Fair Trade Commission to Designate 'Franchise Comprehensive Support Center' as a Close Support Window for Small Franchise Headquarters and Store Owners

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 12th that it will issue an administrative notice on the draft of the "Ordinance on the Designation and Entrustment of Franchise Comprehensive Support Centers," which stipulates the scope of work and designation procedures to designate franchise comprehensive support centers that will closely support small-scale franchisors and franchisees struggling due to the novel coronavirus infection (COVID-19).

Due to the impact of COVID-19, a sharp decline in sales in the franchise sector has become a reality, and with the risk of business closures, disputes between franchisors and franchisees are expected to increase, including unfair contract terminations by franchisors, excessive penalty fees, and unilateral cost transfers. However, there is currently no system in place to provide timely and comprehensive support on the ground.

Accordingly, the Fair Trade Commission has prepared a draft ordinance stipulating the scope of work and designation procedures to designate franchise comprehensive support centers as contact points that can closely support the difficulties and conflicts of small-scale franchisors and franchisees facing economic crises and to entrust the relevant tasks.

Accordingly, the franchise comprehensive support centers will perform various consultations to support the reasonable start-up of franchisees (applicants) and create stable business conditions. In addition, they will serve as ▲ a buffer window for disputes and conflicts such as negotiation mediation between franchisors and franchisee organizations ▲ the expansion and promotion of win-win cooperation between franchisors and franchisees ▲ legal assistance such as litigation support for damaged franchisees ▲ legal and policy education to prevent violations and recurrence by small-scale franchisors and franchisees.

The draft also includes measures for the Fair Trade Commission's guidance and supervision of entrusted tasks. The head of the franchise comprehensive support center shall regularly report to the Chairperson of the Fair Trade Commission on matters necessary for the guidance and supervision of entrusted tasks, such as work plans and results, and the Chairperson shall conduct an annual evaluation of work operations. In addition, the Chairperson may suspend operations or cancel the designation if the entrusted institution fails to perform its duties faithfully.

A Fair Trade Commission official said, "Through the franchise comprehensive support centers, we expect to be able to more quickly and efficiently resolve the increasingly deepening difficulties and conflicts by providing comprehensive support to participants in the franchise industry on the ground." He added, "During the administrative notice period, we will fully collect opinions from stakeholders and related ministries, finalize and implement the draft ordinance, and then proceed with the designation procedures for the franchise comprehensive support centers."

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