Hollys Coffee Forces Franchisees to Agree on Sales Territory... Unfair Terms Corrected

[Asia Economy Reporter Eunju Lee] The franchise headquarters 'KG Hollys F&B,' which operates the coffee brand 'Hollys Coffee,' has decided to voluntarily correct unfair terms and conditions that are disadvantageous to franchisees. Going forward, Hollys will not force franchisees to agree to changes in business areas or compel them to submit accounting documents such as 'ledgers' arbitrarily determined.

On the 30th, the Fair Trade Commission announced that KG Hollys F&B voluntarily corrected five types of unfair terms violating the Act on the Regulation of Terms and Conditions. Previously, the National Franchisee Association requested the Fair Trade Commission to review the franchise contract prepared by the famous coffee brand Hollys for its franchisees. As a result of the review, the Fair Trade Commission found that Hollys' franchise contract contained unfair clauses violating the Franchise Business Act and demanded corrections.

The Fair Trade Commission deemed it necessary to correct a clause that forced business operators to compulsorily agree to changes in business areas determined by the franchise headquarters when renewing franchise contracts. The Commission pointed out, "The 'setting of business areas,' which guarantees exclusive business rights within the business area to operators, is a core part of the contract," and emphasized that it is only possible through the 'consent of the business operators.' The clause forcing mandatory agreement was considered a violation of the Act on the Regulation of Terms and Conditions, unfairly restricting the business rights of franchisees. Hollys deleted the mandatory agreement part and allowed business area adjustments through mutual agreement with franchisees.

The clause requiring business operators to compulsorily submit ledgers arbitrarily designated by the headquarters was also deleted. The Fair Trade Commission acknowledged the necessity for Hollys to share data for sales settlement with franchisees but found it unfair to require submission 'arbitrarily' without specifying the type and scope of data in advance. The Commission pointed out this as "an unfair clause that unjustly infringes on the freedom of franchisees' trade secrets." Additionally, improvements were made to clauses regarding advertising without prior consent from business operators and clauses requiring immediate repayment of all monetary debts to Hollys upon termination of the franchise contract.

The Fair Trade Commission stated, "Hollys has voluntarily corrected all problematic terms," and added, "We expect this correction to protect the rights and interests of self-employed franchisees and help the franchise-related market grow healthily by preventing disputes caused by unfair terms."

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