Countdown to Franchise Business Act Passage... Franchise Association "Strongly Opposes"

Statement Released as Passage in National Assembly Plenary Session Nears on 28th
"Fair Trade Commission's Mandatory Consultation on Essential Items and Confusion"
"All Stakeholders Must Participate for Reconsideration"

As the amendment to the Franchise Business Act, which guarantees collective bargaining rights for franchisees, is likely to pass in the final plenary session of the 21st National Assembly, franchisee groups have strongly opposed it.

The Korea Franchise Industry Association stated on the 28th, "We strongly oppose the unilateral attempt to pass the amendment to the Franchise Business Act in the plenary session," and "We strongly urge that it be reconsidered through a consultative body involving all stakeholders in the next National Assembly."

The amendment to the Franchise Business Act, which was directly submitted to the plenary session last month led by opposition parties including the Democratic Party of Korea, is expected to be processed within this month. The Democratic Party plans to handle seven contentious bills, including the special prosecutor law for Chae Sang-byeong, which President Yoon Seok-yeol requested reconsideration (veto), and the amendment to the Franchise Business Act, all submitted to the plenary session under the Democratic Party's leadership, during the plenary session this afternoon.

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.

Besides the amendment to the Franchise Business Act, the contentious bills include the Democratic Meritorious Person Act, the Grain Management Act, the amendment to the Act on Distribution and Price Stabilization of Agricultural and Fishery Products, the enactment of the Agricultural and Fishery Chamber Act, the enactment of the Korean Beef Industry Support Act, and the amendment to the Special Act on Relief and Support for the Victims of the April 16 Sewol Ferry Disaster.

Contentious bills are usually submitted to the plenary session through bipartisan agreement, but if no agreement is reached, Speaker Kim Jin-pyo can submit them on his own authority. Speaker Kim has announced plans to hold plenary votes on the special prosecutor law for Chae Sang-byeong and the special law on jeonse fraud. It is also reported that the Democratic Party intends to open a plenary session on the 29th through a change in the agenda to vote on the remaining contentious bills.

The amendment includes establishing a registration system for franchisee organizations and imposing corrective measures or fines on franchisors if they fail to respond to requests for consultation from these organizations. It also includes provisions guaranteeing the right to request contract renewal.

The Franchise Industry Association pointed out, "If the amendment passes the National Assembly as it is, it will cause unnecessary disputes and stagnation in brand growth, significantly shrinking the entire franchise industry," and added, "The overly vague regulations are highly likely to generate unnecessary conflicts."

They particularly expressed concern about the chain bankruptcy of small-scale brands. The association said, "About 9,000 small-scale brands with fewer than 10 franchise stores, accounting for 72% of the total, lack the capacity to sustain franchise operations and are likely to give up their businesses." They also stated, "The rapidly growing K-Franchise will lose its growth momentum and fall due to management difficulties domestically."

Since the Fair Trade Commission's essential item improvement measures, which include consultation obligations, will be implemented in July, there are concerns that introducing additional systems will cause various confusions.

The Franchise Industry Association urged that the amendment should be developed through discussions involving the Fair Trade Commission, academia, headquarters, and franchisees, regardless of political interests. The association said, "Since the registration system for franchisee organizations and the obligation to initiate consultations are being introduced for the first time, we earnestly request that all stakeholders, experts, opposition and ruling parties, and the government carefully discuss this system in the next National Assembly."