From Next Year, Franchise Average Operating Period and Support Details from Headquarters in Case of Poor Sales Must Be Disclosed

Fair Trade Commission Announces Partial Amendment to the "Standard Form of Disclosure Document for Franchise Business Transactions"

[Sejong=Asia Economy Reporter Joo Sang-don] Starting next year, the 'Franchise Business Transaction Information Disclosure Document' must include the average operating period of franchise stores and the management support provided by the franchisor to stores with poor sales performance.

On the 20th, the Fair Trade Commission announced that it has finalized and promulgated a partial amendment to the "Standard Form of Franchise Business Transaction Information Disclosure Document" containing these details.

This amendment is a follow-up measure to the revision of the "Enforcement Decree of the Fair Franchise Transactions Act" promulgated on April 28 of this year. The standard form notice was updated to include ▲ the average operating period of franchise stores and the franchisor's support details for stores with poor sales ▲ and to revise immediate termination reasons that were abstract and unclear, which could cause disputes.

First, to allow prospective franchisees to understand the sustainability of franchise store operations, the soundness of the franchisor, and the market evaluation of the brand, the average operating period of franchise stores must be stated in the information disclosure document. Additionally, to enable franchisees to check and compare the franchisor's support in cases of poor sales due to early startup stages or changes in commercial districts, the franchisor's management support for stable store operation must be disclosed. This will be effective from January 1 of next year.

The reasons for immediate termination have also been revised. The reasons "spreading false information" and "leakage of trade secrets or important information," which were abstract and unclear and could cause disputes, have been removed from the immediate termination reasons. Instead, "cases where the franchisee violates laws related to store operation and receives a court judgment" have been added. Furthermore, clarity and urgency requirements have been added to the reason "urgent harm to public health or safety," and the reason "failure to correct after administrative disposition within the correction period," which overlapped with other immediate termination reasons, has been removed. These changes take effect immediately upon promulgation.

A Fair Trade Commission official stated, "With this amendment to the notice, prospective franchisees will be able to check the average franchise store operating period and the franchisor's support in case of poor sales before making a startup decision," adding, "It is expected to help make rational startup decisions and maintain stable franchise businesses."

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