Franchise Association: "Franchisee Negotiation Request Rights Need Comprehensive Revision... Concerns Over Institutionalized Disputes"

End of Feedback Period for Franchise Business Act Revision Set for the 14th

Fair Trade Commission Signals Amendment...

"Need to Create a Stable Regulatory Environment for Implementation"

The Fair Trade Commission has announced plans to revise the Enforcement Decree of the Franchise Business Act to strengthen the bargaining power of franchisees. However, the Korea Franchise Association responded by stating that the current draft does not promote communication between franchisors and franchisees but rather institutionalizes frequent disputes between the two sides. The association called for a complete overhaul that reflects on-site concerns, such as raising the minimum registration ratio to 30-40%.

Na Myungseok, President of the Korea Franchise Association, said at a press conference held at the association’s training center in Yeouido, Seoul, on September 8, 2026, “The rights of all franchisees, brand competitiveness, consumer benefits, and the practical burden on small and medium-sized franchisors must all be taken into account.”

Nam Myungseok, chairman of the Korea Franchise Association, is speaking at a press conference on the revised Enforcement Decree of the Franchise Business Act held on the 8th at the association's training center in Yeouido, Seoul. Provided by the Korea Franchise Association

On August 3, the Fair Trade Commission announced a legislative and administrative notice of the revision of the Enforcement Decree of the Franchise Business Act and a new notification, covering the registration system for franchisee organizations and the group negotiation request right. The key change is to introduce a mandatory registration system for franchisee organizations: if a registered association, whose membership includes either at least 10% of all franchisees or at least 1,000 members, requests negotiations to amend transaction terms, the franchisor is required to comply. At least 30 franchisees are required to form an association based on the 10% membership requirement. The announcement also includes a regulation that, if less than 30% of franchisees join, a separate process is needed to collect the opinions of other franchisees.

All related organizations strongly opposed the proposed revision after the pre-announcement. As the backlash grew, Joo Byungki, Chairman of the Fair Trade Commission, announced plans to revise the Enforcement Decree at the plenary session of the National Assembly’s Political Affairs Committee on August 24. The period for collecting feedback on the revised decree is open until the 14th. Na Myungseok, President of the association, is scheduled to meet Chairman Joo on the 11th to deliver the industry’s position.

At the press conference, President Na pointed out that a total of four clauses were problematic: ▲the registration requirements for franchisee organizations, ▲the scope of negotiations, ▲the possibility of third-party participation in negotiations, and ▲the period for requesting renegotiations, emphasizing the need for amendments. He especially noted, “The minimum registration ratio was drastically lowered to 10% of all franchisees, contrary to what was discussed initially, and the revised decree also allows ‘legally authorized representatives’ to attend negotiations.” He argued that, while the Fair Trade Commission had considered setting the registration ratio at around 30%, the actual revision deviated significantly from those discussions.

President Na emphasized, “It is difficult to regard an organization with 10% franchisee participation as representing the collective opinion of all franchisees, yet the results of such negotiations could influence the overall brand management and operations. If multiple organizations are registered and begin to make competing demands, normal business operations would be impossible.” He added, “The association believes the fundamental registration ratio should be raised to 30-40%, and if the 10% standard is maintained, there must be safeguards such as a single negotiation window, the requirement for universal application, or the need to obtain consent from at least 40% of franchisees.”

The association further raised concerns that if the scope of negotiations is defined to cover ‘all items listed in the franchise contract,’ then all core business operations would be subject to negotiation, potentially undermining brand identity and consistency. Regarding the clause allowing participation by ‘legally authorized representatives’ in negotiations, the association argued that, if external experts are allowed, attendance should be limited to attorneys with clear limits on responsibility and scope, and insisted that additional measures to protect business secrets be adopted.

President Na stressed, “If the pre-announced version is implemented as is, franchisors will have reduced capacity to manage daily operations due to repetitive and unnecessary negotiations, and the damage will ultimately be borne by franchisee sales and consumers.”

The association plans to deliver these industry opinions to Chairman Joo and to other relevant ministries and the National Assembly, emphasizing the need for institutional improvements.

Meanwhile, according to the Fair Trade Commission, as of the end of 2024, 11.9% of franchisors had more than 30 franchise locations. These franchisors account for 87.8% of all franchise outlets. Thus, for large franchisors operating at least 300 franchise units, the criteria for organization registration are either 10% participation or at least 1,000 members. For franchisors with between 30 and 299 outlets, the requirement is at least 30 members. If the pre-announced decree is implemented unchanged, franchisors operating fewer than 30 locations will not be eligible to register franchisee organizations.

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