Gyeonggi Province Explores Measures to Activate Unfair Damage Relief for Franchise Owners

Gyeonggi Province held an 'Industry Officials and Experts Roundtable on Activating Unfair Damage Relief for Franchise Owners' at Gyeonggi Provincial Government on the 21st to explore unfair damages faced by franchise owners and support measures for relief.

Participating in the roundtable were franchise owners with experience receiving damage consultations or filing for dispute mediation through the Gyeonggi Province Fair Trade Support Center, as well as franchise agents who conducted dispute mediation. They conveyed field voices regarding procedural strengths and weaknesses, difficulties, and necessary improvements experienced in actual dispute mediation processes.

Additionally, experts in the franchise sector including Kim Hong-seok, chairperson of the Gyeonggi Province Franchise Business Transaction Dispute Mediation Council; Lee Jung-myung, chairperson of the Korean Franchise Association; Jung Jong-ryeol, advisory chairperson of the National Franchise Owners Association; and Jeon Min-jae, attorney at Law Firm Sunwoon, participated to discuss problems with the current system and improvement measures for protecting the rights and interests of franchise owners.

Kim Hong-seok said, "The implicit franchise contract renewal system was established to protect franchise owners, but cases are occurring where franchise owners who failed to raise objections to contract renewal within 60 days before the contract expiration date are instead burdened with excessive penalty fees," and added, "Institutional supplements are needed to address the issue of penalty fees following contract termination after implicit contract renewal."

Participating experts also recommended easing franchise business requirements under the Franchise Business Act to expand the scope of franchise owner protection, and eliminating blind spots that may arise when transaction structures or contract types are altered to avoid application of the Franchise Business Act. In addition, they proposed the necessity of institutional supplements to prevent damages that may occur during the franchise contract process through special commercial zone entry or startup consulting companies.

The province plans to discover institutional improvement tasks for more prompt and effective relief of unfair damages to franchise owners based on field opinions and expert recommendations presented that day, and will use them as basic data for future policy development.

Seo Bong-ja, director of the Fair Economy Division of Gyeonggi Province, said, "Compared to lawsuits, dispute mediation is a useful means for franchise owners who have suffered unfair damages to receive relief quickly with less burden of time and cost," and added, "We will carefully examine the field voices from this roundtable and endeavor to lead to substantive institutional improvements."

Meanwhile, Gyeonggi Province operates a Fair Trade Support Center to support rights relief for small business owners who have suffered damages from unfair business practices.