"Head Office Requesting Dealership 'Sales Information' Should Be Responded to with 'Documentation'"

by Lee Eunjoo

Published 22 Jun.2023 12:00(KST)

Korea Fair Trade Mediation Agency Issues Damage Advisory on the 22nd to Prevent Disputes and Damages in Dealership Transactions

The Korea Fair Trade Mediation Agency announced on the 22nd that it has issued a damage advisory to prevent disputes and damages in agency transactions. Agency owners need to exercise special caution regarding headquarters that demand important management information such as client and sales status.

According to the Korea Fair Trade Mediation Agency, since the enforcement of the "Act on the Fair Transactions in Agency Dealings" (hereinafter referred to as the "Agency Act") in December 2016, a total of 419 related dispute mediation applications have been received up to last year. Among them, nearly half, 199 cases, were filed in the fields of clothing (80 cases, 20%), telecommunications (66 cases, 17%), and food and beverages (53 cases, 13%). Cases were also received in various other fields such as automobiles and their parts (22 cases), medical devices, and machinery (13 cases each).

The Mediation Agency explained, "There are cases where headquarters unilaterally demand important business information such as transaction status data from agency owners, so caution is necessary. When requesting such information, it is necessary to document the purpose and the content of the requested information and to agree to request only the essential items needed to achieve that purpose."

In particular, disputes related to requests for client information frequently occur in the pharmaceutical and medical device sectors, so agency owners in these fields need to be cautious. In industries where business is not limited to product sales and it is difficult to immediately sever relationships with clients, it is necessary to include provisions in the agency contract that specify a period for settling relationships with clients even after contract termination, addressing post-termination handling.

The Mediation Agency stated, "In addition, agency owners have mainly experienced interference in management activities and non-return of deposits after the termination of agency transactions, so special caution is required." The agency analyzed major agency dispute cases and provided guidelines on precautions necessary to prevent damages to agency owners.