The Korea Fair Trade Commission (the "KFTC") issued an advance notice on a proposed amendment to the Fairness in Franchise Transactions Act, and will be seeking public comments from September 28, 2020 to November 9, 2020. The KFTC plans to obtain the necessary approvals for enactment from the Regulatory Reform Committee, the Ministry of Government Legislation, and the Presidential Cabinet before submitting the final draft of the proposed amendment to the National Assembly. If enacted, the proposed amendment is expected to strengthen the foundation for fair transactions in franchise industries by increasing the negotiating power of franchisees, and securing a sound business environment for franchisors.
The amendment will (i) require franchisors to obtain prior consent from franchisees before launching advertising or promotional campaigns, (ii) introduce a system for registering franchisee organizations, and (iii) require franchisors to have prior experience operating a directly-managed store. We summarize the key details of the proposed amendment below, and recommend companies with franchise networks in Korea to prepare for potential exposure to risk by assessing and addressing their current compliance status based on the proposed changes.
Amendment |
Details |
Require franchisors to obtain prior consent from franchisees before launching advertising or promotional campaigns |
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Introduce a system for registering franchisee organizations |
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Require franchisors to have prior experience operating a directly-managed store |
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Grant local governments the authority to impose administrative fines |
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Other |
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Related Topics
#Franchise Transactions Act #Antitrust & Competition #Legal Update