[2020 National Audit] Franchise Damage to Small Business Owners Surges Sixfold in Three Years

Democratic Party Lawmaker Lee Sung-man: "Personnel and Budget Expansion Needed for Unfair Trade Damage Counseling Center"

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[Asia Economy Reporter Wondara] Damage from unfair trade practices in small business franchises has surged about sixfold over the past three years.

According to data titled ‘2019 Franchise Business Unfair Trade Damage Status’ submitted by the Small Enterprise and Market Service to Lee Seong-man, a member of the National Assembly’s Industry, Trade, and Small and Medium Venture Business Committee (Democratic Party·Bupyeong Gap) on the 12th, the number of consultations received by the ‘Small Business Unfair Trade Damage Consultation Center’ last year was 1,217 cases. This represents an approximately sixfold increase from 247 cases in 2016.

Among the types of consultations, issues related to commercial lease contracts were the most common with 660 cases (54%), followed by consignment and subcontracting with 198 cases (16%), general consultations with 143 cases (12%), and franchise business with 119 cases (10%). The number of reports from franchisees claiming damage from unfair trade practices by franchisors was also over 110 cases annually, with 125 cases in 2018 and 119 cases in 2019.

It was found that each of the six nationwide unfair trade damage consultation centers operated by the Small Enterprise and Market Service had only one dedicated consultation staff member. There was only one expert nationwide responsible for legal advice and dispute mediation, and the budget related to the consultation centers was limited to about 692 million KRW annually.

Assemblyman Lee emphasized, “Consultations on unfair trade damage are the first point of contact for small business owners in difficulty seeking help,” and added, “It is necessary to expand the personnel and budget of the Small Business Unfair Trade Damage Consultation Center and introduce additional related policies to strengthen support to prevent unfair trade.”

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