Franchises oppose Franchise Business Act amendment

[Photo provided by The Korea Franchise Association (KFA)]

The opposition Democratic Party of Korea signaled its intention to bring a revised bill for the Franchise Business Act to a vote in the upcoming parliamentary session within the week, but the franchise industry is staunchly opposing the proposed amendment, arguing that the changes could lead to increased conflicts and undermine the global competitiveness of the Korean franchise sector.

The bill aims to strengthen the collective bargaining power of franchisees.

On Monday, the Korea Franchise Association (KFA) held a rally in front of the National Assembly building in Yeouido, demanding that the government stop the helter-skelter revision of the act.

KFA head Chung Hyun-sik expressed concerns during the rally, saying, “Pushing through an incomplete revision of the Franchise Business Act in the National Assembly raises considerable apprehension within the industry.”

According to the key provisions of the proposed amendment, franchisees can form groups and register them with the Fair Trade Commission. If the franchisor refuses to comply with the group’s negotiation requests, they could face legal penalties and disclosure orders as corrective measures. Persistent non-compliance may also lead to criminal charges filed by the Fair Trade Commission. The National Assembly’s National Policy Committee passed the last proposed amendment in December 2023, which is currently pending review by the Legislation and Judiciary Committee.

The KFA is concerned that the proposed amendment would significantly increase legal risks for franchisors. If franchisees are allowed to effectively form unrestricted ‘labor unions,’ it could pose substantial challenges to the management of franchise headquarters.