"Eradicating Abuse of Mandatory Franchise Items"...Ruling Party and Government Push to Include Items and Calculation Methods in Contracts

The People Power Party and the government have decided to push for amendments to the Franchise Business Act to include essential item categories and supply price calculation methods in contracts for franchisees.

On the morning of the same day, Park Dae-chul, the Policy Committee Chair of the People Power Party, stated at a briefing following the 'Franchise Business Essential Items System Improvement' meeting held at the National Assembly, "We listened to the difficulties faced by franchisees who are responsible for local commercial districts," and introduced, "Franchisees purchase many items from the franchisors at excessively high prices, leaving them with no profit, while franchisors make profits by selling at high prices. They requested improvements to this structure." Park said, "Accordingly, the party and government have decided to promote measures to protect franchisees from so-called essential item abuse, where essential items are excessively designated and prices are unilaterally increased," adding, "We will amend the Franchise Business Act to include supply price calculation methods and other details in contracts to protect the rights and interests of franchisees."

He added, "The government has decided to revise the enforcement decree to include consultation procedures in franchise contracts when transaction conditions such as essential item prices change," and continued, "As a follow-up measure, we will conduct a comprehensive inspection to ensure that essential item-related matters are faithfully recorded in contracts, guiding the smooth establishment of the amended law."

Kang Ki-jung, Chairman of the Fair Trade Commission, is speaking at the Min-Dang-Jeong Council held at the National Assembly on the 22nd to improve the mandatory item system for franchise businesses to prevent and protect franchisees from damage. Photo by Hyunmin Kim kimhyun81@

If conditions such as changes to essential items or price changes become disadvantageous to franchisees, an obligation to consult will also be added. Park said, "If consultations are not conducted, the enforcement decree will be revised to allow correction orders or fines to be imposed, thereby suppressing essential item abuse through law enforcement," and added, "We will establish a new notice containing these details to secure actual consultations and risks of illegal acts related to essential items, encouraging voluntary compliance with the law and increasing predictability in law enforcement."

Furthermore, the designation status of essential items will be continuously monitored, and illegal activities will be actively sanctioned to improve market transaction practices.

Regarding concerns that franchisees may not know the essential items at the time of the first contract, Han Ki-jung, Chair of the Fair Trade Commission, explained, "There is a guideline," and added, "It lists examples of what is recognized as types of essential items. We will make it more specific by reflecting overseas legislative cases so that prospective franchisees can refer to it."

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