Gyeonggi-do Uncovers Unfair Practices by Franchise Headquarters... "Requesting Supervisory Authority to Local Governments"

Kim Ji-ye, Director of the Fair Economy Division of Gyeonggi Province, is briefing on the unfair practices of the franchisor.

[Asia Economy (Suwon) = Reporter Lee Young-gyu] As cases of franchisors terminating franchise contracts due to franchisees' collective activities continue to occur, Gyeonggi Province has decided to report the unfair practices of franchisors to the Fair Trade Commission and initiate an on-site investigation.

In addition, the provincial government plans to propose amendments to related laws to the National Assembly and the government so that local governments can have not only dispute mediation authority but also investigative and disciplinary powers to monitor and supervise unfair practices by franchisors.

On the 23rd, Gyeonggi Province announced a "Plan to Eradicate Unfair Termination of Franchisees and Retaliatory Measures Against Collective Activities" with these contents.

According to the province, chicken brand A unilaterally notified franchisee group president Mr. B of contract termination last year without specifying the reasons for termination. Furthermore, Mr. B was criminally sued for defamation and faced a civil lawsuit demanding 500 million won in damages.

Investigations revealed that from 2018 to recently, A also notified contract termination or expelled eight franchisee group executives nationwide, including in Daegu, Namyangju in Gyeonggi, Goyang, and Mapo in Seoul.

The province regarded this as "retaliatory contract termination" and began mediation of the case in January, interviewing the franchisees four times and investigating the franchisor twice before submitting the case to the Gyeonggi Province Franchise Business Transaction Dispute Mediation Council as a mediation agenda.

The dispute mediation council, composed of external experts, judged that there was a possibility of unfair practices by A and proposed a mediation plan for Mr. B to receive an appropriate amount of damages.

However, A rejected this mediation plan, and the mediation was not concluded.

As unfair contract termination continued to occur afterward, the province decided to report the case to the Fair Trade Commission and urge an investigation.

Additionally, the province plans to conduct an on-site investigation starting this month in the chicken industry sector within the province to grasp the actual conditions of unfair termination or obstruction of collective activities in the franchise sector.

Also, if franchisees need to form or support groups, a pilot project to support collective activities by connecting them with experts for consulting will be launched next month.

Kim Ji-ye, head of the Fair Economy Division of the province, explained, "If local governments, which are well aware of regional circumstances, have not only dispute mediation authority but also investigative and disciplinary powers in franchise business disputes, the protection of franchisees' rights can be more substantial and prompt."

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