Convenience Stores, Laundries, and Car Repair Shops: Contract Termination Without Penalty if Business Fails in the First Year

Fair Trade Commission Prepares Standard Franchise Agreement... Distinguishing Convenience Store Business Areas by Apartment Zone Presence

[Asia Economy Reporter Moon Chaeseok] Franchisees in convenience stores, automobile repair, and laundry sectors will be able to terminate their franchise contracts without penalty if, despite fulfilling related obligations during the first year of operation, they fail to achieve the sales targets set by the franchise headquarters.

On the 23rd, the Fair Trade Commission announced that it had prepared a standard franchise contract for the convenience store, automobile repair, and laundry sectors containing these provisions.

The standard franchise contract allows franchisees to choose whether to terminate the contract if the headquarters changes the brand name.

In cases of disputes between the headquarters and franchisees regarding the need to improve store conditions, the headquarters must prove the necessity. This regulation aims to prevent unfair demands by the headquarters to change store interiors.

Additionally, for long-term stores operating over 10 years, the headquarters can only refuse contract renewal if the evaluation results are poor, unless there is a special reason.

Retaliation against franchisees for participating in franchisee associations or cooperating with Fair Trade Commission investigations is also prohibited.

Individual clauses reflecting the characteristics of each sector have also been established.

In the case of laundries, if damage occurs to laundry items or if the franchisee loses laundry, the franchisee is responsible for the costs.

Furthermore, if the headquarters compensates customers for damages caused by the franchisee’s fault, the headquarters can claim reimbursement from the franchisee.

Specific criteria for setting business areas have been created for convenience stores and laundry businesses.

When setting business areas, not only the size but also distinctions between apartment areas and other regions must be considered.

For the automobile repair sector, a franchisee evaluation system has been introduced. Since uniform service quality must be maintained, regulations regarding evaluation criteria, evaluation items, and related procedures have been established to enable the headquarters to fairly evaluate franchisees.

Car center franchisees are allowed to use equipment similar to the parts models suggested by the headquarters, as long as it does not compromise service uniformity.

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