Franchise Association Opposes Passage of Franchise Business Act... Recommends Presidential Veto (Comprehensive)

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

The amendment to the Fair Trade in Franchise Transactions 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 Franchise Business Act to the plenary session," and added, "The 1.2 million franchise industry workers firmly oppose this unilateral and unrealistic bad law."

The Korea Franchise Industry Association held a press conference at the National Assembly Communication Office on the 25th and stated, "We cannot help but feel regret and despair over the unilateral decision to directly submit the amendment to the Franchise Business Act to the plenary session," adding, "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 includes sanctions such as corrective measures or fines imposed on franchisors if they fail to respond to the organization's negotiation requests. It also guarantees the right to request contract renewal. The bill was promoted in response to frequent cases where franchisees suffer damages due to unfair cost charges and unilateral contract termination notices from headquarters.

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 requests, 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 franchisee guidance and management on the back burner as they respond one by one to the endless negotiation requests from franchisee groups for essential item supply reductions and price cuts."

Choi Seung-jae, a member of the People Power Party and former president of the Small Business Federation who attended the press conference, also repeatedly emphasized the irrationality of the amendment. Rep. Choi criticized, "The law's purpose is to foster a sound win-win relationship between franchisors and franchisees, and one-sided acceptance of only one party's position should not be allowed," adding, "This not only goes against the law's intent but could completely destroy the franchise business ecosystem." He further expressed concern, "Hundreds of franchisee groups might proliferate, dispersing and weakening the industry's voice."

Concerns were also raised that if the amendment passes, small franchisors will face mass bankruptcies. 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 warned that if multiple franchisee organizations proliferate and abuse the right to request negotiations, it will only generate unnecessary disputes, including competition among organizations.

The Franchise Association demanded that, regardless of political interests, the Fair Trade Commission, academia, headquarters, and franchisees should discuss together to create the amendment. President Chung strongly insisted, "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,' and therefore, the Fair Trade Commission, academia, headquarters, and franchisees must put their heads together to deliberate and discuss reasonable alternatives."

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 that the president exercise the veto power."