Franchise Association's Protest Against Amendment to Franchise Business Act on 26th
Democratic Party Hints at Possible Direct Submission to Plenary Session on 29th
"Franchisee Union Rights Threaten K-Franchise Survival"
"The Democratic Party's rushed legislation to win the votes of 1.4 million franchise owners must be stopped." (Jung Hyun-sik, Chairman of the Korea Franchise Industry Association)
On the morning of the 26th, in front of the National Assembly building in Yeouido, Seoul, about 30 franchise headquarters officials took to the streets holding placards as the possibility arose that the amendment to the Franchise Business Act, which would effectively allow the establishment of franchise labor unions, might pass during this month's extraordinary session of the National Assembly. This is the first organized protest led by the Korea Franchise Industry Association in 14 years since demanding Lotte Mart stop selling 'Tongkeun Chicken' in 2010.
Jung Hyun-sik, Chairman of the Korea Franchise Industry Association, said, "If the issue over 10 years ago was a backlash against large corporations' event-driven businesses, this time it involves structural problems," adding, "The Democratic Party's unilateral amendment will destroy the foundation of the franchise industry."
Jung Hyun-sik, Chairman of the Korea Franchise Industry Association, is leading a protest against the amendment of the Franchise Business Act in front of the National Assembly building on the morning of the 26th.
The amendment introduces a registration system for franchisee organizations and includes sanctions against franchise headquarters if they refuse to negotiate with such organizations. It also guarantees the right to request contract renewal. The bill was promoted as cases of franchisees suffering from unfair cost charges and unilateral contract termination notices by headquarters became frequent.
The Democratic Party of Korea unexpectedly submitted and passed the amendment to the Franchise Business Act at the December plenary meeting of the Political Affairs Committee last year, and is now considering directly referring the pending amendment in the Legislation and Judiciary Committee to the plenary session on the last day of the February extraordinary session, the 29th. If a bill passed by the relevant standing committee is held up in the Legislation and Judiciary Committee for 60 days, the chairperson of the standing committee can directly submit it to the plenary session with the approval of three-fifths of the total members.
Hong Sung-guk, the opposition party whip of the Political Affairs Committee from the Democratic Party of Korea, said, "Since there is still time left, we are considering various options," adding, "We have requested the ruling party to convene the Political Affairs Committee, but the agenda has not been finalized."
Since the ruling party holds the majority, the likelihood of the Franchise Business Act amendment passing if submitted to the plenary session is significantly increased. In response, the Franchise Association strongly opposes the bill, calling it "a law that grants franchisee organizations stronger powers than labor unions." Chairman Jung emphasized, "If the amendment passes and is implemented, multiple organizations will proliferate within each of the approximately 11,000 brands, most of which are small and medium-sized enterprises, leading to excessive requests for negotiations such as reducing essential item supplies and lowering prices. Headquarters will have no choice but to postpone product development, making normal management impossible."
He also warned that amid the K-culture boom spreading to K-food, the amendment could hinder the global expansion of K-franchises. Kang Hyung-jun, Chairman of the Special Measures Committee on the Franchise Business Act at the Franchise Association, expressed concern, saying, "Inquiries about K-franchises are flooding in from various countries, but if the amendment is hastily passed, not only will the birth of K-franchises surpassing McDonald's and KFC be impossible, but the franchise industry will also suffer a significant decline."
Chairman Jung also stated, "The opposition party is not supporting the growth of K-franchises advancing overseas but is instead tying their hands and strangling them," arguing, "They do not understand the reality that if the franchise headquarters fail, the franchise owners will fail too."
The Franchise Association urged the Fair Trade Commission, academia, headquarters, and franchise owners to carefully reconsider the amendment in the next National Assembly session. They also requested that, along with a mutually beneficial Franchise Business Act, the Franchise Business Promotion Act be amended and promoted to foster the birth of global franchises.
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