Joo Byungki: "Collective Registration Requirements for Franchisees Were Excessive... Will Be Revised"

Revision Officially Announced Amid Criticism of "Desk-Bound Administration" in National Assembly
Registration Requirements Likely to Be Eased for Franchisors with 30 to 300 Stores

The Fair Trade Commission's proposed amendments to the subordinate statutes (enforcement decree and notification) of the Franchise Business Act, which aimed to guarantee collective bargaining rights for franchisees, have met with strong resistance from the field and are now heading for revision.

Joo Byungki, Chairman of the Fair Trade Commission, is delivering the 2025 fiscal year financial report at the first plenary session of the Political Affairs Committee held at the National Assembly on the 24th. Yonhap News.

At the plenary session of the Political Affairs Committee at the National Assembly on the 24th, Joo Byung-ki, Chairman of the Fair Trade Commission, responded to a question from Kangil Lee, a lawmaker from the Democratic Party of Korea, who argued that the draft amendment to the enforcement decree undermines the intent of the main law. Chairman Joo said, "In focusing on a handful of large franchises and trying to prevent indiscriminate proliferation of franchisee unions among small franchises, the proportion of the segment with between 30 and 300 franchise stores was set excessively high, and I acknowledge that point."

Chairman Joo further clarified, "This proposal is not final and will be revised after we hear sufficient opinions," and added, "We will also make sure to consider creating a structure for co-prosperity between franchisors and franchisees when revising the bill," thereby officially announcing a plan to modify the amendment.

Previously, in December last year, the National Assembly passed amendments to the Franchise Business Act mandating that if a franchisee organization requests negotiation on transaction terms, the franchisor must respond within 14 days. The law is scheduled to take effect on December 31. In response, the Fair Trade Commission pre-announced an enforcement decree that allows registration of a franchisee group when at least 10% or at least 1,000 franchisees join, but also sets a minimum threshold of 30 members and restricts re-negotiation for 180 days after negotiations conclude.

However, following the pre-announcement, continuous backlash erupted from franchisee groups, calling the threshold "excessive." As of now, 88.1% of domestic franchisors are small brands with fewer than 30 stores. These brands are excluded entirely from exercising legal negotiation rights due to the 30-member minimum. There are also mounting concerns that small and medium-sized brands with between 30 and 299 stores will find negotiations challenging, as the required membership rate climbs up to 100% for those near the 30-store mark. Franchisors with 30 to 299 outlets make up 10.7% of all brands, but their franchisees account for as much as 30.5% of the total.

The '180-day renegotiation restriction' clause is also controversial. Franchisees criticize this as a toxic provision that gives headquarters a free pass in emergencies, while franchisors argue it is a minimal safeguard against constant disputes. Industry insiders point out that, by trying to mechanically balance both sides' conflicting demands without sufficient field consultation, the Fair Trade Commission has instead fueled dissatisfaction on both labor and management sides with such "desk-bound administration."

With Chairman Joo officially declaring plans for revision, the Fair Trade Commission is expected to hold additional stakeholder meetings in September and begin work on new amendments in earnest.

This content was produced with the assistance of AI translation services.