Disputes over early termination of franchise contracts in the Gyeonggi region have increased 2.8 times in two years.
The Gyeonggi-do Fair Trade Support Center announced on the 24th that the number of dispute mediation applications arising from early termination of franchise contracts due to decreased sales increased from 16 cases in 2022 to 35 cases in 2023, and 45 cases last year, growing 2.8 times in two years.
These applications mainly involve franchise business operators requesting mediation from Gyeonggi-do, claiming that they were asked for excessive penalties by the franchise headquarters during the early termination process.
Among the 45 cases last year, Gyeonggi-do mediated 34 cases through mutual agreement between the parties, achieving a preliminary relief amounting to 950 million KRW. This averages about 28 million KRW per store. The remaining 11 cases were either withdrawn by the business operators or the mediation failed.
Seo Bong-ja, Director of the Fair Economy Division of Gyeonggi-do, said, "Many franchise business operators suffer significant losses due to business failure caused by the economic downturn without any fault of their own, yet face difficulties from excessive penalties again during the early termination process. We are mediating disputes to prevent both business operators and franchise headquarters from incurring time and financial losses through legal battles."
In addition to disputes over early termination of franchise contracts, the Gyeonggi-do Fair Trade Support Center handles over 100 applications annually related to fair trade mediation in areas such as agency, subcontracting, and distribution.
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