Central headquarters in Jung-gu, Seoul, on the 12th. Representatives from the distribution, consumer goods, dining, and platform sectors of corporations attended.
A price-spread franchise fee refers to the difference that arises between the purchase price and the supply price when a franchisor supplies mandatory items to franchisees. From a franchisee's perspective, it can effectively be seen as an expense paid to the franchisor, making the contractual basis and the method of information provision the core of disputes.
The first presentation was given by Jipyong partner attorney Kim Sang-yun. Kim explained recent Supreme Court rulings, trends in mandatory item regulations, and dispute cases related to price-spread fees. Kim said, "Establishing a basis in the franchise agreement and forming explicit or implicit agreements with franchisees, among other preemptive response systems, will be key tasks to reduce future dispute risks."
In the second presentation, Jipyong partner attorney Lee Jong-heon addressed the Korea Fair Trade Commission (FTC)'s law enforcement direction in the franchise sector. Lee explained trends such as stronger regulation of mandatory items, mandatory consultations with franchisee business associations, and intensified inspections of unfair practices. Lee said, "As the Korea Fair Trade Commission's oversight and law enforcement in the franchise sector are being further strengthened, franchisors also need to proactively review and respond to their contracts and operating systems."
After the presentations, a Q&A session was held, chaired by Lee Byung-ju, head of Jipyong's antitrust group. Participants discussed the basis for designating mandatory items, methods of reaching agreement with franchisees, responses to Korea Fair Trade Commission (FTC) investigations, and ways to refine contracts.
Lee said, "Due to recent legal and institutional changes surrounding price-spread fees and mandatory item regulations, it is time for franchisors to prepare more systematic response strategies," adding, "Jipyong plans to closely analyze the latest precedents and regulatory trends and provide solutions and advice on preventing disputes and practical response measures related to franchisors' price-spread fees."