Franchisee group registry to launch by year-end; FTC chief vows to balance consultation rights with franchisor burden

The Korea Fair Trade Commission has begun gathering industry opinions to finalize the design of a franchisee association registry and mandatory consultation regime set to take effect by year-end.

Fair Trade Commission Chairman Ju Byung-ki held a meeting Tuesday at the Korea Fair Trade Mediation Agency with representatives from the Korea Franchise Industry Association, the Korea Convenience Store Industry Association and the National Franchisee Council to discuss the direction of enforcement decree revisions needed to implement the amended Franchise Business Act.

The amended Franchise Business Act introduces a registration system for franchisee associations and establishes grounds for sanctioning franchisors that refuse, without justifiable cause, to respond to consultation requests from registered associations. The legislation passed the National Assembly in December last year and is scheduled to take effect Dec. 31.

At the meeting, Chairman Ju said the franchise sector "plays a vital role — like the circulatory system of the economy — in spreading income across every region and every segment of society." He added that franchisees must be able to negotiate with franchisors on equal footing if trading terms are to be set fairly and the uneven playing field in the industry is to be corrected.

He said the consultation-request rights granted to franchisees under the revised law must function effectively. The Fair Trade Commission would operate the franchisee association registry to ensure registered bodies have genuine public representativeness and sound decision-making processes, he added.

The meeting also exposed differences in how industry stakeholders want the regime to work.

The Korea Franchise Industry Association and the Korea Convenience Store Industry Association raised concerns that allowing multiple franchisee associations to form could dilute representativeness and increase the burden on franchisors. The National Franchisee Council, by contrast, said overly strict registration requirements could limit franchisees' practical opportunities to engage in consultations.

Chairman Ju said the commission would "carefully review the requests from both franchisees and franchisors to ensure that franchisees gain meaningful consultation opportunities while franchisors are not saddled with added burdens" in designing and implementing the regime.

The Fair Trade Commission plans to use the opinions raised Tuesday to advance the enforcement decree revision and complete all related procedures by year-end so the amended Franchise Business Act can take effect as scheduled.