Support for 'Good Franchise' with Loan Interest Rate Reduction and Guarantee Fee Deduction

Fair Trade Commission Announces Support Requirements and Procedures for 'Good Franchise'

Jongwook Cho, Chairman of the Fair Trade Commission. (Photo by Yonhap News)

[Asia Economy Reporter Moon Chaeseok] The government has decided to provide financial support such as loan interest rate reductions and guarantee fee deductions to franchisors who have given cash support to franchisees struggling due to COVID-19 and other difficulties.

On the 2nd, the Fair Trade Commission announced that franchisors who supported franchisees can receive financial support from institutions such as the Korea Development Bank, Korea Credit Guarantee Fund, Export-Import Bank of Korea, Small and Medium Business Corporation, and Small Enterprise and Market Service.

The support targets are franchisors who have done one of the following: ▲ reduced all franchise royalties by 50% or more for 2 months or waived them for more than 1 month ▲ lowered the supply price of all essential items for all franchises by 30% or more for 2 months ▲ reduced the advertising and promotion cost burden ratio for all franchisees by 20% or more for 2 months ▲ supported at least 20% of the sales decrease for at least 2 months for franchises located in disaster areas (Daegu, Gyeongbuk) or visited by confirmed COVID-19 cases ▲ provided cash support.

When a franchisor submits the documents to the Korea Fair Trade Mediation Agency by visit, registered mail, or email, the agency reviews the documents and issues a confirmation certificate within one week if the franchisor qualifies. The agency determines eligibility based on the date the franchisor requests confirmation. Detailed support for franchisees is judged based on the period around January 20, when the first COVID-19 case was confirmed in Korea. For example, if royalties are reduced by 50% for 2 months starting January 30 and the application is submitted on the 10th, the requirements are met.

Franchisors who receive the confirmation certificate can apply for financial support from the Korea Development Bank, Korea Credit Guarantee Fund, Export-Import Bank of Korea, Small and Medium Business Corporation, and Small Enterprise and Market Service. The implementation period is until December 31. Depending on the company’s situation and the program, preferential policy funds may be provided. Mainly, support is given through loan interest rate reductions and guarantee fee deductions. Specific requirements may vary depending on the credit status of each franchisor.

Lee Soonmi, head of the Franchise Trade Division at the Fair Trade Commission, said, "We believe this measure has laid the foundation for 5,175 franchisors nationwide to support 250,000 franchisees and receive policy funds. We will widely promote this so that as many franchisors and franchisees as possible can benefit and overcome the difficulties caused by COVID-19 as soon as possible."

This content was produced with the assistance of AI translation services.