▲ Fair Trade Commission Chairperson Joo Byung-ki speaks during a meeting on strengthening the bargaining power of franchise owners held at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, on the 11th.
Fair Trade Commission Chairperson Joo Byung-ki has announced that he is reviewing measures to lower the lower limit for franchise business association registration requirements.
Chairperson Joo held a meeting today (the 11th) with franchisors, including the Korea Franchise Association, at the Korea Fair Trade Mediation Agency located in the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. He stated, "I am aware of concerns that registration requirements place a heavier burden on store owners belonging to small franchisors," adding, "We are contemplating ways to lower the minimum threshold."
Following the revised Franchise Business Act scheduled to take effect on December 31, the FTC has legislatively and administratively announced related enforcement ordinance amendment proposals and notice enactments to introduce a franchisee association registration system and the obligation for franchisors to faithfully consult with registered associations.
According to the preview proposals, an association of franchisees can register if it accounts for at least 10 percent of all franchisees with a minimum of 30 members, or if it has 1,000 or more members.
Chairperson Joo's remarks on this day were interpreted to mean that the criteria requiring a minimum of 30 members could be lowered further.
In response, franchisors argue that associations with low representativeness could proliferate, claiming that the registration ratio should be raised to at least 30 percent, or preferably around 40 percent.
Na Myung-seok, chairman of the Franchise Association who attended the meeting, pointed out, "If negotiations are forced with only 10 percent representation, it will leave nothing more than negotiations for the sake of negotiation, and both the headquarters and store owners will only waste energy, time, and costs on meaningless talks."
He urged, "If 10 percent is to be maintained, devices must certainly be established to secure consent from a representative proportion or to organize negotiation channels."
Beyond association registration requirements, the association is demanding that negotiation targets and restricted periods for requesting consultations be clarified.
The preview proposals allow consultation requests to be made again after 180 days for the same topic regarding advertising and promotion agreement issues, or after 60 days for different topics.
Chairman Na argued, "The restriction period should be extended to one year for the same issues and 90 days for different issues."
This is based on the concern that if multiple associations request different agendas in succession, franchisors would have to operate a permanent consultation organization, increasing their management burden.
Franchisors also demanded that the participation of external third parties in consultations be restricted.
Chairman Na emphasized, "Sensitive information such as supply unit prices, business partners, new products, and advertising strategies can be exchanged during the consultation process," adding, "The principle that headquarters and store owners talk directly must be maintained."
Chairperson Joo stated, "For the franchise business to grow, win-win cooperation between franchisors and franchisees is more important than anything else," and added, "We will also review realistic side effects and alternatives with an open mind."
The FTC plans to finalize the amendment of related enforcement ordinances and the enactment of notices within the year after further collecting opinions from both franchisees and franchisors.
(Photo: Yonhap News)
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