Amendment to Franchise Business Act Enhancing Store Owners' Group Authority... Fair Trade Commission "Needs Sufficient Discussion"

Han Ki-jung, Chairman of the Fair Trade Commission.

The Fair Trade Commission (FTC) criticized the ruling Democratic Party and other opposition parties for directly submitting a revision bill of the Franchise Business Act to the National Assembly plenary session, which aims to strengthen the collective bargaining power of franchisees, stating that "legislation requires sufficient discussion."

On the 23rd, the FTC expressed concerns about the revision bill, saying, "A more in-depth discussion process is needed before deciding on legislation." Since the contents of the bill could significantly impact the entire franchise business, it emphasized that the bill should be processed after sufficient opinion gathering and consultation with relevant government departments and stakeholders.

The FTC particularly pointed out that a "gradual approach" is necessary regarding the introduction of the consultation obligation system. It argued that the consultation obligation related to the designation of essential items, which causes the most damage to franchisees, should be introduced first, and then the scope of consultation should be gradually expanded while monitoring the system's operation.

At a back briefing on the same day, Cho Hong-seon, Vice Chairman of the FTC, explained, "It is not that we are unconditionally opposed to the revision bill, but additional review and study of the detailed contents are necessary," adding, "The intention is to seek ways for both franchisors and franchisees to achieve a win-win outcome."

He further elaborated, "Regarding the issue of essential items, which is currently the biggest problem from the franchisees' perspective, a consultation system is already being promoted," and "The idea is to implement this system first and then gradually consider the next steps."

On the same day, the National Assembly's Political Affairs Committee held a plenary meeting and resolved to request the plenary session to deliberate on the 'Revision Bill of the Franchise Business Act (Partial Amendment to the Act on Fair Transactions in Franchise Business).'

According to the National Assembly Act, if a bill passed by a standing committee is not reviewed by the Legislation and Judiciary Committee within 60 days, the bill can be directly submitted to the plenary session if more than three-fifths of the members of the relevant standing committee agree.

The core content of the revision bill, which passed the Political Affairs Committee hurdle this time, allows franchisee organizations formed by franchisees to register with the FTC, and imposes an obligation on franchisors to respond when a registered franchisee organization requests consultation.

The franchise industry and the ruling party in the government are concerned that if this revision bill passes, franchisees will effectively be able to form unrestricted "labor unions," increasing the legal risks that franchisors will have to bear.