1.

Overview

On August 3, 2026, the Korea Fair Trade Commission (the “KFTC”) issued notices regarding amendments to the Enforcement Decree of the Fair Transactions in Franchise Business Act (the “Franchise Business Act”) as well as the establishment of the new Notification on the Registration of Franchisee Associations and Consultation Procedures for Changes to Transaction Terms (the “Notification”).

The proposed Notification and amendments to the Enforcement Decree set out the details for implementing the franchisee association registration system and franchisors’ obligation to engage in consultations with registered associations, both of which were introduced by the December 2025 amendments to the Franchise Business Act. Under the proposed rules, a franchisee association that comprises 10% or more of the franchisees using the same business mark, or has 1,000 or more members, will be eligible to register with the KFTC.

Comments on the proposed amendments to the Enforcement Decree may be submitted through September 14, 2026, and comments on the proposed Notification may be submitted through August 24, 2026. The new registration and mandatory consultation systems are scheduled to take effect on December 31, 2026, together with the amended Franchise Business Act. As the proposed Notification and amendments to the Enforcement Decree specify registration requirements and consultation procedures for franchisee associations, franchisors should also prepare internal protocols for engaging with registered franchisee associations in advance of the effective date.
 

2.

Key Aspects of the KFTC’s Proposed Notification and Amendment

The principal features of the amendments to the Enforcement Decree and proposed Notification relate to (i) the franchisee association registration system, and (ii) the mandatory consultation system, which requires franchisors to engage in consultations with registered franchisee associations upon request.
 

(1)

Franchisee Association Registration System

(Grounds for Cancellation) Registration may be cancelled where an association was registered by misappropriating the identity of a franchisee or by submitting forged or altered documents, or where the association was formed as a result of the franchisor’s undue coercion or inducement of franchisees to join, thereby infringing upon franchisees’ right to voluntarily form an association.
 

(2)

Mandatory Consultation with Registered Associations

(Basic Consultation Procedure and Participants) A registered franchisee association may request consultation in writing on matters such as items required to be included in the franchise agreement and matters relating to advertising and promotional activities. Upon receipt of such a request, the franchisor must commence consultation within 14 days. In principle, the franchisor must hold at least two meetings, prepare meeting minutes, and retain those minutes for three years from the date the consultation concludes. The franchisor must also notify franchisees who did not participate in the consultation of the outcome within 14 days. Participants in the consultation procedure should be officers and employees of the franchisor at the time of participation and members of the registered association, and may also include persons duly authorized to act as representatives of the parties.

(Opinion-Gathering Procedure) Where the membership of the registered association requesting consultation represents less than 30% of all franchisees, the association must conduct an opinion-gathering procedure that notifies non-member franchisees of the topics for consultation, the association’s position, and the methods for submitting opinions. This mechanism is intended to ensure adequate representation for associations with lower membership rates.

(Effect of Conclusion of Consultation Procedure) To prevent redundant consultations, a registered association that has completed a consultation may not request further consultation on the same topic for 180 days, or on separate topics for 60 days (or 90 days in the case of franchisors with fewer than 100 franchisees).
 

3.

Implications

As franchisors will be required to commence consultations within 14 days of receiving a request from a registered franchisee association, it will be important for franchisors to prepare in advance by establishing internal protocols for handling requests, conducting meetings, maintaining meeting minutes, and communicating outcomes. Large franchisors may receive consultation requests from multiple associations, and should develop strategies for efficient consultations, such as inviting multiple associations to joint sessions or consolidating agenda items.

Because the specific standards regarding the registration of franchisee associations and the consultation process may be further adjusted as the Enforcement Decree and Notification are finalized, companies may wish to consider submitting comments during the public comment period.