Franchise Association Opposes Passage of Franchise Business Act... Recommends Presidential Veto

Franchise Association Press Conference on the 25th Regarding the Franchise Business Act
"Strong Opposition to the Amendment Guaranteeing Collective Bargaining Rights for Store Owners"
"Regardless of Pros and Cons, Amendments Should Be Developed Together with Academia and Others"

The amendment to the Fair Transactions in Franchise Business Act (Franchise Business Act), which guarantees the collective bargaining rights of franchisees, was directly submitted to the National Assembly plenary session on the 23rd, prompting strong opposition from franchisee groups.

The Korea Franchise Industry Association held a press conference at the National Assembly Communication Office on the 25th, stating, "We cannot help but feel regret and despair over the unilateral decision to directly submit the amendment to the plenary session," and added, "The 1.2 million franchise industry workers firmly oppose this unilateral and unrealistic bad law."

The amendment introduces a registration system for franchisee organizations and imposes sanctions such as corrective measures or fines on franchisors if they fail to respond to the organization's negotiation requests. It also includes guarantees for contract renewal claims. The bill was promoted as cases of franchisees suffering from unfair cost charges and unilateral contract termination notices by headquarters became frequent.

Jung Hyun-sik, Chairman of the Korea Franchise Industry Association, held a rally on February 26 in front of the National Assembly building in Yeouido, Seoul, opposing the "hasty legislation of the unreasonable Franchise Business Act" and urged for a reconsideration of the amendment to the Franchise Business Act.

However, at the press conference, Chung Hyun-sik, president of the Korea Franchise Industry Association, argued, "The amendment recognizes franchisee groups, which are individual business operators, as legal entities similar to labor unions, and if the franchisee group makes a request, regardless of the number of members, it imposes a stronger collective negotiation obligation on the franchisor than labor-management negotiations without any restrictions," adding, "This is a powerful regulatory bill that cannot be found anywhere else in the world."

He expressed concern, saying, "Franchisors will inevitably have to put product development and franchise guidance and management on hold as they respond one by one to the endless requests from franchisee groups for reducing essential item supplies and lowering prices."

There were also concerns that small franchisors would go bankrupt under this law. President Chung said, "If the amendment is implemented as is, small franchisors will perish, and affiliated franchisees will close down in succession," and asked, "I want to ask the lawmakers who passed this bad law if they can take responsibility under their names."

He also worried that if multiple franchisee organizations proliferate and abuse the right to request negotiations, unnecessary disputes including competition among organizations will only increase.

The Franchise Association demanded that the amendment be created through discussions involving the Fair Trade Commission, academia, headquarters, and franchisees, regardless of political interests. President Chung explained, "Even the Fair Trade Commission, the competent authority, has strongly expressed opposition on the grounds that 'various side effects could ultimately shrink the related industry.'"

However, since the Democratic Party secured a sole majority in the 22nd National Assembly, the amendment is highly likely to pass the plenary session. President Chung said, "If this amendment passes the National Assembly plenary session, we will recommend the president exercise the veto power."