Issuance of Mobile Gift Certificates Without Franchisee Consent Will Be Punished

Fair Trade Commission to Implement 'Guidelines for Reviewing Unfair Practices in Franchise Sector' Starting from the 25th

Franchise headquarters that issue promotional mobile gift certificates without obtaining consent from franchisees will be subject to punishment for abuse of bargaining position under the Franchise Business Act.

On the 25th, the Korea Fair Trade Commission announced that it will implement the "Guidelines for Reviewing Unfair Practices in the Franchise Sector," which include these provisions, starting from that day.

Since the enactment of the Franchise Business Act in 2002, unfair trade practices in the franchise sector have been regulated under the Franchise Business Act rather than the Fair Trade Act. However, until now, there has been no separate review guideline to determine whether specific types of unfair trade practices stipulated in the law constitute violations. Accordingly, the Commission has faithfully reflected accumulated Fair Trade Commission rulings and court precedents, reviewed and analyzed the unique characteristics and key issues of the franchise sector, and established the first-ever guidelines for reviewing unfair trade practices specific to the franchise sector.

The guidelines specify types and examples such as unjust refusal to renew contracts, restriction of trading partners, unjust demands for store environment improvements, unjust infringement of business territories, and retaliatory measures.

Acts such as a franchise headquarters forcing franchisees to handle mobile gift certificates without their consent and unilaterally imposing related costs such as fees, or unilaterally burdening franchisees with the cost difference arising when the sales price increases after issuing goods-provided mobile gift certificates without reasonable grounds, may constitute abuse of bargaining position (unjust coercion) under the Franchise Business Act.

The Fair Trade Commission stated, "With the establishment of these guidelines, we expect to lay a systematic and consistent foundation for reviewing violations in the franchise sector, increase predictability regarding legal violations by franchise headquarters, and contribute to preventing damages to franchisees."

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