One out of every four franchise transaction disputes in Gyeonggi Province was found to be related to the "abuse of trading position by the franchisor."
On March 3, Gyeonggi Province announced that 26 cases (25%) out of 106 franchise business transaction disputes last year were found to involve franchisors unfairly disadvantaging franchisees by abusing their superior trading position.
According to cases reported in Gyeonggi Province, these included franchisors unilaterally and excessively raising the prices of essential items supplied to franchisees during the contract period, requiring complete removal of facilities and interior investments made at the franchisee's own expense after termination of the contract to restore the premises to their original condition, and imposing a total ban on operating similar businesses.
In response, Gyeonggi Province advised franchisors that making unilateral demands on franchisees for matters not specified in the disclosure documents or franchise contracts may constitute an abuse of superior position and could unfairly disadvantage franchisees. The province also facilitated reasonable contract maintenance or termination between parties, resulting in successful mediation in 22 out of the 26 cases.
Last year, Gyeonggi Province received a total of 110 franchise business dispute mediation cases and handled 106 of them within 38 days. Of these, mediation was completed in 77 cases.
Suh Bongja, Director of the Fair Economy Division at Gyeonggi Province, stated, "Unfair damage suffered in the process of franchise transactions directly impacts the livelihoods of small business owners, so we will do our utmost to ensure swift and fair mediation. We will also continue to actively support franchisees so that they do not suffer unfair disadvantages, striving to create a fair ecosystem where franchisors and franchisees can prosper together."
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