[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province is significantly expanding the scope of franchise headquarters subject to fines. This is a measure following the revision of the Enforcement Decree of the Franchise Business Act. Previously, Gyeonggi Province received the authority to impose fines from the Fair Trade Commission during 2019-2020.
The province had imposed fines on franchise headquarters that violated two laws, including failure to register changes or report changes to the existing disclosure documents, but from the 20th, it announced on the 19th that fines will be imposed for violations of five additional items according to the revised Enforcement Decree.
The expanded fineable acts include ▲violation of the obligation to provide written information related to expected sales, ▲violation of the obligation to keep and allow inspection of the basis for calculating expected sales information, ▲(applicable to franchise headquarters of large corporations or those with 100 or more franchise stores) violation of the obligation to provide expected sales calculation documents, ▲violation of the obligation to keep expected sales calculation documents, and ▲violation of the obligation to keep franchise contracts.
The province particularly views expected sales as the most important indicator for prospective franchisees when starting a business, emphasizing the high importance of the reliability of this information. Accordingly, the highest and lowest sales amounts are determined based on the sales of three franchise stores, excluding the smallest and largest sales among the five franchise stores closest to the prospective store location in the previous business year. Franchise headquarters must provide related information such as expected sales in writing.
To promote these improvements in franchise business-related systems, the province will conduct 'Fair Trade Guardians' activities for one month starting next month.
Additionally, to ensure compliance with the obligation to provide expected sales calculation documents and to understand the status of franchise business transactions within the province, a franchise business survey will be conducted for five months from next month through October.
Furthermore, according to the revised Enforcement Decree, from July 5, the act of 'failure to notify and refusal to allow inspection of advertising and promotional expense execution details' by franchise headquarters to franchisees will also be added to the list of acts subject to fines.
A provincial official stated, "With the expansion of the scope and authority to impose fines, we expect that law enforcement tailored to local field conditions will be possible," and emphasized, "We will continue to do our best to establish fair trade order in the franchise business sector and protect the rights and interests of prospective franchisees and franchisees."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
