“Obligation to Provide Franchise Headquarters' Estimated Sales Statement Contravenes Global Standards”

Policy Forum on Advancing K-Franchise Hosted by Assemblyman Kwon Myung-ho
Choi Young-hong, President of Distribution Law Association, Highlights "Issues of Regulatory Purpose and Effectiveness"

[Photo by Choi Younghong, President of the Korean Distribution Law Association]

Concerns have been raised that certain regulations under the Franchise Business Act, such as the obligation for franchisors to provide estimated sales statements, are significantly out of sync with the global franchise industry, highlighting the need for revisions.

On the 22nd, Kwon Myung-ho, a member of the People Power Party, and the Korea Franchise Association held a policy forum titled "Should We Leave K-Franchise Trapped in Galapagos-like Regulations As Is?" at the National Assembly Library Auditorium.

Choi Young-hong, president of the Korea Distribution Law Association, who presented at the forum, stated regarding the obligation imposed on franchisors with over 100 franchise stores or those that are not small businesses to provide estimated sales statements, "Franchise laws worldwide strictly limit the provision of information related to estimated sales or profits, but Korea enforces it uniformly and mandatorily," diagnosing that "the targets and methods are flawed, causing issues with the regulatory purpose and effectiveness."

He pointed out, "Predicting future sales belongs to the realm of divinity and should not be required by law, and the allowed deviation of 1.7 times lacks scientific basis," adding, "Moreover, the targets are incorrectly set, focusing only on mature franchisors who are relatively less likely to provide false or exaggerated information."

Han Seok-jun, CEO of HiData (Ph.D. in Political Science), in his second presentation titled ‘Introduction Plan for the Franchise Win-Win Certification System,’ proposed institutional support measures to expand win-win cooperation between franchisors and franchisees.

Han explained, "Win-win cooperation is a core mechanism for the operation of the franchise system, and a system that systematically promotes win-win cooperation is necessary for industry development," adding, "Current evaluation systems have a very limited number of participating companies and their purposes are confined to information provision or prevention."

He argued, "If a win-win cooperation evaluation index system is established and a certification system that simplifies and objectively quantifies it into an index is introduced, it can enhance the industry's understanding and acceptance," and insisted, "Related laws such as the Franchise Business Promotion Act should be amended to systematically promote the spread of the win-win paradigm throughout the franchise business."

Meanwhile, about 100 people, including Representative Kwon, Jung Hyun-sik, president of the Korea Franchise Industry Association, and franchise industry stakeholders, attended the forum.

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