Gyeonggi Province Moves to Ban Use of Similar Names Related to "Franchise Business" and Promote System Improvements

Gyeonggi Province is moving to prohibit the use of terms such as "franchise business" or "franchise headquarters" by entities that are not actual franchise operators, and plans to impose fines for violations.

On September 23, Gyeonggi Province announced that it is preparing a proposal to amend the Franchise Business Act, which would restrict the use of names that could be mistaken for franchise businesses-such as "franchise business" or "franchise headquarters"-and impose fines for violations. This move comes in response to a recent increase in cases where the use of such names confuses entrepreneurs or causes them economic harm.

Gyeonggi Provincial Government

According to Gyeonggi Province, there has been a growing trend of exploiting the popularity of franchises by recruiting store owners as if they were joining a franchise, collecting franchise fees, but then signing contracts such as "license agreements" or "product supply agreements"-not actual franchise agreements-thereby allowing only the use of trademarks and avoiding the application of the Franchise Business Act. In these cases, the burden falls on the store owner, as the victim, to prove that the business qualifies as a franchise. If the Franchise Business Act does not apply, it becomes difficult to seek remedies for unfair practices such as violations of contract procedures, failure to provide disclosure documents, or the provision of false or exaggerated information.

In relation to this issue, Gyeonggi Province held a forum on September 2 at the National Assembly Members' Office Building in Seoul, attended by lawmakers, legal experts, store owner associations, and franchise industry representatives, emphasizing the need for institutional improvements such as dispute mediation for similar franchise business cases.

Suh Bongja, Director of the Fair Economy Division of Gyeonggi Province, stated, "The proposed amendment to the Franchise Business Act, which bans the use of similar names and imposes fines for violations, will serve as an opportunity to enhance transparency and trust in the franchise market."

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